NADA Headlines - 09/27/2013 (Plain Text Version)
General Motors has stopped running dealer-incentive programs in New Hampshire in response to a new law requiring automakers to disclose more information about the programs. GM told its 24 New Hampshire dealers this week that it "will not offer any new dealer sales programs in New Hampshire," including so-called stair-step programs or other contests that award dealers bonus money for hitting factory-set sales targets. The move strikes back against a dealer-backed law that took effect this week requiring automakers to provide dealers with advance, written details about their sales incentive programs. The provision requires automakers to explain how they calculated each dealer's sales target and to disclose the targets of all dealers in the state. Peter McNamara, president of the New Hampshire Automobile Dealers Association, which lobbied for the changes, believes GM is balking at the requirement for greater transparency. He says notifying dealers of programs in advance and disclosing details "shouldn't be difficult to do since the manufacturers create the program themselves."
The U.S. Treasury is launching the third phase of its sale of General Motors stock. The Treasury Department confirmed earlier this month that it owned 7.3% of GM after the second phase of its selldown, down from 13.8% in June 12. The government plans to sell its remaining 101.3 million shares gradually on the open market. The Treasury wants to divest of GM completely by April 1. With GM's stock hovering around $37, the government is expected to lose about $10 billion on its $49.5-billion bailout of the largest U.S. automaker.
Transportation Secretary Anthony Foxx will meet Friday with executives at Detroit's Big Three automakers and tour auto facilities. The new secretary — a former mayor of Charlotte, N.C. — said previously he looked forward to going to Detroit to meet with U.S. automakers and learn more about the auto industry. Foxx is expected to tour General Motors Co.'s Warren Transmission plant with Mike Robinson, vice president for sustainability and global regulator affairs. He will also tour Chrysler Group LLC's Jefferson-North Assembly plant in Detroit and Ford Motor Co.'s VIRTTEX driving simulator in Dearborn. Foxx also met with Michigan Gov. Rick Snyder on Thursday. Foxx is among the cabinet officials who will be in Detroit on Friday for a meeting with government officials and local community leaders to talk about the Motor City in the wake of its Chapter 9 bankruptcy filing.
Company services 17 major car dealerships throughout Southern California
The U.S. Department of Labor has obtained a consent judgment in federal court ordering automotive detailer Interior Magic of California LLC, and officers Frank and Tammy Hallberg, to pay $292,000 in back wages and liquidated damages to 205 current and former employees, plus pay $34,408 in civil money penalties. The judgment comes after an investigation by the department’s Wage and Hour Division found the Torrance-based company willfully violated the Fair Labor Standards Act’s overtime, minimum wage and record-keeping provisions. For more information, visit www.dol.gov/whd.
New policy, pricing, equipment aid turnaround
Paul Lynch felt like "crawling under a table" when his dealership financial data revealed to his classmates at the NADA Dealer Academy that some of the used cars on his lot had been there for more than 500 days. But the shame provoked the general sales manager at DePaula Chevrolet in Albany, N.Y., into action, leading to a complete overhaul of his used-vehicle operation. With the support of the dealership's vice president, Tom Restino, Lynch sold off the aged inventory at a $200,000 loss. He also reduced by 80 percent the time it took to get a used vehicle ready for retail sale. He enacted a strict policy: No used vehicle sticks around for more than 60 days. Ever. In 2012, the year after Lynch's epiphany, DePaula sold 1,385 used cars and trucks, almost twice the 737 it sold in 2011. His gross profit improved about $400 per unit.
Auto maker applying software fix for transmission that delayed deliveries
Chrysler Group LLC is gearing up to begin deliveries of its 2014 Jeep Cherokee after problems tuning its nine-speed transmission delayed shipments and prompted the company to slow production of the important new sport-utility vehicle. Chrysler has corrected the calibration problem and is applying a fix to about 10,000 vehicles that were first off the production lines at its Toledo, Ohio, factory, said Bruce Baumhower, president of the United Auto Workers local that represents workers at the plant. Transmissions on the about $23,000 and up vehicles weren't shifting as smoothly as expected, prompting the revisions. The latest delays mean the 2014 Cherokees won't be arriving at dealerships in volume until the fourth quarter.
As acquisitions go, Ford Motor's purchase of Michigan start-up Livio doesn't amount to even a tiny drop in the bucket. Still, it has the potential to create ripples throughout the industry. Ford paid less than $10 million — not even 0.2 percent of its 2012 net profit — to acquire the Ferndale, Mich.-based company whose software connects the apps on your smartphone to your car's dashboard. Ford said the move will extend its leadership in the race to provide drivers with safe, seamless access to the electronic content they love while in their vehicles. More importantly, however, the two companies plan to focus on developing an industry standard for smartphone-to-vehicle communications, a market that is expected to reach 21 million vehicles by 2018.