We always like to let you know when one of the Ask PattyCertified Female Friendly retailers does something cool, and this is one of those times. Tamara Darvish is a vice president of DARCARS Automotive Group, a privately owned group of 34 franchises in the Washington Metro area, and she's written something pretty amazing. It's called OUTRAGED: How Detroit and the Wall Street Car Czars Killed the American Dream, and it's a story about how the auto industry's collapse in 2008 and the subsequent bailouts may have saved auto manufacturers, but ultimately spelled doom for many smaller dealerships across the country. Check it out:
The “taking out” of America’s hometown car dealers is perhaps the most misunderstood or little-known story of the decade, certainly of the last few years. The collapse of the “Detroit Two” automakers (General Motors and Chrysler; Ford is the third component that makes up the so-called “Big Three,” or “Detroit Three” automakers), and a temporary government group designed to rescue them set the stage for the events that transpired. The automakers saw new life. But a good portion of “Main-Street” car dealers were left to hang out to dry. Main Street and Highway 61 are used as metaphors for the rejected dealers, many of whose businesses were located on Main Streets or along highways in rural, small and midsize towns, as consultants pointed out. And dealers, as portrayed here, represent entrepreneurs everywhere, as symbols of the American dream.
Pretty heavy stuff - but important stuff! 2008 and the resulting chaos was tough for everybody, but the best thing we can do now is learn from those mistakes so we don't repeat them again. Ever. Thanks to Tammy for penning this torrid tale, and contratulations to you from the whole Ask Patty team. We hope it's a hit for you!
You can learn more about Tammy and her book at http://www.tammydarvish.com/, and the book's available for purchase at Barnes & Noble and Amazon - plus, it's available on the Kindle. Go get it!
Last weekend at the NADA conference in San Francisco, Jim Lentz, President and COO of Toyota Motor Sales USA delivered a keynote speech on the state of the industry. In it he said that 2011 marks a new beginning for the industry, giving dealers a call to action to rise above the oft-mentioned economic downturn of a few years past, saying to strive for gradual improvements this year and next; he spoke of the importance of 'Generation Y' as a target audience, the benefits of reaching the hispanic community, and, of course, the importance of the woman comsumer in the auto industry. Here's that particular segment, where he calls for auto dealers to take the radical stance of actually listening to women, and quotes someone familiar to the AskPatty.com readership - AskPatty's own Jody DeVere. Head past the jump that segment of his address.
In a shocking last-minute decision made just a day before contracts were to be finalized, the Penske Automotive Group has announced that it has ended its discussions with General Motors to acquire the Saturn automobile brand. This very disappointing news comes after months of efforts by hundreds of dedicated employees and Saturn retailers who tried to make a new Penske-run Saturn a reality.
Sadly, as a result of Penske's decision, General Motors will be winding down the Saturn brand and dealership network, in accordance with the wind-down agreements that Saturn dealers recently signed with GM.
Penske's announcement explained that their decision was not based on interactions with General Motors or Saturn retailers; rather it was because of the inability to source new products beyond what it had asked GM to build on contract.
According to Penske, "Since announcing its discussions with GM on June 5, 2009, the company has been in the due diligence process to determine the feasibility of developing an independent distribution model for Saturn-branded products and service parts in the United States, including the sourcing of vehicles from GM and other potential suppliers. The company had negotiated a definitive agreement with GM to source vehicles on a contract-manufactured basis for a period of time. After this period, the company would have been required to source vehicles from another third party under a similar contract-manufacturing agreement."
That manufacturer was Renault-Nissan, the Detroit Free Press reported, quoting a statement from a Renault spokeswoman who said "Renault has been in contact with Penske to supply cars, parts, and technology to Saturn through an OEM agreement. The conditions for an agreement have not been found."
The announcement is a tragic blow to the industry. According to a report at autoMedia.com, "Penske the man and organization is held in high regard, and this deal was considered the best chance for the future of the brand. The plan had been for General Motors to continue to supply vehicles through 2011, after which time Penske would source products from another automaker. This arrangement promised to shake up the century-old business model and provide unique opportunities. For instance, a Penske-run Saturn could have potentially drawn vehicles from multiple automakers, thereby giving Saturn great market flexibility, while limiting the potential liabilities associated with manufacturing that nearly toppled GM and Chrysler."
In a press release issued by General Motors yesterday, company President & CEO Fritz Henderson said this "disappointing news comes at a time when we'd hoped for a successful launch of the Saturn brand into a new chapter. We will be working closely with our dealers to ensure Saturn customers are cared for as we transition them to other GM dealers in the months ahead. I'd also like to thank every GM employee and Saturn retailer who worked so hard to try to make this new beginning happen for Saturn."
