The Truth About Cars » Dealer News http://www.thetruthaboutcars.com The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. Wed, 16 Apr 2014 04:59:29 +0000 en-US hourly 1 http://wordpress.org/?v=3.8.1 The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars no The Truth About Cars editors@ttac.com editors@ttac.com (The Truth About Cars) 2006-2009 The Truth About Cars The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars » Dealer News http://www.thetruthaboutcars.com/wp-content/themes/ttac-theme/images/logo.gif http://www.thetruthaboutcars.com/category/news-blog/dealer-news/ Dealers Still Waiting For Replacements, DeGiorgio Linked To Original Design And Upgrade http://www.thetruthaboutcars.com/2014/04/dealers-still-waiting-for-replacements-degiorgio-linked-to-original-design-and-upgrade/ http://www.thetruthaboutcars.com/2014/04/dealers-still-waiting-for-replacements-degiorgio-linked-to-original-design-and-upgrade/#comments Mon, 14 Apr 2014 14:00:51 +0000 http://www.thetruthaboutcars.com/?p=797362 GM ignition diagram

Automotive News reports dealers are still waiting for the ignition switches meant to replace the out-of-spec switch at the center of the ongoing recall crisis at General Motors. The switch was to have arrived at dealerships beginning this week, yet most dealers are in a “holding pattern” on deliveries. Once the parts do arrive, service bays will begin work on affected customer vehicles immediately before turning toward the used lot, where vehicles under the recall are currently parked until the customer vehicles are fixed.

As for GM seeking help from NASA with its woes, however, The Detroit Bureau learned from NASA Deputy Associate Administrator for Communications Bob Jacobs that his employer “is not working with General Motors on its ignition switch issue”; a separate source claimed “low-level” discussions between the two were taking place, but hasn’t gone any further thus far. He added that while NASA would be more than willing to help GM, a formal request would require some coordination between the agency and both the National Highway Traffic Safety Administration and the Justice Department so as to not interfere “with their own, ongoing investigations of the GM ignition switch recall.”

Speaking of the Justice Department, Reuters says five senators, including Richard Blumenthal of Connecticut and Barbara Boxer of California, penned a letter asking Attorney General Eric Holder to “intervene in pending civil actions to oppose any action by GM to deny responsibility for damages”:

We write to request your immediate intervention and assistance on behalf of victims of severe damage – financial harm, physical injury, and death – resulting from serious ignition switch defects in General Motors (‘GM’) cars.

The aforementioned actions may be in reference to the liability shield erected upon the automaker’s 2009 exit from Chapter 11 bankruptcy, where “New GM” is only responsible for the claims linked to the switch from June 2009 forward.

That division within the company may be more of a thin line than a 4-inch-thick steel plate, however, as Autoblog reports an investigation by the House Energy and Commerce Committee uncovered an email exchange between the NHTSA and GM last July to discuss the latter’s “indifferent attitude toward safety issues” face-to-face. The agency cited the automaker’s slow response to urgent matters and preference toward regional recalls over full recalls as two examples of GM not having changed much since leaving bankruptcy.

Bloomberg adds the agency itself didn’t do enough to take GM to task on its attitude toward safety, though, based on a memo unearthed by the committee regarding airbag failures on a number of Chevrolet Cobalts and Saturn Ions with warranty claims being four times’ higher than similar competitors. The decision to investigate those claims was rejected by a review group within the NHTSA, believing the airbag issue “did not stand out” among other incidences of failure.

Automotive News reports the committee also found an email chain that ties GM engineer Ray DeGiorgio — who denied having knowledge of the April 2006 change to the ignition without a change to the part number — with said change. In short: DeGiorgio signed-off on both changes to the spring and plunger to help prevent the slipping issue now linked to 13 fatalities and 33 accidents, as well as on the decision to retain the original number issued to the part he designed for the Saturn Ion as his first project for GM in 2001.

