Monday, June 22, 2009

Big Money Coming To A Dealer Near You, 'Cash For Guzzlers" Bill Passes The Senate


BREAKING NEWS! BREAKING NEWS!


President Barack Obama will soon sign a $1 Billion Dollar bill, recently passed 91-5 by the U.S. Senate, will provide $3,500.00 to $4,500.00 cash vouchers to consumers who trade in their current vehicles for newer, more fuel efficient automobiles and here is the catcher, the trade-ins must be scrapped.

The bill hopes to provide a push to fuel lagging new vehicle sales in the U.S. auto market, the program will last about 3 1/2 months.

The program has been modeled after similar programs in Germany, France and China, which saw huge sales increases when the programs where released in those respective countries.

I will provide more details of the program as it is released.

Enjoy Today!
Kevin Kimbrough
That Car Guy

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Louisiana Welcomes V-Vehicle Co. of San Diego And The 1400 Jobs It Plans On Bringing To A Former GM Plant

T. Boone Pickens

A former Guide Lamp (a spun off GM subsidiary, known as Guide Corp and Delphi Lighting) plant based in Monroe, Louisiana is set to become the new automotive assembly plant for V-Vehicles (VVC).

The new company that is being backed by T. Boone Pickens a Texas billionaire, Ray Lane, John Doerr of Kliener Perkins Caulfield & Byers and James Davison. The operation is bringing industry veterans Tom Matano and Horst Metz to the team.

VVC as the new venture is being called "Will produce a high quality, environmentally friendly and fuel efficient car for the U.S. market", according to a company statement.

A $67 million dollar incentive package lured the company to Louisiana, which plans to make improvements to the 189 acre 425, 000 square foot facility, by expanding the facility to 750,000 square feet among other improvements.

The plant plans to employ 1400 people and a Louisiana State University report states that another 1800 indirect jobs will be created for the state.

Enjoy Today!
Kevin Kimbrough
That Car Guy

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Tuesday, June 9, 2009

The Former Head Of AT&T is Poised To Become The Next Chairman Of General Motors


BREAKING NEWS! BREAKING NEWS!
Edward Whitaker Jr., who is the former Chairman and CEO of AT&T has been tapped to become the next Chairman of General Motors when GM exit's from bankruptcy.
The announcement made today by current Chairman, Kent Kresa, informed the media that he will serve in his current capacity until the new GM exits from bankruptcy, expected later on this summer.
It has been reported that 6 other current board members will retire after the formal approval for the sale of the "Old" GM is transferred to the "New" GM by the U.S. Bankruptcy Court. The new board will consist of 13 members and will be represented by the Canadian Government and the UAW Voluntary Employees' Beneficiary Association.
Edward Whitaker Jr., who was Chairman of AT&T till 2007 holds a industrial engineering degree from Texas technological University and sits on the bards of ExxonMobile Corp. and Burlington northern Sante Fe Corp.
Enjoy Today!
Kevin Kimbrough
That Car Guy

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Real American Igenuity, Next Engines 3D Scanner...

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Monday, June 8, 2009

Hold On Wait A Minute, Supreme Court Issues A Stay, And Delays Chrysler/Fiat Deal...

BREAKING NEWS! BREAKING NEWS!

Ruth Bader Ginsberg, interrupted the U.S. Government, the new Chrysler and Fiat S.p.A. plans to emerge from bankruptcy court with a fresh start.

The stay issued a few minutes before the deadline, has momentarily delayed the merging of the new Chrysler and Fiat and may derail the deal put together by the Obama Administration to bring new life to the ailing Chrysler.

The Indiana State Pension Fund and other parties requested that the U.S. Supreme Court to review the matter This Sunday and requested that the court rule to stop the sale while the group seeks to challenge the sale of the "old' Chrysler" as the pension group believes they are due far more that what they are receiving from the proceeds of the sale as it is currently structured.

Among the various challenges include, the use of federal bailout funds being used illegally, that the sale unlawfully rewards unsecured creditors ahead of secured creditors which amounts to an illegal reorganization plan.

More to come...

Enjoy Today!

Kevin Kimbrough

That Car Guy


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Friday, June 5, 2009

Roger Penske And Penske Automotive Emerges As The Buyer For GM's Saturn Brand



BREAKING NEWS! BREAKING NEWS!


Penske Automotive and General Motors announced this morning that the two companies have reached an agreement that would GM would sell GM's Saturn brand to Penske Automotive. Penske Automotive has signed a memorandum of understanding that would sell the Saturn group to Penske Automotive, that would include the dealer network of 350 dealerships and other properties and would retain all 13,000 Saturn employees.