Terms of the wind-down process will be determined and communicated shortly. Saturn customers and owners will continue to be able to purchase and have their vehicles serviced at Saturn retailers during this process, and once the wind-down is complete, Saturn owners will still be able to have their vehicles serviced at other General Motors dealerships. According to the Detroit Free Press, the end of the Saturn brand could cost as many as 13,000 jobs at dealerships nationwide and General Motors.
Saturn was founded nearly 30 years ago by General Motors, and was promoted as a "different kind of car company," known at first for its bouncy dentless plastic door panels and then better appreciated for its hassle-free 'no haggle' pricing. Owners of the vehicles have proven to be quite loyal to their brand, as evidenced by their vocal community at IMSaturn.com
As General Motors emerged from its bankruptcy, the company stated it was committed to a clear and simple vision - to design, build and sell the best vehicles in the world. One step of that commitment is being demonstrated with a greater emphasis on corporate transparency to consumers and additional attention to unmatched customer service.
As part of these efforts, General Motors has created a new website -- gmreinvention.com -- where the company shares current news, corporate blogs, flickr photos, live twitterfeed, and chat sessions to provide as much information as possible about the current status of the new company.
One feature on gmreinvention.com is "Tell Fritz," a video blog in which site visitors can submit a question, comment, or concern about the new GM to CEO Fritz Henderson. He'll read them and respond to as many as possible each week. The questions and content will change each day, as Henderson addresses the subject matter submitted by readers in an effort to keep us all apprised about the priorities of the company.
This video is the first in the series which just went live this week; in it Henderson explains the "Tell Fritz" feature. Stay tuned after he answers, as this video continues on to other topics.
Check it out, and check back often. If you're interested in what's happening with the new General Motors, this site is the best place to get information.
Emerging from bankruptcy just 40 days after filing, the new General Motors Company began operations on Friday touting a new corporate structure, a stronger balance sheet, and a renewed commitment to make the customer the center of everything the new GM does.
This emergence "marks a new beginning for General Motors, one that will allow every employee, including me, to get back to the business of designing, building, and selling great cars and trucks and serving the needs of our customers," said Fritz Henderson (left), president and CEO, in his public address made Friday morning. "We are deeply appreciative for the support we have received during this historic transformation, and we will work hard to repay this trust by building a successful new General Motors."
"One thing we have learned from the last 100 days is that GM can move quickly and decisively," said Henderson. "Today, we take the intensity, decisiveness and speed of the past several months and transfer it from the triage of the bankruptcy process to the creation and operation of a new General Motors.
The new General Motors is committed to a clear and simple vision - to design, build and sell the best vehicles in the world. "A successful auto company needs to focus on both the cost and the revenue sides of the business," said Henderson. "Success on the revenue side means building the stylish, high-quality, fuel-efficient vehicles that customers want - and getting them to market fast."
As part of its reinvention, the new GM has is focusing its resources on four core brands - Chevrolet, Cadillac, Buick and GMC - and is creating a stronger, more effective dealer network. The company will trim the number of GM dealers in the U.S. from 6,000 this spring to approximately 3,600 by the end of next year, and reduce the number of U.S. nameplates from 48 to 34 by 2010. Additionally, General Motors will end its regional operating structure and remove layers of management - reducing the number of U.S. executives by 35 percent and overall U.S. salaried employment by 20 percent by the end of this year - in an effort to flatten the organization and speed decision-making (not to mention, cut costs).
As part of its plan, GM is aggressively developing a full range of energy-saving technologies, including advanced internal combustion engines, biofuels, fuel cells, and hybrids. The company will be leading its alternate-fuel segment with the production of its extended-range electric vehicles, the Chevy Volt, currently undergoing road testing and scheduled to launch in 2010. The new GM is also taking steps to make advanced battery development a core competency, and expects to make additional announcements on this subject later this summer. In fact, the company has been touting its new green-ness so highly that some blogs such as LeftLaneNews, Bloomberg, and others have even speculated it might re-color its log to a brighter shade of green. However, Henderson denied knowledge of any such redesign during his address.
Additionally, Henderson shared the news that the company would be 'unretiring' Bob Lutz to fill an important position in the new GM as vice chairman responsible for all creative elements of products and customer relationships. "He has a proven track record of unleashing creativity in the design and development of GM cars and trucks. This new role allows him to take that passion a step further, applying it to other parts of GM that connect directly with customers," said Henderson. The iconic auto-persona will team with Tom Stephens, vice chairman, product development; and Ed Welburn, vice president of design; to guide all creative aspects of corporate design.
