HAPPY NEW YEAR!

I want to wish everyone a very Joyous, Happy and Prosperous New Year!

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That Car Guy

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It is the end of the line for the Serbia made Yugo... The Jokes end here, ok maybe not, but their not making them anymore...

Breaking News! Breaking News! Breaking News!

An announcement has just been made that Belgrade (former Yugoslavia) will no longer produce the pride of comedic jokes in America, the Yugo.

As I am writing this article the decision has been made and it appears that the last Yugo rolled off the line Thursday 11/20/08. The Yugo hit the U.S. in 1986 and sold for about $3,990.00, although selling more than 100,000 Yugo's in the U.S., the vehicle met the ire of the Insurance Institute for Highway after slow speed crash test resulted in $2,197 worth of damage against a flat barrier.

The Yugo was a tremendous success in the former Yugoslavia republics and enjoyed immense popularity.

So, bye bye forever Yugo... I can't say Americans will miss you...

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That Car Guy

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HAPPY HOLIDAYS...

Merry Christmas!

Happy Hanukkah!

Happy Kwanzaa!

Happy Holidays

and

Have a very Happy New Year!

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That Car Guy

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Think Automotive Has Halted Production As They Seek Capital... Could They Be In Trouble Without The Norwegian Government's Assistance...

BREAKING NEWS! BREAKING NEWS! BREAKING NEWS!

Think Global a Norwegian automotive company who was looking to begin selling vehicles in the United States in 2009-2010 has halted production as announced by CEO Richard Canny. Richard Canny has described the company as in "urgent financial distress". The announcement has set back the company which is considering bankruptcy if the Norwegian government does not step up to assist the ailing company.

The Think City all electric plug in type vehicle has long been anticipated and was in production when the decision to stop production lines was made recently. The company has been hit hard by the world economic crisis and it's supplier's have been increasingly been more demanding and the company has found it difficult to meet short term working capital demands.

A series of press conferences have been lined up to discuss the companies future, I will keep you posted as I have been anticipating this vehicle for quite some time now.

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That Car Guy

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Finally a Lifeline... A Federal Bailout for General Motors and Chrysler, They Get $17.4 Billion Dollars...

BREAKING NEWS! BREAING NEWS! BREAKING NEWS!

We knew it was coming the lifeline that GM and Chrysler so desperately needed along with the supply chain and the rest of our nations economy. Now I am not endorsing the move although with what happened in the financial industry it was necessary, when the Federal Government bailed out that sector, which started this slippery slope that we are now on.

I will always contend that when Treasury Secretary Paulson pitched the idea that the world was collapsing, I found it unsettling and upon further dissection you find that the very nature of bailing out the financial sector has created an enormous economic vacuum. The only people that will come out ahead is the financial institutions that got us primarily in this mess, it doesn't make since. We rewarded horrible ethics and accounting by the institutions in which businesses and consumers rely on and in turn they are not recirculating taxpayer money back into the system and no one is holding them accountable, that was one of the very reason for the bailout to get money flowing back into the system, yet these institutions are buying other banks and not helping the American public. I have written before that we did not need a bailout to make these acquisitions happen, a free market would have corrected the mess, there is precedent, the weak get gobbled up by the strong, their would have been structured bankruptcies people would have still made their payments and the economy would rebound.

But what President Bush and Secretary Paulson did was bail out their buddies on Wall Street to save their fortunes and their jobs, how else can you explain the lack of accountability, lack of a plan and lack of oversight. The financial industry gets access to $700 Billion dollars and no one stops to say, aren't these the guys who got our country into this mess why are they still guiding the ship.

They are demanding more from the automakers who actually make products, that creates jobs, who's products recirculate and get sold again to employ even more people than the financial services industry. Our government is almost in attack mode against labor and the wages and benefits paid to these workers, yet no one blinks an eye at the outrages compensation packages and bonuses paid to Wall Street types over the years. Have you seen what a typical Wall Street broker makes and the yearly bonuses paid to them in comparison to the rest of the nation's wage earners, it's almost obscene, working with other peoples money. Now I don't begrudge someone from earning a bunch of money, I am merely framing the context of what we have been hearing from some folks in Congress and our Senate over the last few weeks.

They are making the claim that the compensation of labor is out of line and did not make the same comparison to Wall Street, let's be fair about an assessment of wages. If Wall Street and bankers can't figure out how to make money with other peoples money and access to the Treasury Department, they do not need to be running these companies period, particularly now that they are exposed to the over hyped balance sheets and numerous ethics violations. The very nature of paying these outlandish salaries and bonuses on fictitious balance sheets is criminal in my mind, particularly when companies and individuals entrusted there hard earned money to these financial institutions that charge them for using there money.

So GM and Chrysler got a short term lifeline and that should last until March 2009, when a formal plan is expected to outline their future plans to turn these companies around. As expected Ford Motor Company did not participate in any immediate funds and is not expected to need any in the next few months, however as they have said that if GM or Chrysler fails they would most certainly need an infusion of cash.

General Motors received $9.4 billion and Chrysler $4 Billion Dollars, the government is calling for massive restructuring among labor, dealers among other measures it also includes the appointment of a Car Czar , which is expected to be Secretary Paulson (the absolute wrong choice), President elect Obama will have the opportunity to make his choice while the administrations transitions.

While under the current collapse of the economic framework of the Worlds economy, the decision to provide loans to the auto industry is merited, it is of my strong opinion that much of the future impact could have been softened if free market forces would have been exercised and allowed to work.

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That Car Guy

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Application for TARP Capitol Purchase Program... It takes more documents to get a mortgage...

I read recently that the application to get TARP Funds (Bailout Money) was only two (2) pages long, I did not believe the story. I said to myself surely the ability to get millions and in some case billions of dollars would require more information than what it would take for a consumer to get a home mortgage, it is taxpayers dollars after all.

I have done a little research, it was real easy, google is a wonderful research tool and sure enough I discovered that the entire application is six (6) pages long, the first four (4) pages are guidelines and the final two (2) pages the application with the first page only asking for name of the institution and contact names.

Ok, my first question is and what you won't find on the document, why do you need the money and my second question, how are you going to pay it back. Seriously, not one of those two questions are on the document, if I walked into my local bank branch and asked for a loan, the first question they ask is, what do you need the loan for.

I could go on, but this bailout is the most ridiculous plan in the history of free markets. Starting with the bailout of AIG, we were fed a story that said the banking system would collapse, the only thing that would have happened is that a lot of bankers and financiers would have lost their jobs and investments and another savvy investor would have scooped up the pieces after the collapse at bargain basement prices. Their is precedent and a structured dismantling would have provided enough free cash flows for the remaining entities.