Regarding the Ion, Reuters says the troubled development of the compact vehicle — and the equally troubled relationship between GM and supplier Delphi — may have laid the groundwork for the current recall crisis. The supplier alerted the automaker about the out-of-spec switch, but fearing an embarrassing introduction, money issues, and the possible wrath of then-vice chairman of product development Bob Lutz, GM pressed ahead with the switch as-is.

 

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Wash. Governor Inslee Signs Pro-Tesla Legislation, Hackers Find Ubuntu Inside http://www.thetruthaboutcars.com/2014/04/wash-governor-inslee-signs-pro-tesla-legislation-hackers-find-ubuntu-inside/ http://www.thetruthaboutcars.com/2014/04/wash-governor-inslee-signs-pro-tesla-legislation-hackers-find-ubuntu-inside/#comments Mon, 14 Apr 2014 13:45:11 +0000 http://www.thetruthaboutcars.com/?p=797458 Ubuntu_GNOME_13.10_ScreenShot

Automotive News reports Washington state governor Jay Inslee signed legislation that would allow Tesla to continue with its direct-sales business model within the state while also clarifying current law that favors traditional franchise dealership networks by preventing other automakers from following in Tesla’s path. The EV automaker thanked the state government “for supporting a culture of innovation and ultimately making the right decision for consumers” with the introduction of the bill into law.

In other government news, the California Air Resources Board is considering cutting EVs priced at $60,000 and above from the agency’s Clean Vehicle Rebate Program as funding continues to run low, according to Capitol Weekly. Though the move would be temporary, the cap would push-out both the Cadillac ELR and Tesla’s Model S and upcoming X, a move that Tesla feels is disappointing:

[CARB] aims to paint Tesla as the sole purveyor of EVs (electric vehicles) to the wealthy, while disregarding the fact that individuals of similar affluence may still continue to receive a rebate by purchasing a different EV.

Finally, Autoblog Green reports a group of tech-savvy Tesla owners have dug into their EV’s console via its exposed Ethernet connector, discovering a subsystem powered by Linux distribution Ubuntu. The individual behind the dig, known only as ‘nlc,’ was contacted by the automaker through its service center, warning him that his exploration could void his car’s warranty should he persist.

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GM Seeks Aid From NASA, Issues New Ignition-Related Recall http://www.thetruthaboutcars.com/2014/04/gm-seeks-aid-from-nasa-issues-new-ignition-related-recall/ http://www.thetruthaboutcars.com/2014/04/gm-seeks-aid-from-nasa-issues-new-ignition-related-recall/#comments Fri, 11 Apr 2014 09:00:47 +0000 http://www.thetruthaboutcars.com/?p=793690 gm-headquarters-logo-opt

Autoblog reports 2.19 million of the same vehicles under the current General Motors ignition recall are under a new ignition-related recall, as well. The new recall warns of a problem where the key can be removed without the switch moved to the “off” position. According to GM, the automaker is aware of “several hundred” complaints and at least one roll-away accident resulting in injury, and is instructing affected consumers to place their vehicles in park or, in manuals, engage the emergency brake before removing the key from the ignition until repairs are made.

Regarding the original recall, The Detroit News reports has called upon NASA’s Engineering & Safety Center to review whether or not the 2.6 million affected Chevrolets, Pontiacs and Saturns are safe to drive with just the ignition key in position. The agency, which has performed similar reviews in the past, will look over the work performed by the automaker in the latter’s effort to make the affected vehicles safe to drive, as well as review its overall approach to safety concerns.

On the financial front, Automotive News says GM will take a $1.3 billion charge in Q1 2014 for the original recall, 40 percent greater than the $750 million charge originally estimated at the end of last month. The charge — which includes repair costs and loaners for affected owners — comes on the heels of a $400 million charge tied to currency challenges in Venezuela, the total sum of which threatens to knock out most if not all of the automaker’s Q1 2014 earnings set to be announced toward of end of this month.

Meanwhile, The Detroit News reports Michael Carpenter, the CEO of former GM financial arm Ally Financial, says his company will complete its exit from government ownership by Election Day of this year:

The U.S. Treasury is quite happy today. My own view is they will definitely be out before the election and we are close to having Treasury and U.S. government ownership in the rearview mirror.