Roger Penske is set to retain former Chrysler Co-President Tom LaSorda who joined the company in the past month in a consulting role in the negotiating process for Saturn.

Saturn would be wholly owned by Penske Automotive and possibly looks to partner with Renault-Samsung to produce it's line of vehicles in the US for the remaining Saturn dealer body. Penske indicates that he wants to produce all vehicles for the brand here in the United States.

The deal has a 60 day due diligence clause and must meet certain obligations that is directly associated with the bankruptcy proceedings going on with GM.

Although, the Penske group has declined to inform the media of an asking price it is being reported by Bloomberg News that it is paying between $100 - $200 million dollars for Saturn.

Enjoy Today!
Kevin Kimbrough
That Car Guy

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Thursday, June 4, 2009

What Is Going On With GM Forcing Dealers To Sign Participation Agreements Or Face Termination... What's Next?



As the free enterprise system is turned upside down with the financial meltdown, mortgage crisis, bankruptcies by major corporations, including General Motors, companies across America are being forced into making major cut backs in employees, expenditures and deal with a less than stellar economic forecast in the foreseeable future.

Particularly as General Motors has gone to Washington D.C. with hat in hand and lawmakers and the current administration willfully opening up the taxpayers piggy banks, GM has taken the opportunity through the bankruptcy process to force the hand in it's favor away from many of it's stakeholders.

One of the principle stakeholders that the company has no investment in and cost the company virtually nothing as GM cost shifts at unprecedented rates, is it's dealer body. The remaining dealer body that has weathered tremendous economic conditions over the 100 years of GM existence and persevered through great adversity is now being forced to sign "Participation Agreements" or face franchise termination.

These "Participation Agreements" are requiring the remaining dealers to comply with company upgrade and program requirements that the company requires during the bankruptcy process. The remaining dealers who have received the letters have until mid-June to sign and return the agreements and if the dealers do not comply with the request, General Motors will terminate the existing franchise agreement.

To the outside world this may seem simply as a company requesting an authorized franchisee to do what is in the best interest of the company and compliance should not be questioned. However in the world of auto dealer and auto manufacturing relationships, this becomes a another tool in which a major corporation with the power and might of GM (now backed by the U.S. Government), has a new tool to impose it's will on an independent businessman or woman without regard to market conditions or an assessment of need in a particular dealerships sales area.

The heavy hand of GM dictates need, no questions asked, do this or else seems to be the new corporate by line towards factory and dealer relations. It truly is a sad day for dealers, the individuals, cities and towns that depend on these dealers now have to spend excess monies to fund projects for GM in another cost shifting move to comply with whatever the factory wants, now the independent dealer must do, or else.

The corporate position is firm, Mark LaNeve said in a company statement, "GM expects them (the dealers) to perform well on customer satisfaction scores and sales, have their facilities up to speed and not have any non-GM brands in their showrooms". Dealers should and will expect tough requirements moving forward through this process, I ask, individual markets have significantly different market expectations and no one is giving dealers any bailout or any monies at all. The remaining dealers, many of them are in perilous financial conditions currently and will get even worse if the sales climate does not improve soon.

The big twist in all of this, the biggest glaring clause in the agreement states that the dealer agrees that they will not sue the manufacturer before the dealers franchise agreement expires in 2010.

Our free market system, isn't it wonderful.

Enjoy Today!

That Car Guy

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How Not To Save Detroit As Reported By Hoofy and Boo

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Wednesday, June 3, 2009

General Motors re: invention Site


I am providing the direct link to General Motors re: invention public relations site:


This site is the portal for the public to stay up to date with what is happening with the company while it is going through bankruptcy and provide information on product development and other issues that the company wants the public to be informed about.

Enjoy Today!

That Car Guy

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Going, Going, Going, Gone, Hummer Sold To Chinese Company




BREAKING NEWS! BREAKING NEWS!

In what was a surprise announcement, a Chinese industrial company purchased General Motors Hummer Division, the buyer, Sichuan Tengzhong Heavy Industrial Machinery Company.

The privately held company and maker of construction equipment, structural components, dump trucks, fuel tankers and energy equipment was formed in 2005 with the acquisition and merger of a few companies.

The company (Tengzhong) announced that the operations of the Hummer brand will stay in the United States and current production facilities will stay in place. It went further to state the the current management and leadership of Hummer will stay in place to provide continuity and allow for a smooth transition.

Tengzhog went further to state that the new company would make investments in new product development and expand the dealer network in other countries.