President Bush and Secretary Paulson provided their pals the biggest safety net ever to Wall Street and will take taxpayers at least a decade to get a return if ever, I am sure the way these quick funds have been released their is no guarantees or measures to track the money or reporting back to the treasury on how the money is being spent as it surely is not benefiting the very taxpayers who have provided the funds.

Here is the link to the application below:

http://www.ustreas.gov/press/releases/reports/applicationguidelines.pdf

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That Car Guy

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Two Comedians Provide Insight and Opinions On The Global Financial Crisis...

Comedic relief from this financial mess we are in...

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That Car Guy

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Money As Debt...

I thought I would share this video before I begin a regular dialogue about the current financial crisis that is gripping the world economy. It should assist in understanding the banking and financial institutions that we are all indebted too.

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That Car Guy

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An Automobile That Runs On Compressed Air...

Odds are you've never heard of this car.

Why not?

Why is a French company developing it with zero help from the high rolling US-UK dominated global financial system which until recently had money for every loony scheme imaginable?Answer: The banking system and the oil industry are closely intertwined and they want to protect their investment in the gasoline infrastructure at all costs.

Fortunately, France doesn't have the same commitment to gasoline as fuel that the US and UK does. France does have oil companies, but it doesn't have the equivalent of Exxon or Royal Dutch Shell. India doesn't either. But the French and the Indians do have superb engineers.

Assuming that the collapse of the global financial system doesn't derail the launch of this car, India and France will have vehicles that are completely independent of the oil companies. No toxic fuel, no toxic emissions, super low cost, utter reliability, and here's the really cool part: the "fuel" could be available anywhere there is room for an air compressor including your own home.

What's not to like about this? Why is the news of this technology all but banned in the US?

The banking system and the oil industry (and news media industry) are closely intertwined.

It's really that simple.

*Reprinted from Brasschecktv.com

The Car Guys Editor Note:

The technology is available to do a whole host of things, I am not sure I agree about the banking system, news media and oil industry being in bed with Big Oil, that's a little far fetched.

But the exciting thing is the technology, if perfected it could be tremendous...

Don't you just love conspiracy theorist though, no facts just opinions...

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That Car Guy

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THEY'RE BACK... The Big 3 Auto Execs are back in Washington DC begging for their aid packages...

Breaking News! Breaking News! Breaking News!

The Big 3 Automotive Execs from General Motors, Ford and Chrysler are back in Washington DC Thursday 12/4/08 to beg borrow and plead with Congress for a bailout package that will save the companies from bankruptcy.

All 3 Executives are traveling to meet Congress in hybrid vehicles after a disastrous public relations fiasco the last time they showed up. All of the Execs flew in on there corporate jets on the first visit and as one congressman put it with tin cans in there hands begging for taxpayer money.

Although hard to believe on the previous visit not one Exec was prepared to present a plan on how the companies would spend the money and when they planned on paying it back. I am still shocked at this but the Financial Industry set the tone as not one congressman complained when Wall Street showed up asking for their packages in their private planes and did not present a plan or finalize controls or regulations about how the money will be spent. I guess they learned their lesson after appropriating $700 Billion Dollars to the financial industry without strict controls, I don't think so. Since the Auto Industry is asking for far less money, I suppose Congress feels it should put this industry on a tighter leash.

We all know that the money will be appropriated, this show is dress window dressing to appease the public and further scrutiny. However the amount originally asked for of $25 Billion Dollars has now grown to $34 Billion Dollars. General Motors wants $18 Billion Dollars, $4 Billion before the end of the year, $8 Billion by March 2009 and a $6 Billion Dollar credit line, Ford wants a $9 Billion Dollar credit line that it can tap into if the others go belly up, Chrysler needs $7 Billion Dollars as fast as it can get it's hands on it by the end of the year if you can spare some change.

I hope that congress can get this right, although I doubt it as the plans call for most top execs to work for $1 Dollar per year and other execs forgoing bonuses, the companies need to shake up the executive ranks, these are the people that have been steering the ship for the last decade or two.

All of these companies need fresh perspective and insight to what consumers want and just an overall fresher image and you can't do it when it will be business as usual after the bailout. The companies have been hit hard with negative comments about design and my favorite "junk" vehicles that nobody wants to buy. The companies do not build junk vehicles as evidenced by NHSTA and other reports that state emphatically that the domestic brands are as good or better than their import competitors. I would also challenge the notion on poor design, come on have you looked at a Toyota Prius, it's not winning any design awards, it's a wedge on wheels.

I have not been sold on this whole bailout of industries in general but congress and Mr.Paulson (U.S. Treasury Secretary) has set this country back at least a hundred years with this whole bailout strategy. I will be writing more later but this whole bailout matter stinks to high heaven and I can't believe academia and other researchers have not been screaming about it. The whole notion that the world is caving in is nonsense. This whole mess was a Treasury Secretary coming to the rescue of incompetent Powerful Financial and Banking Executives whom he knew and wanted to save their hides. Mr. Paulson begged and pleaded that a meltdown was imminent, as if their was not precedent for these collapses and in fact there are, some other Bank, Finance company or Insurer would have picked up the pieces at bargain basement prices and life would have gone on, folks would still make their payments to those new institutions and the markets would make the appropriate corrections. AIG would have been broken up and sold off and every other Big bank or Finance company collapsing would have been swooped up by another bargain hunter. Once again the folks who drove the Banking and Financial services companies into the ground are still directing the ships, why aren't the stockholders screaming and why isn't congress making these companies accountable for the taxpayers money.

We will see Thursday 11/4/08 what happens next in this chapter of American history, since congress is re-writing how the free enterprise system works in America.

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That Car Guy

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Fisker Automotive introduces the production version of their plug-in hybrid Fisker Karma...

The folks at Fisker Automotive unveiled and announced today that their first production vehicle will be on display at The Detroit Auto Show in January 2009. The Former Design Chief at Aston Martin and BMW Henrik Fisker who is CEO of Fisker Automotive, has been steadfast in delivering what appears to be a nearly identical version of the vehicle that was seen at last years Detroit Auto Show in 2008.

What makes the vehicle move is what is being labeled Q-Drive technology, which will provide an all electric range of 50 miles. The vehicle has a 2.0 liter Ecotec turbocharged engine from General Motors that is rated at 260 hp that operates a generator to provide power to after the battery power is exhausted. The Fisker Karma as announced has a 0 - 60 mph time of 5.8 seconds and will reach 125 mph at top speed.

The vehicle is expected to have a base price of $87,900.00 and no announcement has been made about distribution at this time or production timetable.

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That Car Guy

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Axon 100 mpg.