Finally, in a move that got many journalists talking, Henderson announced that the company is "working on new ways to make car buying more convenient for our customers, including an innovative new partnership with eBay in California to revolutionize how people buy vehicles online." Henderson said customers "will be able to bid on actual vehicles just like they do in an eBay auction, including the option of choosing a predetermined 'buy it now' price." Can you imagine a more female friendly way to shop than from the comfort and privacy of your own desktop?
"Business as usual is over at GM," promised Henderson. "Today starts a new era for General Motors and everyone associated with the company. Going forward, the new General Motors is fully committed to listening to customers, responding to consumer and market trends, and empowering the people closest to the customer to make the decisions. Our goal is to build more of the cars, trucks, and crossovers that customers want, and to get them to market faster than ever before."
"To our current customers, we appreciate the confidence that you have placed in us, and going forward, we'll offer you nothing less than great cars, trucks, and crossovers, with unmatched customer service. To those who have supported us through this challenging time, we are deeply grateful," said Henderson. "And to those who have never tried a GM vehicle - or who have tried one and been disappointed - we look forward to the chance to win your business and earn your trust."
It sounds like an awesome plan. We certainly do wish the best for General Motors and all its employees as they enact this drastic new structure move towards a better corporate future.
Have you got additional questions about how these changes at GM could affect you? Then read more about it at Consumer Reports. The blog includes information on what brands and models are still available, how to get parts and service for GM cars, what to do with GM warranties, how to sell a GM car, whether or not it's a good idea to buy a GM vehicle now, and what to do if you have a claim against GM.
Many drivers of Chrysler and General Motors vehicles may be wondering about their recourse if they require warranty work, or if their car exhibits defects that may qualify it as a "lemon."
There's plenty of good news here, but also some bad.
For instance, according to a document released by the White House Press Office earlier this week, "GM will continue to honor consumer warranties." With Obama's announcement on Monday, the U.S. Treasury made its Warranty Support Program available to GM and $361 million was funded to a special program available to provide security for the orderly payment of warranties for cars sold during this restructuring period. And don't forget that President Obama created a "Warrantee Commitment Program" in March specifically to provide backing for Chrysler and GM vehicle warranties and assure consumers that their new-car warranty would remain valid through its term.
So that's good news!
More good news: The U.S. Court overseeing General Motor's bankruptcy approved GM's request to continue honoring vehicle warranties, including GM's participation in the Better Business Bureau's Auto Line program for consumers that need help with any warranty-related dispute with the manufacturer.
It was not much of a surprise yesterday when General Motors revealed the details of its bankruptcy plans; many in the automotive industry were wondering WHEN, not IF, GM would have to resort to such drastic measures. According to News.Yahoo.com "GM's bankruptcy filing is the fourth-largest in U.S. history and the largest for an industrial company. The company said it has $172.81 billion in debt and $82.29 billion in assets."
As part of yesterday's announcement, General Motors CEO and President Fritz Henderson promised, "Today marks the beginning of what will be a New GM dedicated to building on only the very best of our recent progress in fuel efficiency, world-class quality, green technology development and outstanding design."
In a nutshell, General Motors is using the bankruptcy process to split into two companies: a leaner "New GM" which will focus on four core brands (Chevrolet, Cadillac, Buick, and GMC) and an "old GM" which will include the pieces of the company that GM will sell or close out. According to the Wall Street Journal "GM intends to accomplish the split through a Section 363 sale, which would transfer the 'New GM' assets to an entity owned by the U.S. and Canadian governments, the United Auto Workers union and the company's unsecured creditors."
The term "Cash for Clunkers" might sound familiar to you - it's a hot topic in the news and across the automotive blogs right now. Details: Two bills are currently under consideration in the House and Senate, each of them offering their own set of pros and cons. Unfortunately, as much as people are discussing them, nobody can decide on which is better or whether either one of them is actually any good at all.
Either one could be considered to be a bit like a government stimulus plan to get car buyers back to buying new cars. Both offer incentives towards the purchase of a new car when the shopper turns in an older model, but the value of the incentive is determined by the fuel economy of the new car.
As explained at Time.com, the bill being supported by Democratic Ohio Representative Betty Sutton, offers an incentive for the trade-in of any car from model year 2000 or earlier, without any restriction on fuel economy. Car buyers will receive $4,000 if they purchase a new domestic vehicle car that gets a minimum mileage of 27 mpg or $5,000 if it gets 30 mpg. (With all the numbers being bandied about, I'm not exactly clear on whether this is a combined city/highway figure, or if it is based entirely on highway economy. As we know there can be quite a bit of difference between the two.) The crux of this bill is that the new car must be manufactured in the United States, imports can qualify, but only if they're built here in the U.S., which would exclude the highly-touted 50-plus-mpg Toyota Prius hybrid, which is built in Japan.