By the end of trading Thursday, Ally’s IPO netted taxpayers $17.7 billion with a profit of $500 million on the $17.2 billion bailout of the consumer finance company, while the Treasury currently holds 17 percent of its remaining shares after selling 95 million for $25 per share at the opening bell; share price fell 4.4 percent to $23.50 at the closing bell.

In lawsuit news, Automotive News reports GM settled with the families of two Saturn Ion drivers who lost their lives in 2004 when their respective cars’ airbags failed to deploy. The two fatalities were identified by the publication as the earliest of 13 linked to the out-of-spec ignition switch at the root of the current recall crisis. In addition, while one case was settled out-of-court in September of 2007, the second case drew its settlement terms after the automaker filed for bankruptcy in June of 2009, placing the plaintiffs and their lawyer with other unsecured creditors.

The Detroit News reports Cadillac and Buick are at the top of their respective lists for dealer service satisfaction as determined by the J.D. Power & Associates U.S. Customer Service Index Study. Cadillac’s dominance over the luxury brand category comes as former No. 1 Lexus — who held the top spot for five consecutive years — falls to third behind Audi, while Buick leads Volkswagen, GMC, Mini and Chevrolet in the mass-market brand category.

Finally, Autoblog reports the last of eight Corvettes swallowed by the sinkhole that formed inside the National Corvette Museum in Bowling Green, Ky. back in February has been recovered. The 2001 Corvette Mallett Hammer Z06 will need extensive work performed to bring it back to its original state, but not before it joins its brethren in a new exhibit entitled “Great 8″ beginning next week. The exhibit will last until the museum’s 20th anniversary in late August, at which point GM will begin restoration work on the eight Corvettes.

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GM Fined $28k By NHTSA, Places 2 Engineers On Paid Leave http://www.thetruthaboutcars.com/2014/04/gm-fined-28k-by-nhtsa-places-2-engineers-on-paid-leave/ http://www.thetruthaboutcars.com/2014/04/gm-fined-28k-by-nhtsa-places-2-engineers-on-paid-leave/#comments Thu, 10 Apr 2014 14:56:25 +0000 http://www.thetruthaboutcars.com/?p=793305 Rencen. Picture courtesy GM

Associated Press reports General Motors has placed two engineers on paid leave as “an interim step” in the investigation conducted by former U.S. attorney Anton Valukas. Spokesman Greg Martin declined to name the two engineers in question.

The Detroit News reports GM has been fined $28,000 by the National Highway Traffic Safety Administration for failing to answer in full by the April 3, 2014 deadline the 107-question survey sent to the automaker regarding the recall of 2.6 million vehicles with an out-of-spec ignition switch linked to 13 fatalities and 33 accidents. Furthermore, the agency will fine GM $7,000/day so long as the automaker continues to fail to comply with the inquiry in full, and may call in the Justice Department to sue GM for answers and fines.

As for how this came to pass, GM says it couldn’t provide all of the answers as the outside investigation by Valukas had yet to be completed. Meanwhile, spokesman Greg Martin defended the automaker’s response to the survey, citing the millions of related documents already delivered to the NHTSA as proof of compliance.

The agency may not be alone in its dimming view of GM, however, as concerns running through Wall Street have sent price targets of GM stock downward amid gloomy forecasts of rising costs, diminished earnings and other challenges outside of the recall crisis. Analysts for Morgan Stanley and RBC Capital Markets have dropped their target prices of $49 and $47 per share to $33 and $46, respectively, with the former downgrading GM stock to “underweight.”

Without the crisis, however, the automaker still has rough seas ahead after emerging from government ownership, with Wall Street fearing for the long-term future of GM in the face of strengthening Japanese automakers — bolstered by a weakened yen — dependency on its joint ventures in China, problems in Europe and other international markets, and domestic challenges from Ford and Tesla.