Enjoy Today!

That Car Guy


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Ford and General Motors Sales Slide Slows Down While Toyota and Honda Grows...


BREAKING NEWS! BREAKING NEWS!

The Ford Motor Company and General Motors posted smaller monthly sales declines last month, while Toyota and Honda sales slipped more than 40 percent while the overall North American auto industry showed signs of improvement.
Although Chrysler saw sales slide more than 46.9 percent
This is a positive sign for the North American car market and most certainly for Ford and GM.
Enjoy Today!
That Car Guy

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Upcoming Radio Interviews...




6/2/09- Car Concerns with Harry Douglas 9am est, The Rick Roberts Show KFMB 8:35am est, The Brian Felston Show WBIG Chicago, 10:40am est

6/3/09- The Curtis Sliwa Show WABC New York 10:20pm est

6/4/09- WINK w/ Doug Kellet 6:35am est, The Corner w/Phil Mikan 2:15pm, XM Radio 2 Stations all day

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Monday, June 1, 2009

Clark Howard Is Wrong About Automobile Distribution Cost...





I heard Clark Howard on the radio this evening (6/1/09) answering a callers question on his radio show about why Chrysler and GM closed dealerships across this country, as the caller did not understand how this cost the manufacturers any money, since auto dealers are independent businesses.
Clark Howard who I find entertaining in his folksy manner and who I believe normally does a good job of explaining topics, by and large I think he gets things right when he explains financial matters to his audience. However, Mr. Howard got this question wrong, dead wrong as a matter of fact.

Clark Howard explained to the caller and his audience that the cost to the manufacturer was tied directly into the inefficient distribution system that was in place when General Motors had 60 percent market share and that the cost to get the vehicle to the dealers cost the manufacturer money by shipping vehicles to all the dealers who were in place when the company enjoyed such a large market share and by comparison the imports sell more cars per dealer but had fewer dealers.
So it cost the import manufacturers less money to ship those vehicles to there dealer network (I am paraphrasing as I do not have an exact transcript). The system was inefficient to the manufacturer and cost it money with many inefficiencies in the current system so it was necessary to reduce the dealer head count to create efficiencies in the distribution system and hence save money for the manufacturer.
Clark Howard you are wrong on so many points but I will start with just the freight, the dealers pay for the freight and do you know that the freight is the same charge for a dealer that is only 50 miles away from the freight yard as it is for a dealer that is 500 miles away, the manufacturer averages the cost and splits it among the dealer body, in addition the cost is paid at delivery. But GM doesn't pay it's freight vendor for 60 - 90 days and in some cases 120 days, how is that for cash flow, most businesses would die for this kind of cash flow.

But the cost to distribute is not entirely based on shipping cost, there is the cost to order and the cost to service the dealers account (manufacturers representative), most dealers are assigned a sales representative since the dealer is the manufacturers customer. But most dealers don't have a personal representative calling on them everyday, they are assigned a telephone number that in turn has a rep assigned to it. These dealers over 60% of the dealer body do not sell enough vehicles (per GM guidelines) to warrant a weekly or monthly visit from General Motors. In addition computers print out recommend orders to the dealers and the dealer accepts or rejects the order or amends it if he wants more or less vehicles. But just because a dealer wants more vehicles does not mean that they will get it, especially of hot items, such as the new Camaro, those request tend to go to the top selling dealers.

Clark Howard did point out that the sales per dealer at import dealerships were higher than those at domestic dealerships, this point is true, but the insinuation that this cost the manufacturer money, that is not true. This cost the dealers money, since the dealer has less opportunity to sell more vehicles and has more competition within his own dealer body to make money per vehicle. More dealers benefit consumers, because if a consumer can shop multiple GM dealerships within a smaller geographical footprint, they, consumers,save money as most same make dealerships cannibalize profits by underbidding the neighboring GM or Ford or Chrysler store. It is highly naive to think that closing dealerships benefits consumers especially on price, most consumers make a vehicle decision online and then they shop that particular brand and make of vehicle and shop same make dealerships. You do not find a person once they make up there mind on a Chevrolet Silverado, comparing prices on a Ford XLT, because the consumer in most cases has made up there mind that they are purchasing a Chevrolet before they step out and shop prices, so they compare competing Chevrolet dealers.

The issue becomes only based on customer service, which he did not point out, if a dealer is not selling more he is making less money and therefore you could make an argument that his expense to provide a high level of customer service is diminished, but even in that example the cost to the manufacturer is zero, zilch, this cost rest solely on the franchised dealership.