Move over Prius, upcoming gasoline car gets 100 mpg

London (England) – A British auto maker thinks gasoline is here to stay and has introduced a carbon-fibre body car that gets up to 100 miles per gallon. Axon Automotive’s diminutive car has a very light 26 kilogram engine that still manages to achieve a top speed of 85 miles per hour. The interior of the car is also environmentally friendly with the seat covers and upholstery made from recycled pin-stripe suits and jeans.The Register has some great details about the car and you can see their article at the link below. Unlike many high-efficiency cars coming out today, the Axon vehicle sticks to a gasoline only engine. A lightweight and aerodynamic body contributes to the car’s impressive miles per gallon claim.
The entire chassis is made from carbon-fibre and weighs approximately 400kg. Founder Steven Cousins says the body panels can also be made from the same material. The 26kg 500cc two-cylinder engine is designed to be easily serviced and if you have any troubles the company will send you a replacement engine while the original one is being checked.Cousins said the car can be quickly brought to market because his tooling costs are relatively low compared to traditional steel-chassis cars. Axon is aiming for a 2010 launch date and a retail price of 10500 pounds which will probably translate into $50,000 by the time the car is available.
This car has been shown off before at various green automotive shows, but it seems people didn't take the manufacturers seriously.

Reprinted/Courtesy Humphrey Cheung

http://www.axonautomotive.com/

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Hirsh: Make Big Banks Pay for Financial Crash | Newsweek Voices - Michael Hirsh | Newsweek.com

Hirsh: Make Big Banks Pay for Financial Crash Newsweek Voices - Michael Hirsh Newsweek.com

Check out this link...

Interesting report from Michael Hirsh

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General Motors is returning 2 leased jets... Announcement came after congressional scrutiny of the executives mode of travel...

BREAKING NEWS! BREAKING NEWS! BREAKING NEWS!

General Motors has just announced that it is returning two leased jets, after Congressional members criticised there high end travel arrangement to Washington DC this week. As executives of the Big 3 (GM, Ford and Chrysler) approached the U.S Government for a Federal Bailout Loan/Aid, after the session with Congress the executives have been hit hard with a wave of negative publicity.

As many taxpayers have put plainly, it just didn't send the right message as there companies are on the brink of Bankruptcy.

GM spokesperson Tom Wilkinson made a statement today that GM has made a decision to return two more of the companies seven leased jets it had at the beginning of the year, because of a "aggressive cut back in travel". Mr. Wilkinson said that the decision to return the leased jets was made before the congressional hearing and that the company returned two other jets in September.

It should be noted that the top executives at GM and Ford are required by their companies to fly private aircraft for security reason, according to it's filings with the Security and Exchange Commission. Cerberus the company that owns Chrysler, since it is private does not have to disclose it's requirements.

All of this begs to question the grasp that Mr. Wagoner has on the company, if a decision had been made to cut back why not state that at the hearing and lesson some of the negative face that was sure to be painted when the question was asked. If the decision had been made on effectively cutting more than half of your corporate jet fleet, that sends a clear message that the company is making changes.


Ford has not made a statement regarding any cutbacks in the use of it's corporate jets. It should be noted that Mark Fields, President of Ford North America, relinquished his use of a corporate jet nearly two years ago as criticism mounted when Ford was making huge cutbacks and losing billions of dollars.

I said it once and I will say it again, next time Mr. Wagoner, Mr, Mulally and Mr. Nardelli, fly into Virginia or Maryland and drive in or drive from New York or Detroit with a caravan of your latest products and future products with your business plan in hand demonstrating your commitment to be good stewards of the taxpayers money.

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That Car Guy

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The Big 3 flew to meet congress with there hands out on there private jets... Can someone use some PR (Public Relations) about now...

Lets be fair for one minute, the executives that run General Motors, Ford and Chrysler have very busy schedules and time is money in the world of big business. To fly commercial to Washington from Detroit and New York (where GM and Chrysler hang out) on there private corporate jets saves them time most certainly, have you seen the lines at JFK and Laguardia in the morning.

But as I have said for years, the PR machines for these companies is atrocious, starting with the notion that they do not make fuel efficient vehicles, that the quality of the vehicles are poor and the list goes on. The facts are they make more fuel efficient vehicles than the imports especially GM, the quality is on par if not better in many categories (does anyone check the recalls for Toyota and Nissan with NHTSA), these types of misstatements, myths and public opinion should have been dealt with long before this latest fiasco.

Who runs the PR machines for these people! GM produces a Internet commercial to address the misinformation that is circulating about it's need for money, yet the same advertising or PR firm can't say hey let's show up in Washington DC driving our new technology, can anyone say Chevy VOLT.

How about Ford or Chrysler's' Public Relations staff saying let's roll out the full array of our vehicles and demonstrate that we are innovative and have vehicles that will meet the needs of the driving population now and into the future including electric and hybrid, it could have been the biggest publicity campaign they could have waged in years probably ever.

Can you imagine a parade of vehicles headed to the steps of Congress, that's PR bigger than the L.A., New York and Detroit auto Shows combined, the whole world would have been watching and the parade would have been the lead story on every major network and hometown paper in the world.

So fly into Virginia or Maryland or from New York (even better) and drive to Washington DC next time, Mr. Wagoner, Mr. Mulally and Mr. Nardelli. I guarantee that you'll get some favorable press that will save your tales from the Chapter 11 heap.

Oh, and another thing, you guys showed up without a business plan on how you were going to use the money, you expect more from a mid-level manager or your dealer network. What would you expect congress to do except send you back home and come back when you are better prepared and can demonstrate that you guys will be good stewards of the taxpayers money.

So here you go guys I have served up the greatest event that you could ever do for your image and assistance in making a powerful statement to Congress and to the taxpayers. Drive your full fleet of vehicles, which includes your new technologies and make an event of it.

And another thing, get rid of your PR firms and get a group that can reshape your images.

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That Car Guy

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General Motors produces a Fact and Fiction Commercial to assist in it's Bailout Campaign...

I am posting the new GM web/Internet commercial in it's entirety titled "GM Fact and Fiction", obviously designed to assist in it's bid to win congressional approval and influence lawmakers votes to bail the company out of it's financial crisis.

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That Car Guy

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Dodge introduces Dodge EV Sports Car at L.A. Auto Show...

Dodge introduces the DODGE EV sports car at the Los Angeles Auto Show. The lightweight aluminum chassis developed by Lotus is an all electric "plug in" type vehicle that promises a driving range of up to 150 miles.

The lithium ion batteries along with its all electric 268hp engine delivers 0-60 mph in 5.o seconds and will do the quarter in 13.0 seconds with a top speed of over 120 mph. Dodge is hoping that these statistics will deliver customers to it's showroom, however the vehicle isn't expected to hit dealer showrooms until 2010.

Pricing has not been determined and Dodge has not stated an exact time frame for delivery to dealerships.