In other financial news, Bloomberg reports former GM financial arm Ally Financial’s exit from U.S. Treasury ownership would allow Ally to take on more subprime auto loan borrowers. The finance company currently holds 11 percent of its portfolio in such loans, and at $25/share in its IPO, the $2.83 billion raised would give Ally a boost in attracting more subprime borrowers.

However, both CreditSights Inc. analyst Jesse Rosenthal and independent banking consultant Bert Ely shared concerns regarding the finance company’s reliance on auto loans, especially in the subprime market, citing the lack of diversification other consumer-finance companies or large banks possess in weathering the credit risk subprime auto lending could bring. Bloomberg adds that Ally’s relationship with GM — 39 percent of its lending and leasing portfolio came from the automaker in 2013 — could add an additional risk in light of the latter’s ongoing recall crisis.

Finally, Automotive News presents a history of failure between GM and its suppliers over the functionality of the ignition switch in Chevrolet Cobalts and Saturn Ions, leading to numerous changes, complaints, claims and, a decade later, a recall crisis that may bring more pain than the automaker could bear.

The first problem — Ion owners not being able to start their vehicle in cold weather — prompted the 2004 redesign currently linked to the recall, then quietly changed in April 2006 when the second and third problems — Cobalt owners not being able to shut off their vehicle unless they accidentally bumped their knee into the ignition — led to the conclusion by two engineers that the switch was mounted too low, and that it was “falling apart.”

Furthermore, in the deposition given by engineer David Trush in the case regarding the 2010 death of Brooke Melton behind the wheel of her Cobalt, Trush stated GM had its supplier at the time make replacement parts for the first ignition problem alongside a service bulletin asking dealers to install the new part in affected cars; the automaker changed suppliers in 2008, citing deficiencies in quality and production in the former supplier.

Lastly, nearly two years before the recall in April of 2012, GM began offering to replace the switch on 2007 – 2009 Cobalts and Pontiac G5s and 2008 – 2012 HHRs for free, citing a “binding condition” with the cylinder and its housing which could prevent basic functionality of the ignition system.

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Off-Lease Consumers Add Fuel To New-Vehicle Demand http://www.thetruthaboutcars.com/2014/04/off-lease-consumers-add-fuel-to-new-vehicle-demand/ http://www.thetruthaboutcars.com/2014/04/off-lease-consumers-add-fuel-to-new-vehicle-demand/#comments Wed, 09 Apr 2014 14:15:54 +0000 http://www.thetruthaboutcars.com/?p=791313 Cadillac-Pre-owned

New-vehicle sales are on the rise due not only to demand originally held back by the Great Recession, but by consumers coming off of their leases for their next latest and greatest.

Automotive News reports Manheim Auctions chief economist Tom Webb proclaimed that off-lease volume will be on par with new-vehicle sales throughout 2014 before surpassing sales the following year and into 2016, forecasting over 3 million new leases signed in that year alone:

If you consider that new vehicles are increasingly being bought by high-income households that do, in fact, want to trade on a regular cycle, then they should be in a lease, not a retail contract.

Webb added that since residual risk “always has to reside somewhere,” the perfect place for such risk would be none other than the lessor “who has a portfolio of vehicles and hopefully also has a professional remarketing arm.”

Speaking of remarketing, Webb says the certified pre-owned market is in good health, with sales of CPO vehicles outpacing the off-lease market for the third consecutive year in 2014, with the latter providing the foundation stones for the former.

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GM Dealers Deal With Part Backlog, CEO Asked To Back Rental Car Bill http://www.thetruthaboutcars.com/2014/04/gm-dealers-deal-with-part-backlog-ceo-asked-to-back-rental-car-bill/ http://www.thetruthaboutcars.com/2014/04/gm-dealers-deal-with-part-backlog-ceo-asked-to-back-rental-car-bill/#comments Wed, 09 Apr 2014 14:03:25 +0000 http://www.thetruthaboutcars.com/?p=791337 ChevyDealership03.jpg

Automotive News reports the repairs of some 2.6 million vehicles affected by the 2014 General Motors ignition switch recall will be delayed by one week as the needed part slowly enters into the automaker’s dealership network. Though most dealers thought they would be receiving the part Monday, GM spokesman Kevin Kelly insisted the part was set to arrive sometime during “the week of April 7″:

We plan to send letters this week informing affected customers that parts are arriving at dealerships and to schedule a service appointment with their dealer. Repairs are likely to begin to follow soon after the customer letter mailing.