So a computer sends out the request and a computer fulfills the request, less manpower over the years to service a large majority of the manufacturers customers, hmm, sounds like the company has figured out a way to save money in the distribution system, lets examine the cash flow portion of this equation.

Clark Howard should have pointed out that dealers pay the shipping cost and the entire cost of the vehicle owed to the manufacturer at delivery. Wow, how is that for cash flow, I am sure that every industrial manufacturer would love a sweet deal like that, but it gets better. The manufacturer is over paid, up to 102-106% (Invoice, hold back, advertising and other built in incentives and shared cost) of the manufacturers invoice to the dealer, what a great system for the manufacturer, all at the time that the vehicle gets delivered on the dealers doorstep. The dealers bank pays those cost up front, without delay. This reminds me of the airlines, oh but I digress, how do you get your cost paid up front without delay and have this kind of positive cash flow and manage to say that the distribution system is costing you money.
But it gets even better, manufacturers by and large are notorious for paying vendors 60, 90, 120 days late, oh and it gets even better, they sometimes go back and renegotiate the cost of supplies to them after they have accepted goods, services and supplies. Yes the automobile manufacturers after accepting delivery, go back and say, well I agreed that I would pay you 'X' amount, but I can only pay you this lower amount, this is said with a heavy hand by the way, and where else is a supplier to go with door panels for a Chevy Impala, GM is it's only outlet.

But it gets even better, I said that the manufacturer is overpaid by the dealer at delivery, so therefore the manufacturer owes the dealer some money. Those monies are paid through separate accounts that the dealer sees the proceeds on when they sell a vehicle or time passes (such as hold back), but these monies are not paid right away they are still being held until the sell takes place to a consumer in most cases. These funds are paid through a weekly account and monthly account, however funds are still delayed by upwards of weeks to months in some cases.

The dismantling of the dealerships by the manufacturer is designed to provide the remaining dealers better profit opportunity so that they can invest in new facilities and upgrade, not to save the manufacturer any money because it does not cost them any money.
The issue really is, the manufacturer wants a dealer body that can make investments that the manufacturer wants as the manufacturer wants them and they need a highly profitable dealer network that can fund these investments.
Yesterday it was announced that the remaining GM dealers must sign a letter that states "that if GM requests the dealer invest in there facility or programs, that they agree to make those upgrades or they will be terminated", how is that for a thanks for assisting us as we go through bankruptcy welcome letter.
In the end consumers will pay more for vehicles as there is less competition from competing same make name plates, this should have been the story that Mr. Clark Howard should have conveyed to his audience, how does it effect the consumer.
I work tirelessly to provide you the real story behind the story, and provide a forum in which I discuss and comment on topics in which the general public is not fully informed about.
Enjoy Today!
That Car Guy

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General Motors Bankrupt! U.S. Government Expected To Take A 60 Percent Ownership Stake


BREAKING NEWS! BREAKING NEWS!


As expected GM filed for federal bankruptcy protection today, in what most analyst agree will be an organized structured bankruptcy process. The federal government is to take a 60 percent ownership stake while the Canadian Government takes a 12.5 percent stake, the UAW has a 17.5 percent stake and bondholders will have a 10 percent ownership stake.

What should be the largest industrial bankruptcy in U.S. history should pave the way for a new GM if the Obama administration plan moves through federal court smoothly as expected.

A Chief Restructuring Officer has been appointed, Al Koch Managing Director of AlixPartners, who steered Kmart through it's Chapter 11 reorganization. Mr. Koch is expected to be the point person in dismantling the "Old" GM (parts, assets, etc.) into the "New" GM, he is also expected to steer the management team assembled to close the "Old" GM when the company emerges from bankruptcy.

The bankruptcy will effect many constituents, including auto warranties (the federal government is currently backing the warranties), retirees pensions, auto suppliers, auto dealerships, shareholders (expect nothing), employee 401k plans and others.

The company should emerge much leaner which should include Chevrolet, Buick, Cadillac and GMC, the companies other brands are expected to be sold off and if buyers can't be found they will be shuttered.

Once the icon of American Industry and the world, GM is far from it's glory days, can it survive and thrive once again, I believe it will, to survive in this current economic crisis, it had to become smaller and leaner and this bankruptcy filing was the only way to get all of it's stakeholders to agree on the restructuring necessary, which includes the Federal government assistance. It would have never survived without the U.S. Government intervening on it's behalf and many more companies would have been brought down with it, including Ford Motor Company.

Enjoy Today!

That Car Guy

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