Note: Without a Auto Bailout package, Dodger will be hard pressed to deliver on this promise.

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That Car Guy

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Should we bailout Detroit's Big 3? Will the bailout work? and other thoughts and opinion's...

With a potential bailout of the auto industry imminent and the high probability that if it doesn't happen GM and Chrysler will have to seek Chapter 11 reorganization, and Ford will not be far behind because of shared suppliers and other vendors who will have to seek Chapter 11 or worse Chapter 7 Bankruptcy protection. I want to address a few things that the manufacturers, the broadcast media and others are just getting plain wrong about how we got here.

The comments and reporting on this crisis has reached just about a fever pitch and will be front and center until a decision is reached on the matter. As you read this article the executives from the Big 3 (GM, Ford and Chrysler) have met with congress to plead there case before a panel designed to hear there case.

I understand that there will be opinions for and against the matter, however in order to fully understand what is transpiring I want to note that a lot of opinion has been based on a narrow perspective and not fully objective. Now I have not fully quantified the impact and the magnitude of a total collapse of the auto industry, although I have read several opinions on the issue. I do know that it will be big and far reaching, we are talking a global impact that will take a scholar with more mathematical skills than I have to assess.

Other opinions on why the industry has collapsed range from blaming the industry for poor decisions, blaming the unions and blaming poor quality and design. While we all have strong opinions, I feel it is best to look at those decisions that have impacted the industry the most in its downward spiral.

To blame the Big 3 entirely on this current mess is really shortsighted, the lion share of the blame in it's current state goes to the financial industry which has not only crippled this industry but is crippling industries far and wide. The financial machine (banks, finance institutions, insurers and brokerage firms) has provided false data to it's shareholders and to our government for years. You would never be able to understand your own financial position if your finance institution gave you a false since of security, of which you thought you had a partner to assist in your financial plans. Most companies, including it appears our government was blindsided by the amount of AAA rated security instruments that were hiding bad loans, these loans were on financial institutions balance sheets as great assets.

Lets be fair, Toyota, Nissan and Honda are not out of the woods yet, I have said for years that Toyota will teeter towards disaster faster than even I expected if the economy doesn't turn around or if there is a supplier meltdown in the coming days and months and Nissan will not be far behind. Honda should escape this mess because of there manufacturing and supplier model and there costs to operate. It should be noted that the manufacturers (including suppliers) dependence on the finance industry is heavy and the tightening of credit in a heavily dependent business on easy access to credit is stifling, not only towards the manufacturers ability to conduct there daily business but particularly with the retail network to provide credit to customers and that same network securing credit lines to finance the inventory. The impact of what has transpired with the finance institutions is much more far reaching than anyone has been able to accurately detail.

I have been amazed at how an industry which enjoyed huge sales and even bigger profit opportunities reached a point in which it has failed so miserably over the last couple of decades. The business lessons that will come from this will be discussed for years to come in colleges and university across the globe.

So here are a few of my thought and opinions; the mess that this industry has found itself in is a business executives worse nightmare and could not totally be attributed to the decisions that executives at the top of these manufacturing concerns made. Although we can make a strong case that a host of decisions made by these executives have cost these industries dearly and I will outline those as I state my opinions. But the current crisis is a perfect storm of things which has created a tsunami that even the savviest of business executive could not navigate unless they had a pot load of cash. The intricate nature of all of the pieces necessary to make a vehicle, supply it with parts? transport it and retail it are interdependent and if one of these pieces doesn't work the whole system doesn't work, so even if the bailout happens for the manufacturer, what happens for the suppliers? What happens to the shipping industries? What happens next for the retail dealer body?

These issues must be addressed in a comprehensive manner otherwise the efforts to raise needed cash for the manufacturers is moot, if the suppliers can't supply and the dealerships are closed to retailing, the supply chain is seriously damaged and the image of this once prestigious industry will erode. With that, where there was once failure, a new model will emerge, the questions become how soon and who will it be?

As we examine the missteps of the Big 3 over the last couple of decades it is easy to see that misguided and uninformed executive management failed to provide a long term strategy to adjust to the ever changing retail climate. While the Big 3 were having a drunk fest on the profits that they were making off of trucks and SUV's they never addressed the changing taste of it's customer base for better styling and cost efficient vehicles in a timely manner. Not to mention the notion that in particular GM felt it was bullet proof, I asked a manufacturers representative about 10 years ago why doesn't General Motors consider the entry level buyer, the remark was along the lines of the company felt that they provided enough selection to meet there customers needs and that they could not be all things to everybody. Basically what the corporate line was they were conceding the entry level and car segment to the imports and that the segment that was in demand at the time was trucks, especially SUV's, my comments were, as a dealer we were losing sales to the imports and even more importantly we were losing a whole customer base, as anyone in retail knows that if you have an opportunity to gain there confidence when they enter the vehicle market, you share a greater chance in owning that customer for life. The bottom line, GM could not make money selling cars, they couldn't figure it out with there cost structure and probably felt that they would adapt as they went along.

I shared a similar conversation with my Lincoln Mercury representative regarding there Lincoln Town Car, my statements centered on the grounds that the Town Car customer was defecting to Lexus and BMW and the company line was similar to what my GM dealer rep stated. The point was they could have cared less that the product did not have any appeal to a large segment of the demographic they were trying to reach as there focus was elsewhere, there bottom line right now, not there bottom line in the future.

The Big 3 manufacturers failed to deliver for the future, the notion that management was not working hard and that they were mismanaged is arguable, because the demands to produce a bottom line took precedence over any long term strategy, we can argue that by this definition they were mismanaged, but in Wall Street shareholder terms they worked tirelessly to deliver profits, the pressures to satisfy Wall Street demands are staggering, this is precisely what Cerberus was trying to tackle when they purchased Chrysler, but the bottom fell out of the finance markets. Cerberus banked on it's ability to focus on a long term strategy to reinvigorate the brand and find success with innovation that imports would be hard pressed to match.

Beyond this, I find that for all of the brain trust that would be accessible to these manufacturers, no one seems to realize that a basic economic principle escaped them as they worked hard to downsize and produce profits for Wall Street. It is truly economics 101, supply and demand, a decision made by all three manufacturers to start manufacturing vehicles in Mexico and Canada has cost the manufacturers many more Billions than they realized by not renegotiating Union contracts and reducing other cost that were draining there cash at the time.