Until then, dealerships may face service backlogs, especially with affected vehicles already on the lot that cannot be sold until they are repaired, which can only happen once customer vehicles go through the 30-minute swap. On the other hand, while dealers have noticed some frustration from their customers, the majority of their base was found to be patient with the status of the repair plan.

Over in Washington, D.C., The Detroit Press reports Senator Barbara Boxer of California sent a letter to GM CEO Mary Barra asking her to back a bill that would keep recalled rental cars under recall off of the road. The bill would require affected rentals to be grounded within 24 to 48 hours upon receipt of a safety recall notice, as well as establish a temporary protocol evaluating safety risk if parts are not available right away, and allow the National Highway Traffic Safety Administration the oversight to investigate rental company safety practices for the first time.

Though the bill — named after two sisters who lost their lives in 2004 when their rental car caught fire and crashed into a truck — has seen support by rental companies, the Alliance of Automobile Manufacturers — where GM is a member — has stymied the legislation out of a fear that automakers would be forced to fix rental fleets first before individual-owned vehicles, as well as potential lawsuits from the rental companies over lost revenues.

Detroit Free Press reports the NHTSA is calling upon engineers to be the agency’s eyes and ears in the battle against defects like the one linked to the current recall crisis. Lead attorney Kevin Vincent laid his case out before attendees of this year’s SAE World Congress:

Each manufacturer is actually responsible for identifying defects… and promptly reporting those defects to NHTSA. The message I have delivered to senior lawyers at the automakers is that they need to have practices and procedures in place so that when they find a problem, they will respond.

The first line of defense against safety defects is not my agency — not NHTSA. You are truly the first line of defense… to prevent safety defects from reaching the American public.

The safety agency has been taken to task as of late regarding the GM recall as well as those related to Jeep, and has been asked by the Center for Auto Safety to investigate an airbag deployment issue with 2003 through 2010 Chevrolet Impalas.

Automotive News says the 2014 Chevrolet Equinox and its GMC Terrain twin both received a top safety pick+ award from the Insurance Institute for Highway Safety in surviving the group’s new small-overlap crash test designed for midsize SUVs. The results were linked to improvements in the front structure and door-hinge pillars.

Finally, The Detroit News reports GM will pay a dividend of 30 cents per share for Q2 2014 on June 26 to all shareholders of record as of June 10. The dividend is the second consecutive payment made by the automaker to shareholders — the first, worth 30 cents/share for Q1 2014 earnings, was paid last month — and will cost $1.8 billion annually.

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Chevrolet Offers Incentives, Extends Truck Month To Take Back Sales Crown http://www.thetruthaboutcars.com/2014/04/chevrolet-offers-incentives-extends-truck-month-to-take-back-sales-crown/ http://www.thetruthaboutcars.com/2014/04/chevrolet-offers-incentives-extends-truck-month-to-take-back-sales-crown/#comments Mon, 07 Apr 2014 13:02:44 +0000 http://www.thetruthaboutcars.com/?p=788658 2014-Chevy-Silverado _12_

Though Ram knocked Chevrolet off the monthly sales throne for the first time since August 1999, the brand is ready to reclaim their part of Truck Mountain by offering incentives and extending their annual Truck Month into April.

Automotive News reports brand vice president Brian Sweeney threw down an additional $1,000 on the hoods of 2014 Silverado double-cabs in pursuit of “the heart of the pickup market.” Furthermore, Chevy’s second Truck Month boosts incentives offered last month, dropping a maximum discount of $8,974 into the bed of the Silverado 2500 HD crew cab or $8,162 for the light-duty double cab V8 model.

