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.

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Kevin Kimbrough
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.

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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.

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That Car Guy

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Loose your job, GM and Ford say no problem, we’ll make your car payment...

Following in the footsteps of Korean automaker Hyundai, General Motors and Ford Motor Company, made announcements March 31, 2009 that it would make the car payments for customers who lose their jobs, up to 12 months.

Hyundai Motor Company has had a similar program since January, 2009 and states that its sales have risen 4.9%, its program initially stated that customers could return the vehicle without damaging the customer’s credit. It has since made a temporary change that states that Hyundai will make up to three months of car payments (leases and loans).

General Motors program called GM Total Confidence Program will provide payment protection for two years. The program will make nine vehicle payments of up to $500.00 a month for its new vehicle purchasers on vehicles purchased by April 30, 2009.

Ford Motor Company announced its Ford Advantage Plan that will make vehicle payments up to 12 months with a maximum payment amount of $700.00. Customers must purchase a vehicle by June 1, 2009 and the program will accept claims until December 31, 2009.

General Motors made an additional announcement regarding Trade-In protection to customers who sometimes end up owing more on a vehicle than its current value. GM said that it would provide limited trade-in protection on GM vehicles purchased with a finance contract up to six years and would further require that customer to be midway through the contract before the trade takes place. In a further major move GM began touting its 5 year/100,000 mile powertrain warranty as the “best coverage in the industry”.

General Motors is not stating that the government recently announced that it would back the warranties of its vehicles, should the company go into bankruptcy. Mark LaNeve, GM vice president of North America vehicles sales, service and marketing stated, “We’re not using the word government or using that level of detail” were just stating that the warranties are “fully backed”.

Ford is confident that the new program along with its current line of 0% financing offers on most of its vehicle line up will shrink sales declines in recent months as stated by John Felice, General Manager of Ford, Lincoln and Mercury. He went on to say that the current offer is low risk by Ford, which is buying insurance to cover potential payouts, he would not disclose the cost of the program but described it as nominal.

These programs are anticipated to bring confidence back into dealers’ showrooms and resuscitate life back into the ailing auto industry. GM and Chrysler have 60 and 30 days respectively to provide the Federal Government satisfactory plans to turn around its companies or face bankruptcy. The lifeline that they have lived on for the last few months has tightened considerably and is near being completely cut off.

The automakers immediately began touting the programs online and consumers should start to seem them in print and radio in the next couple of days. For complete details of these programs check the company websites and ask dealers for a complete copy of these programs so that consumers maintain any compliance issue.

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That Car Guy

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The Baghdad Auto Industry is Growing And They Love Hummers...

Visit msnbc.com for Breaking News, World News, and News about the Economy

One place where the auto industry is prospering and the Hummer is still king of the road. Our auto industry can get back on track if our government puts some teeth in foreign trade agreements. Our brands have high regard in other countries, but they do not enjoy free market access like the foreign brands enjoy in the United States. The tariffs and access to building a presence presents heavy monetary obstacles that do not allow Ford, GM and Chrysler to compete in a fair and open market.

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That Car Guy

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A Nebraska Auto Dealer Faces Vehicle Theft Charges...

Nebraska auto dealer Allen Patch, the owner of a Ford Lincoln Mercury dealer and Toyota dealership in Scotts Bluff, Nebraska faces felony theft charges for the theft of 81 new vehicles from his own dealership and two of his employees .

As reported by Automotive News, the dealer used fake cashier's checks to pay a vehicle transport company to haul 9 auto carriers late at night on 3/9/09 said John Childress, chief deputy attorney in Scotts Bluff County.

Employees arrived the next day to find the dealership virtually empty of new vehicles and are shocked by the situation, especially with the management missing. The pieces are starting to fall into place as many of the employees started noticing that the owners of the store started requesting temporary titles for the vehicles that were transported away.

The FBI is reporting that some vehicles have been recovered and have been turning up in several places such as Utah, Las Vegas and 7 vehicles at Bargain Buggy's outside Salt Lake City.

Allen Patch the owner of the dealership and Rachel Falt the Controller, were arrested on Wednesday 3/11/09 and Rick Covello the General Manager turned himself in on 3/12/09.

With many businesses struggling, I hope that this is not what many business people would turned to to resolve financial pressures. There are alternatives to resolve your financial hardship including bankruptcy. The Florida Auto Dealers Association is hosting seminars on bankruptcy protection for it's members as many dealers and other businesses are facing mounting pressure because of not having access to credit to operate their businesses.