This is simple economics, just look at market share 30 years ago when these same manufacturers enjoyed a robust 75% market share and employed millions of people directly and indirectly. The cities and towns where there vehicles were made and the suppliers who supplied them were loyal customers who had a brand loyalty that was the envy of companies worldwide. I heard constant stories when I opened up a Ford dealership in a predominantly GM town and was told that I was going to have a hard time selling Fords in a GM town. The loyalty to GM was amazing, these folks knew that there bread was buttered by GM the whole town knew that there bread was buttered by GM, I am talking the bankers, the insurance agents. the real estate agents, the mom and pop shops, the friends, the families, just about everybody in the community was a loyal customer and in most of these cities and towns they enjoyed healthy 75 - 90% market share. This market penetration was not lost on the cities and towns that employed these auto workers and suppliers it extended to other cities and towns because of the extended nature of friends and families. The connection was far enough reaching that by the very nature of the benefactors who benefited from the manufacturer and supplier relationship, it influenced purchasing decisions beyond geographic borders of a particular community. The tentacles of this relationship was a tremendous business model that virtually guaranteed success, people were buying the product because they had a stake in it's success, the demand.

All of that was lost when manufacturing picked up and left these towns, it was lost on the suppliers and ancillary businesses who had a stake in the success of these manufacturers. Demand waned, not all at once, but over time as it took time to move these huge operations to other geographic areas beyond the borders of the United States.

I am confident that the accountants justified the decisions to move operations, but who provided the economic impact that these moves would have, not on the bottom line, that was an easy sell, but on the full economic impact that would be lost on all of the businesses, employees, families and friends had on the bottom line with the purchases that were made by these groups. The reasons why they were loyal were clearly related to the business model that was created inadvertently or not, it was there and strong. It was not dependent on a new model design or a freshened up product. It was dependent on the infrastructure that was created by an economic system that was rooted in economics 101. The manufacturer had a product and had loyal customers who wanted to purchase that product.

The failure of the manufacturer then failed to prop up their own economic infrastructure by adjusting to the new demands placed on it by a buying public who did not have the same loyalty that they had with the earlier business model. Instead they forgave market share as they concentrated on profits and as there grip on loyalty eroded, they justified there business case by there profit margins, these manufacturers enjoyed tremendous profit margins just a few years ago, mostly from there finance arms, but profit was profit.

Additionally the new business model was wound so tightly with what the manufacturer would have us to believe was wage disparity and although they found low wages in Mexico and Canada, particularly in Mexico, the wage scale that was paid did not allow those same workers to enjoy the fruit of there labor, namely a new car for them and one for there family, oh and one for the businessman in the community and so on.

Economics 101 people failed the Big 3 miserably and the future looks cloudy for it's survival in the near future, at least the bloated business model as we know it.

Should we bail them out? Not a blanket bailout like Chrysler had enjoyed, we must understand that there will be additional fall out even with a bailout, to think that there are some suppliers and a whole host of dealerships that will cease to exist in the coming months would be naive. But by and large the precedent was set when the financial institutions received a lifeline and they do not employ and create jobs at nearly the same rate as the auto industry, so yes they need a lifeline too. But a clear mandate on conditions and tight oversight to ensure that the bailout is going to sustain the industry now and into the future.

The bailout will work if a business model can be created that shows innovation, downsizing to meet market demands and addressing the legacy cost of the retirees, if those things are not addressed, the bailout of the Big 3 auto manufacturers will fail miserably and fast. The market demands in this environment will only deteriorate an already diminishing return. The only way outside of a bailout is a reorganization (Chapter 11) and start downsizing and starting over as we have no idea how long this downturn is going to last, GM ends up with Chevrolet and Cadillac or some model like that. If these things cannot be addressed, you might as well flush the money down the drain.

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That Car Guy

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GM has decided to delay incentive payments to it's dealer body... Read the letter that Mark Laneve GM's Vice President sent out to dealers...

BREAKING NEWS! BREAKING NEWS! BREAKING NEWS!

Here is a copy of the letter that GM's Mark LaNeve, Vice President of North America, sent to the General Motors dealer body explaining why they are delaying dealer incentive payments to them.

We are reaching the tip of the iceberg, if GM cannot find some free cash flow, they will not make it till the end of the year. The company is just burning up to much cash coupled with the worsening economy, it isn't nimble enough to make adjustments as retail sales worsen.

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That Car Guy

HERE IS THE LETTER:

GM LETTER TO DEALERS
To All Dealers:
I am writing to you to update you on changes we are going to implement with regard to the incentive payment schedule.
As I discussed in the IDL last week, one of the biggest issues facing General Motors is our liquidity. That is the cash we have on hand to pay for our regular operating expenses.
In this cash crunch, we have examined every aspect of our business in an effort to improve cash flow, including our relationships with all of our key stakeholders, like suppliers, agencies, employees and dealers. In this regard, we are implementing minor changes to incentive payment timing. So, what does this mean for you? Basically we are delaying the payment of the incentives by two weeks. Here is the new schedule that will be in effect until further notice:
· Incentive applications previously scheduled to be paid on November 28th and December 4th will be delayed to December 11th and December 18th respectively. Please see the attached payment schedule.
· Weekly incentive payments will continue thereafter reflecting one week of dealer application activity. On average, payments will be made approximately 2 - 3 weeks after a valid dealer application has been processed by GM. Effectively this is a 2 week delay from the current schedule.
· As a result of this retiming you will not receive any incentive payments on November 28th and December 4th.
This liquidity crisis has an obvious effect on all of us. As you are aware we are asking the federal government for some temporary relief. I need your continued help in talking to Congress. There are three things you need to ask your congressional delegation for:
· First, ask the government officials to approve a new $25 billion loan package to help us deal with our current liquidity crisis.
· Second, while the rules for the distinctly separate and already approved $25 billion loan package for investments in technology and enhanced fuel efficiency have been issued, we'd like to see that program move as fast as possible, so we need to encourage the government to minimize red tape and act on loan applications as quickly as they can.
· Third, the automotive industry needs some additional government support to stimulate retail sales, like making interest on car loans tax deductible, etc.
We've set up a website that will assist you in making your voice heard in Congress and to help spread the message. Please visit www.gmfactsandfiction.com. If you have not already done so, please call and e-mail your congressional representative.
This is a critical time for our industry, your dealership, and General Motors. Please continue to do what you do best, selling vehicles one customer at a time. Please make every effort to integrate your promotions with the recently announced Red Tag sales event.
Together we can work through this crisis. As always, thank you for all of your hard work and effort.
Good Selling.
Mark R. LaNeve
GMNA Vice President NA Vehicle Sales, Service & Marketing

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GM prepared to lay off 35,000 people by this weekend 11/14/08...

BREAKING NEWS! BREAKING NEWS! BREAKING NEWS!

I have been informed that General Motors is preparing to lay off more than 35,000 auto workers by this weekend. I have not been able to confirm this report, however I have been informed that GM has notified state and local agencies of it's intentions as required by law. These lay offs are individuals working mostly in the Midwest and some other parts of the country, a mix of Blue Collar and White Collar workers, an across the board slashing of hourly and salaried workers. I have not confirmed but more than likely any announcement will shut down more than a couple of manufacturing facilities.