Lease offerings were also boosted for the reclamation battle, as one email from a Northeastern United States gave details for a regional lease agreement of $269 per month with $1,900 due upon signature; the Ram’s terms were $259 per month, but with a higher down payment of $2,999 upon signature.

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GM Shareholders Unflappable As Recall Repairs Begin This Week http://www.thetruthaboutcars.com/2014/04/gm-shareholders-unflappable-as-recall-repairs-begin-this-week/ http://www.thetruthaboutcars.com/2014/04/gm-shareholders-unflappable-as-recall-repairs-begin-this-week/#comments Mon, 07 Apr 2014 12:58:22 +0000 http://www.thetruthaboutcars.com/?p=788714 GM-building-US-Flag

In spite of General Motors losing $3 billion in shareholder value over four weeks since the recall crisis began, Bloomberg reports investors are holding onto their shares in the belief the automaker will recover from the debacle. Though questions about the delay persist, most shareholders are pleased with how CEO Mary Barra is guiding her company through the maelstrom.

Other factors in the massive stock decline include overseas challenges and weaknesses in product lines, including bringing European profits into the black, while Chevrolet’s Silverado fights Ram’s offerings in order to regain its traditional place in the monthly sales charts.

For those affected by the recall, CNN Money reports repairs of the out-of-spec ignition switch found in a handful of 2003 – 2011 vehicles will begin Monday, though the repairs will focus on the original recall of 2003 through 2007 models first, with fixes due later for 2008 – 2011 vehicles. GM advises consumers to make an appointment with their dealers before bringing in their affected vehicles. The repair is free of charge, and will take 30 minutes to accomplish, though customers may have to wait longer due to “scheduling requirements,” according to the automaker.

Speaking of the dealers, Bloomberg reports GM dealers as a whole have had to “act as therapists” for their customers who, like owner John McEleney of Clinton, Iowa, have been bombarded by recall news on a daily basis:

It’s a little bit unnerving because GM is on the front page — not of the business section, but the front page of the paper and the lead story on the news every day. People are concerned because they’re GM owners and they see all this publicity regarding GM.

Regarding the emergency injunction that would have forced GM to request affected consumers to park their cars until they were repaired, Detroit Free Press says U.S. District Judge Nelva Gonzales Ramos in Corpus Christi, Texas needs more time to thoroughly examine the brief filed on behalf of 15 families.

As for the National Highway Traffic Safety Administration, New York Times reports the agency and Congress both face questions over the former’s handling of the GM recall, from funding and punishments available to the NHTSA, to how the agency couldn’t find a clear link between the out-of-spec ignition and undeployed air bags in 2003 through 2006 Chevrolet Cobalts and Saturn Ions. Consumer advocate and former NHTSA chief Joan Claybrook offers this summation:

General Motors made the part, they designed the part, they sold the part that was defective and they knew about the problem fairly early on. And I believe that General Motors has the greatest culpability. But there is a really important story about NHTSA’s failure to handle this properly.

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GM Adds Clinton Media Director To Crisis Team http://www.thetruthaboutcars.com/2014/04/gm-adds-clinton-media-director-to-crisis-team/ http://www.thetruthaboutcars.com/2014/04/gm-adds-clinton-media-director-to-crisis-team/#comments Fri, 04 Apr 2014 19:27:37 +0000 http://www.thetruthaboutcars.com/?p=787369 Original 5 tower complex, John Portman, 1977

In an interview with New York Magazine, consumer advocate Ralph Nader said General Motors CEO Mary Barra has “a good opportunity” to make serious changes to the corporate cost culture that gave rise to the 2014 ignition recall crisis. Suggestions include appointing an independent ombudsman with a direct line to the president and CEO for engineers who need to speak out about possible problems without having to go through “cost-concerned bosses,” as well as holding accountable all involved in any cover-up of any potential product issues.

Nader also believes the federal government should go after personal prosecutions of those tied to the current recall, but adds that unless the media keeps putting the pressure on the Justice Department to do so, the only thing that could come is a settlement in the vein of the one reached between the agency and Toyota earlier this month.