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That Car Guy

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Auditors Have Raised "Substantial Doubt That General Motors Can Continue To Operate...

BREAKING NEWS! BREAKING NEWS!

The auditors (Deloitte & Touche LLP) for General Motors Corporation has raised 'substantial doubt" that the automaker can continue to operate given the economic and sales climate facing the auto industry. It's reports indicate that it may have to seek bankruptcy protection if it is unable to fully execute a tremendous restructuring of it's debt and finances.

GM communicate the results of the audit to the Securities and Exchange Commission today. The report said "The corporation's recurring losses from operations, stockholders' deficit, and inability to generate sufficient cash flow to meet its obligations and sustain its operations raise substantial doubt about its ability to continue as a going concern."

This will no doubt be a substantial blow to its stakeholders, dealers and customers and comes in the midst of ever growing government bailouts and request for more money from the U.S. Government. The automaker has already received more than $13.4 Billion dollars in federal money and is asking for another $16.6 Billion to keep its doors open.

I have voiced strong opinion that GM as a going concern will have to sell off divisions and completely reinvent itself, Change its focus and culture, similar to what GE did a couple of decades ago. The company will be forced, against much opposition to produce and manufacture its vehicles in other parts of the world, Mexico, India, China and other areas to be shipped back for sale. The cost of labor in those markets are substantially lower and the company made huge economic mistakes beginning with exporting manufacturing to Mexico and Canada but under increase pressure for price concessions in manufacturing and an already eroded base of customers it is forced too.

The economic model that GM enjoyed throughout the history of the company was substantially diminished when the company did not examine the true economic impact of displacing whole communities and families who were building, supplying and purchasing there products.

The simple math that was examined was that they would save X amount of dollars with reduced labor cost, simple savings. However the Micro and Macro Economic impact was far more substantial, with entire communities dependent and loyal to the brands, those loyal, beholden legions of buyers were left to make new choices and develop new loyalties and in most cases those folks became bitter and punished GM with there purchasing decisions.

As market share eroded and quality issues became the focus, the brands started losing luster and customers. This will be the greatest lesson in modern business history on how a brand could be destroyed internally with bad decisions. But, it does have a chance to remake itself, just not in it's current incarnation, it will have to be a trimmed down version of itself that will have a chance to improve and grow from its past.

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That Car Guy

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Auto Dealerships Need Floorplan Assistance And Access To Credit If they Are Expected To Survive...

The retail auto industry is in the worst financial crisis in its history and the future doesn't look very promising for most auto dealers. In the early 1900's, auto dealers came to the rescue of the auto manufacturers with loans and the ability to purchase more inventory to meet the needs of the fledgling auto industry. That was when local banks and other financial sources could step and assist because of the character and contributions that the local businessman contributed, loans were based on character and importance to the community. The days have changed and have they, auto dealers are in the fight of there life to find adequate sources to fund the purchase of vehicles needed for there businesses.

Dealers have been besieged with letters changing terms of there floor plan agreements and as NADA (National Auto Dealer Association) is putting it, there is a massive pullback from captive lenders, regional banks and others who specialize in lending to auto dealers. The pullback is not subjective as dealers with excellent repayment histories and have great collateral are seeing these lenders making demands that may not be met by the auto dealers.

NADA has taken the case to the Federal Government to intervene on the dealers behalf as it sees a potential for massive closing on the near horizon. They are requesting the government provide a commitment of $1 trillion dollars to increase the issuance and sale of securitized loans for buyers and dealer inventory to stem the tide of dealership closings because of the credit crisis.

The issue stands out because if not the potential for thousands of jobs lost of dealership employees, suppliers and other associated businesses could result in a deepening recession.

With banks continuing to receive aid and it not being circulated through loans and other instruments is confounding, what is the purpose of the banks receiving aid if they will not lend to businesses and individuals. At some point the public has to cry out and tell the government to stop as it really is a waste of taxpayers dollars since they are the ones footing the bill and these funds are not benefiting them or the economy. We are only preserving jobs for the bank executives and other bank employees with these funds and if it is meant to stimulate the economy then lets get the money circulating instead of providing the banks more funds so they can purchase other banks, that truly is a waste of taxpayer money.

The outlook for many dealers remains weak as the lenders are making it very difficult to operate with tight credit restrictions coupled with the already difficult retail marketplace.

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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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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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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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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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