The action is being taken to conserve GM's cash reserves to meet it's obligations over the next few months, as tries to reach a bailout deal with the Federal Government. This is a drastic move and is further evidence that the auto industry is in real trouble. This latest move to conserve cash will effect many more auto suppliers and support industries and will devastate many local economies. This move does not have a timetable to indicate if it is a permanent move or temporary.

The auto industry is definitely in peril and if it fails it will effect more than 1 in 10 workers in this country. It has been widely reported that GM will be out of cash by years end and any talk of bankruptcy will damage the company beyond repair.

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That Car Guy

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Toyota Profit drops 73.6 % for the fiscal year ending March 31, 2008... I said it before and I will say it again Toyota is headed for a big fall...

Katsuaki Watanabe

President, Toyota

Toyota is facing a current profit crisis that they have never seen before, as sales fall in North America and a rising yen.

Toyota has now reduced there year end outlook as the company headed by Katsuaki Watanabe looks to find solutions. Mr. Watanabe who was picked to continue to lead the company in continued profitability has more than his hands full. Mr. Watanabe is the Chairman of a select committee in charge of making sure that the company is stays in the black over the course of the next two years.

Toyota North American sales fell 9.4 percent between the periods of April - September 2008 and the entire company has slashed there full year global sales outlook 7.6 percent to 8.24 million vehicles for there fiscal year.

I have predicted for quite some time that the meteoric rise of this manufacturer over the last few years as the overall retail auto industry has slowed cautioned me to look at how Toyota was prepared to handle there success especially as it related to selling and marketing there product lineup. Consumers love there vehicles, however the product mix is all wrong for the current climate, we all new that the Domestic manufacturers mix was wrong, but as the love fest with Toyota has been reaching the crescendo, I saw chinks in the armour.

The market has not been keen to retailing trucks and SUV's over the last few years and with the fluctuating gasoline prices and tightened credit markets people are not buying these vehicles.

And Toyota has to sell a lot of them to remain profitable, in addition what are they going to do when these vehicles come back from there current leases as the financial industry is backing away from leases and rapidly deteriorating residuals plus used car valuations plummeting is a perfect storm for Toyota's current and future profit problems.

I don't want to say I told you so, but....

More to come...

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That Car Guy

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BRACK OBAMA Elected President of The United States... Can he save the auto industry...

Barack Obama was elected president of the United States of America on November 4, 2008. History made, and as the President elect voiced in his Election Night Speech, "only in America can his story happen".

Now, Mr. President Elect, we have a Auto Industry crisis looming and verging on catastrophe, and the industry can use a little assistance.

As this story is being written, the Big 3 auto Manufacturers are preparing for a congressional begging hearing, under the auspices of needing money for research and development, for the further development of hybrid technologies. In short they need money bad and raiding the treasury coffers is just the ticket for a low, low interest multi billion dollar loan.

Mr. President Elect can you help an industry out?

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That Car Guy

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500 All Electric BMW Mini's to be leased next year...

BMW has just announced that it will be test piloting a program which will lease 500 All Electric Mini vehicles called the Mini E in California, New Jersey, New York.

The vehicles will be powered by lithium-ion batteries that have a range of 150 miles with a maximum speed of 95 mph and will go 0-60 in 8.5 seconds.

The vehicles will have the ability to be charged overnight or a special high speed wall box charger will be able to charge the batteries in 2.5 hours. The initial test vehicles will be two seaters because of the space that is needed to house the battery pack.

The vehicles will be leased for $850.00 per month which will include all maintenance.
BMW has committed itself to producing energy efficient vehicles and reducing emissions on the road.

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That Car Guy

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BYD Hybrid Vehicle... Warren Buffet invest $230 million dollars into company...

Warren Buffet just dropped $230 million dollars for ten percent of BYD a Chinese Battery maker and Hybrid powertrain manufacturer.

It looks as if BYD is making a push to bring a dual mode hybrid vehicle to market much sooner than expected. BYD has had a launch date of 2010 for its vehicles and have not announced plans for the U.S. market. However it has been reported that it has had some of the most extensive testing of it's batteries and vehicles in China.

The batteries have a range of 62 miles and will last 300,000 miles before needing replaced, the company claims.

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That Car Guy

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Thomas Jefferson quote from 1802...

Quote of the Week: "I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around the banks will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered."

~Thomas Jefferson 1802

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That Car Guy

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Who is running this financial mess... The people want to know...

My Thought and Opinions!

The automotive news stories are flying fast and furious, whether its auto manufacturer news, auto retailing news, auto dealership news, auto consumer news, auto financing news, how gas prices are effecting the sale of trucks, hybrid electric vehicle news and the list goes on and on.

But this financial crisis is gripping everyone in this great nation of ours. I cannot remember a point in history where so much is riding on our U.S. Treasury Department to get this credit crisis right, but my gut is telling me its going to get it wrong and someone else down the line of elected officials will have to get it right or the market will make the adjustments after a slow painful period of time. I hope I am wrong.

I have watched the national media outlets and the Internet to try and discern what is going on and I have reached the conclusion that our Government has not figured out that business is the driving force of America and the millions of wage earners who work for those businesses.

When I see our U.S. Government bailing out the financial markets who have fleeced its shareholders and now the taxpayers because they have duped everyone into believing that there balance sheets were fine by packaging bad loans (not just mortgages) into AAA rated securities that our U.S. Government had lax regulations over, it makes no sense to me without providing incentives for businesses whose life's blood is having access to credit to purchase goods, inventories, provide credit for there customers and it goes on. As these lenders who have been bailed out and who did not practice good lending policies are now not lending to credit worthy businesses and ordinary citizens is nothing short of preposterous. And for our government to think that by not enforcing a more stringent requirement for these lenders to make loans to those credit worthy businesses is tragic not only for the business but for there employees who are the very men and women who will be bailing out these financial institutions with there tax payments.

Who is running this mess, it appears that our government has had to hire the same Wall Street financiers who created the mess, because they are the only ones who understand it. Wouldn't it have made since for the Treasury Department at some point in time check out those securities and balance sheets more thoroughly particularly with all the newly developed security instruments that these large finance, insurance and banking institutions were putting on there books in recent years at an alarming rate.

With the auto industry not set to recover any time soon , even with gas at less than $70.00 a barrel today, some additional stimulus is needed to assist those who will be bailing these large banking institutions out. I read a commentary recently on a another auto industry news site and a regular citizen stated why not restore the IRS auto loan interest deduction to ease some pain for consumers. Or look into tax relief for those purchasing a new vehicle over the next year, there are probably many more ideas that have a legitimate shot at stimulating things but nothing will move until the financial markets loan to Mr. and Mrs. Business Owner and Mr. and Mrs. Customer who have paid there bills on time and are now cut out of the financial marketplace.