Big News Today: In conjunction with conversations General Motors started with its U.S. dealers today, GM issued the following statement:
As noted in our recent S-4 filing and updated Viability Plan, General Motors plans to reduce its dealer network from 5,969 stores today to approximately 3,600 by the end of 2010.
This process starts today, as GM begins contacting dealers regarding its long term planning. Approximately 1,100 underperforming and very small sales volume U.S. dealers will be advised that GM does not see them as part of its dealer network on a long-term basis. In most cases, existing franchise agreements run through October of 2010.
In addition, we will be updating about 470 Saturn, HUMMER and Saab dealers on the status of those brands and we will be discussing how the remaining dealers will support our retail plans going forward. While additional cuts will be made, we believe the vast majority, over 90 percent, of the remaining dealers will be offered a chance to remain with GM. However, specific dealer issues, further attrition and additional possible dealer network actions are expected to bring the number of future GM dealers to around 3,600 by the end of 2010, as described in the Plan. The actual number could vary given levels of attrition, etc. outside of GM's control.
"We have said from the beginning that our dealers are not a problem but an asset for General Motors," said Mark LaNeve, GM Vice President of Sales Service and Marketing. "However it is imperative that a healthy, viable GM have a healthy, viable dealer body that can not only survive but prosper during cyclical downturns. It is obvious that almost all parts of GM, including the dealer body, must get smaller and more efficient."
"In response, we are letting them know about our long term plans. GM's viability plan calls for fewer, stronger brands as well as fewer, stronger dealers. We have taken a very difficult step by identifying those dealerships we'd like to keep in the GM dealer network and those with whom we will have to wind down our business relationships," LaNeve said.
As independently owned businesses, dealer owners will make their own decisions if and when they want to make this information public. GM is not releasing the names of any dealers.
"We are not terminating any dealerships today," LaNeve clarified, "We will be talking to all of our dealers over the next few weeks, letting them know now in the spirit of open communication, so they are advised well in advance, about our long-term plans and their role in them. Long term, GM should have fewer, healthier dealers, maintaining GM's current high customer satisfaction ratings, with more sales per outlet."
We've been following the "carpocalyse" for months now, watching to see what would happen with automotive giants General Motors and Chrysler. Today's big news came with twice the jaw-dropping effect, as Chrysler announced that it will merge with Italian automaker Fiat, whie also declaring Chapter 11 bankruptcy.
Every automotive website we follow is talking about it, each with their own spin on the circumstances surrounding this monumental arrangement, which according to President Barack Obama "will provide a new lease on life for Chrysler." Here are short summaries of the most important points, from each of the blogs we follow on this subject.
Our colleague Rich Truesdell, over at AutomotiveTraveler.com has posted a blog supplying many of the details on this transition, explaining that Chrysler, Fiat, and the US Treasury will appoint a new board of directors (with six members to be named by the US Government and three by Fiat), which will then appoint a new CEO to replace current CEO Bob Nardelli after he steps down. According to Truesdell, the US Treasury will provide $3.5 billion in debtor-in-possession financing as well as an additional $4.7 billion upon the company's emergence from Chapter 11. The Fiat-Chrysler partnership is official; Fiat has already agreed to transfer technology and has also agreed to build engines and cars here in North America. Finally, American taxpayers will be repaid before Fiat can increase its initial ownership stake, Daimler will give up its stake and contribute to pension plan obligations.
Eric Evarts at Consumer Reports does an excellent job of describing the new arrangements with Fiat, explaining how "a new company will emerge phoenix-like from the Chrysler Corp. ashes, with its autoworkers' Voluntary Employee Beneficiary Association (VEBA) owning 55 percent... Fiat will initially hold a 20 percent ownership stake in Chrysler (without shelling out one single Euro), which may be expanded as government loans are repaid. In the meantime, the U.S. and Canadian governments combined will have a 10 percent stake."
Evarts tell us that most manufacturing operations will be temporarily idled beginning May 4th, though they are expected to resume in 30 to 60 days once the dust has settled and a new company emerges. Apparently, according to Evarts, the combined merger and bankruptcy comes just a few months shy of 30 years after Lee Iacocca saved Chrysler by winning government loan guarantees, on September 7, 1980.