Hears a thought why not take action with our money by taking a hard look at Wall Street and its practices of shorting stocks (manipulating) and outlandish cash incentives paid to executives and staff who are playing with other peoples money. Particularly now when we know that those incentives were paid with a padded balance sheet and negative profitability.

Now understand that I am all for people making money and lot's of it, I have no problem with healthy profits and folks earning high wages, I have a problem with the inflated, fraudulent practice of paying and rewarding businesses, financial institutions and individuals on a fictitious financial statement.

Until small business owners and the citizens of this great country demand accountability from our regulatory agencies, our elected officials and of themselves (greed is alive and well) we will be forced to relive this painful episode again, WAKE UP AMERICA! GET INVOLVED!

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That Car Guy

Check out this link from Newsweek:
Hirsh: Make Big Banks Pay for Financial Crash Newsweek Voices - Michael Hirsh Newsweek.com

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How lenders are responding to delinquent auto loans... The repo man is giving you a little more time...

Banks and Finance companies are rethinking their repossession strategy, the current financial crisis and lower wholesale values have prompted them to wait a little longer to pick up your ride.

As reported by MSNBC.com

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That Car Guy

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GMAC will not make loans to customers who's credit score is below a 700 beacon score...

BREAKING NEWS! BREAKING NEWS!

GMAC Financial Services has just announced that it will no longer lend money to prime credit customers who's credit score falls below a 700 beacon score.

In a move that will cast a large cloud over the already shaky footing of car dealers across the nation, this move will surely leave most dealers scrambling for alternative sources to assist in financing their customers. This latest move by GMAC is designed because of a lack of access to funds from the global capitol and credit markets.

GMAC has also suspended some sales bonuses to dealers for its highest volume "Platinum" dealers. While only a small percentage of dealer's business, these moves represent the latest curtailment of the fallout from the global financial crisis gripping the U.S. economy.

With these current changes in policy, those GM dealers already facing difficulty with selling cars are getting another death blow by GMAC and General Motors. This move will effect about 1 in 4 customers walking in a typical dealership seeking financing according to recent reports. What that means another 25% of customers who would have probably been provided financing by GMAC will not get financing in an already troubled retail marketplace for car dealers.

What troubles me even more for the retail auto industry particularly for the captive finance arms of GM, Ford and Chrysler is that these finance sources for dealers are their life blood.

In turbulent times the captive has been their for auto dealerships for years when banks or other lenders turned their backs and concentrated on other areas of the banking business. Captive finance companies sole customer were auto dealers, however the writing on the wall is becoming clearer, everyman (or dealership) has to be for themselves.

Dealers wake up for the sake of your businesses and employees, and let your manufacturer know that it is in their best interest to continue to support your efforts in retailing vehicles, to many livelihoods are at stake in this matter. If you don't do it no one will do it for you, in order for you to sell vehicles you have to have access to financing and this current financial crisis is hitting you harder than ever in your checkbook. You cannot survive on customers with 700 beacon scores or higher, don't wait act now by contacting your manufacturer, your captive finance company (GMAC, etc.), your congressman and other elected officials.

If you wait, it may be to late, you have to have a stimulus to get the credit market moving for the auto industry. The focus has been on residential mortgages when the focus should be wider to focus on other sectors, like the retail auto industry, commercial real estate and others. When these sectors become crippled we will be in a recession for a long, long time, as I always say, don't wait, don't hesitate or it may be to late!

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That Car Guy

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Auto Dealerships are getting hit hard by the economy...

Tough times for Chevy dealer

Check out the video from MSNBC above...

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Chevrolet Volt may get a 100mpg rating if the EPA approves of proposed testing formula...

The Chevrolet Volt may get a 100 mpg. rating, which would be a first in the world of mass produced vehicles. General Motors is requesting from the EPA, for regulatory purposes, to declare the Volt an electric vehicle. The California Air Resources Board has given the Volt preliminary certification as an electric vehicle, according to Rob Peterson, a GM spokesperson.

If given the 100 mpg rating, it would provide a strong and valuable marketing benefit for GM and be a boost for compliance and fuel economy standards.

Typically, a vehicle would be tested on a EPA test loop, that would consist of city and highway driving, to measure tailpipe emissions and pollutants and provide necessary data for calculating fuel economy. However for electric vehicles that have not emissions, the government uses a Department of Energy mathematical formula to translate energy use into an equivalent of miles per gallon of gasoline.

Using the above described formula, the all-electric Tesla Roadster, as an example gets a 244 mpg rating for the government's corporate average fuel economy program.

The Chevrolet Volt is a plug in electric hybrid, which GM describes as a "range-extended" electric. The vehicle due out in 2010 is designed to go 40 miles on all-electric power. Then a small internal combustion engine would engage to extend the range. It does not appear as reported that the test loop would provide an accurate measure of the Volt emissions and fuel economy.

A government official who wanted anonymity said that declaring the Volt an electric would not paint a true picture of the vehicle.

Rob Peterson, a GM spokesperson said that if the Volt would be certified as an electric, the GM engineers could fully utilize the powertrain's calibration for testing against that classification.

The Society of Automotive Engineers would not classify the Volt as a electric vehicle. The Society of Automotive Engineers classifies and defines a hybrid as having two sources of of energy, like gasoline and electric, of which the Volt has.

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That Car Guy

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Smart car gets even Smarter... Daimler is testing 100 battery powered Smart ED's...

Daimler is testing 100 Smart ED in and around Berlin, Germany just in time for the Paris Motor Show. The Smart ED (ED stands for electric drive) has a range of 90 miles on a charge, Berlin has several charging stations positioned around Berlin, Germany to accommodate the testing. Utility company RWE has or will be installing 500 electric charging stations throughout the city.

Daimler had been doing some real world testing in London, England since 2007 as the project has been in development for some time. In addition a diesel version of the Smart vehicle has been available for some time now and boast the lowest carbon dioxide emissions of any available production vehicle worldwide, according to Daimler.

The production schedule for the Smart ED is planned for the end of 2009 as the vehicle continues certain internal testing and fine tuning of other components to meet production version standards. The initial roll out will be limited at first and then go into full production, the company has not disclosed it's sales forecast for the model.

The company did disclose that it will begin selling a Smart two-seater in China starting in mid 2009 and expand as the market dictates and supplies increase.

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That Car Guy

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Expect to see more Retail Auto Dealerships closing in the coming months...

With tightening credit markets and poor consumer confidence, the retail auto industry will forever be changed. In a market in which a perfect storm as some have described of recession aided influence, your local Chevy, Ford and Chrysler store will be hurt the hardest.

It is currently been reported that 1 in 5 car dealerships will be closing over the next 2 - 3 months, that is nearly 4,000 dealerships across the nation. A staggering number considering the number of employees those dealerships employ and the Real Estate involved with these closings.

It has long been known that sales per outlet for GM, Ford and Chrysler stores have performed way under same store sales as compared with import stores, especially Toyota and Honda. Industry consolidation has been put on the back burner because of product issues and cash flow for the manufacturer, so natural financial attrition has reared it's head and the stores in poor performing markets will soon be gone forever.

The financial bailout that is helping Wall Street will not help this situation and I believe most people want to keep people employed and this bailout does nothing for that. What this bailout does is keep the financiers in business while working class individuals will be on the unemployment line. This crisis is only the beginning of a slow down that has been in the making for quite some time, going back over 2 years. I want to say with clarity that the bailout will not loosen access to capitol to small business, the requirements will be fundamentally tougher as we move forward period. As a result of a continued decline in real estate values and low consumer spending for an extended period of time which will take a while to recover, I predict that a turnaround will take quite some time. We should start to see some stress reduced sometime in the third quarter of 2009 with the economy breaking loose in 2010. Primarily what will be the distress in the commercial real estate markets, which no one is talking about, since the emphasis on the current crisis is with residential markets, is the catalyst for the extended recession.

When you look at the amount of dealership real estate that will be on the market, some of the most one dimensional facilities in the market place in which there will not be another auto brand to take it's place, the real estate in those market places will be hurt considerably.

The silver lining will be that as always markets will return eventually and the consolidation that has been needed for the last several years will move forward, even if it is not voluntary.

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That Car Guy

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Toyota sales fall 32% for the month of September 2008... It's worst decline since June 1987... Is this the beginning of a steep sales decline?

Toyota Motor Sales USA posted it's largest sales decline since June 1987 one of it's worst monthly sales output's in it's history of selling vehicles in the U.S., for the month Toyota sold 144,260 vehicles, significantly down from the same period last year when it it sold 213,042 vehicles. That is a whopping 32% for a car company that has been long revered as the model for all other manufacturers, now and for the future. I have long cautioned the optimism with Toyota sales success recently and I believe that this is the start of a decline that will have enormous ramifications across the board for the manufacturer. However the sky will not fall quite as hard as it will for GM, Ford and Chrysler dealers as the distribution network for these manufacturers has long been to big to accommodate lackluster sales volume to support it. Sales per unit for these manufacturers continues to erode dramatically and unfortunately a whole lot of these dealerships will soon close there doors.

The Big 6 (GM, Ford, Chrysler, Honda and Nissan) all saw sales decline for the month, but Toyota's sales decline is more troubling as I have written before, the quest to become the largest is perilous at best, plus with it's emphasis to mirror what GM and Ford have done with it's reliance on Truck and SUV's sales is more ammunition to be worried about how Toyota can turn it around.

To be optimistic, Toyota executives are making the rounds saying that Toyota and Lexus customers are concerned just like the rest of the nation about the downturn in consumer confidence, it goes without saying that overall consumers are looking to purchase energy and fuel efficient vehicles that Toyota's line up doesn't measure up outside of the Prius and Corolla and a small output of Scion's. Top to bottom Toyota's line up is heavy on Trucks and SUV's, just like the domestics.

For the record Nissan sales were down 37%, Ford 33.8%, Chrysler 32.8%, Honda 24% and GM 15.6%.

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That Car Guy

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Bill Heard Chevrolet Closes all of it's dealerships...

As reported by the Automotive News and The Atlanta Journal Constitution today, Bill Heard Chevrolet, recognized as the world's largest Chevrolet Dealer and reportedly the nations 11th largest dealer group, closed it's doors to all of it's 13 remaining dealerships and filed for Chapter 11 Bankruptcy protection on Sunday 9/28/08.

With reported sales topping $2 Billion dollars and employing more than 2700 people, the dealer group had an enormous footprint in the regional areas in which it operated. Bill Heard, Jr. is citing the difficulty in securing financing for sub-prime customers, a customer base that makes up the predominate amount of retail customers for his dealerships and the steep decline in retail truck sales.

The Heard family has been selling vehicles since 1919 when Bill Heard, Sr. used an inheritance from an uncle to establish William T. Heard Motor Co. in Columbus, Georgia, selling LaSalle, Essex and Hudson automobiles. In 1932 Bill Heard , Sr. purchased a competitor who sold Chevrolet's.

The Heard Auto Group empire spanned several states including Houston, TX, Las Vegas, NV and Orlando, FL, the company was high flying in the 80's and 90's after the company purchased two jets to fly executives around to the various dealerships.

But with the success came complaints, the Heard enterprises were often cited as the leading auto dealer for complaints as reported by the State of Georgia's Office of Consumer Affairs. The company often cited that there competitors or disgruntled customers who were unhappy because they did not receive auto loans was the source of the complaints. In June of 2008 The Council of Better Business Bureaus revoked the Heard dealership's accreditation saying in part that the company failed to correct certain issues and causes of consumer complaints.

In August of 2008 GMAC Financial Services cut off a line of credit that allowed several of the Heard dealerships to obtain new vehicles. With the continued decline in vehicle sales and consumer credit harder to come by sales at the Heard stores continued to fall dramatically auto industry analyst say.

This is just the tip of the ice burg as more major dealership will be succumbing to the harsh realities of this financial crisis and recession that we are in. I am very sorry to say, but it is a reality of the times that we are living in.

Find more info at http://www.ajc.com/ and http://www.automotivenews.com/ .

Side Note:

Reportedly a lawyer named Jon Sheldon who works for the National Consumer Law Center, a Boston advocacy group stated in The Atlanta Constitution and commented on this breaking story, that car dealers collect "significant fees for arranging sub prime auto loans", "the fees often amount to 2 percent to 3 percent of the sales price", this information is not accurate and I want to point out that when arranging sub prime loans the dealer is more often as a condition of selling the contract to the lender paying a hefty fee as a discount on the loan contract (passed on to the consumer in the purchase price). Giving him the benefit of the doubt, his comments may be geared towards a fee normally associated with prime contracts where a dealership may receive a fee from the lender as a buy rate or wholesale rate and then mark the rate up to a retail rate to the consumer, this fee is the dealers commission for arranging the loan.

If people of certain knowledge and authority choose to comment on stories published in major papers, I ask would you please get your facts straight before providing the info to the public, call me to verify first, particularly if you never worked in a dealership. I ask, how did you become an authority if you never worked at a dealership, kind of like playing a doctor on T.V..

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That Car Guy

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