As for where Barra was during the 14 years it took for the recall to surface, Forbes wove her 34-year-long résumé with General Motors into the recall timeline. In short: Barra would have been made aware of the ignition switch problem as early as 2011, when then-CEO Dan Akerson made her head of global product development, yet it was only in December of 2013 — when the torch was passed from Akerson to Barra — when the new CEO was presented with an analysis of the issue linked to the Chevrolet Cobalt; the recall decision would be presented to Barra by product development chief Mark Reuss at the end of January 2014.

Detroit Free Press reports the National Highway Traffic Safety Administration received 200,000 from GM in response to the 107-question survey aimed to drill down what had happened leading up to the recall, as explained in a statement issued by the automaker:

The company has submitted some 200,000 pages of documents and will provide today answers to nearly 65% of the questions. GM is cooperating fully with NHTSA and is keeping the agency apprised at every step of its progress as it works to respond to the remaining questions within the Special Order.

The agency will release the documents upon vetting, a process that could take weeks to accomplish.

Meanwhile, Bloomberg reports the task force appointed by the Obama Administration to manage GM’s bankruptcy proceedings were not made aware of the out-of-spec ignition and subsequent reports linked to its failure. The task force spent more time focusing on what brands needed to be cut and how pensions and health care would be handled, with then-current product-liability claims — totaling $414 million pre-bankruptcy — given a broad look without looking ahead toward future claims.

Within the Capitol, the nation’s lawmakers are considering higher fines and criminal liability in the wake of the two congressional hearings earlier this week. Senator Jay Rockerfeller of West Virginia plans to propose an update to the 2000 TREAD Act in the aim of giving the NHTSA more firepower to take automakers to task over failures to properly and quickly handle potential problems, while regulators would like to boost the agency’s fine limit from $35 million to $300 million.

Back in Detroit, GM has hired crisis-communications expert and former director of media affairs for the Clinton Administration Jeff Eller to join the growing team of experienced crisis managers — including Kenneth Feinberg and Anton Valukas — assembled to guide the automaker through the ongoing recall debacle. Eller worked on the Firestone-Ford crisis in 2000, and will have a number of GM’s allies inside the Beltway on his side.

GM’s partner in the maelstrom, Delphi, may emerge less unscathed if the supplier’s stronger bankruptcy protections hold according to Reuters. Unlike the automaker, Delphi did not assume successor liability during its 2009 bankruptcy proceedings, forcing lawyers to convince any judge who hears their cases that Delphi covered-up the design flaw, and thus, should force “New Delphi” into becoming liable.

Speaking of lawsuits, Bloomberg reports U.S. District Judge Nelva Gonzales Ramos in Corpus Christi, Texas is preparing to consider issuing an order to GM to instruct all affected consumers to park their vehicles until the flaw is fixed. The order is part of a class-action lawsuit filed by Robert Hilliard on behalf of Charles and Grace Silvas, seeking as much as $10 billion in lost resale value for the vehicles under the recall. The Detroit News adds Hilliard sent an email to Barra with evidence from an affidavit illustrating that even with the key stripped down to the bone, the switch will still shut the vehicle off, including the airbag system.

Finally, Reuters reports GM dealerships may have more than polar vortices to weather on the sales floor as a result of the recall. Dealers have reported fielding as many as 50 calls per day from concerned consumers over what to do with their affected vehicles, as well as offering more rental cars and taking in more trade-ins. Spokesman Jim Cain offered his view on the situation facing dealers:

Time will tell. In the long term, we will be judged on how we take care of customers. We have advertising incentives and other tools to use if there’s evidence that sales in the short term may be impacted. But we haven’t seen that.

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Tesla Appealing NJ Direct Sales Ban Ruling http://www.thetruthaboutcars.com/2014/04/tesla-appealing-nj-direct-sales-ban-ruling/ http://www.thetruthaboutcars.com/2014/04/tesla-appealing-nj-direct-sales-ban-ruling/#comments Thu, 03 Apr 2014 12:30:35 +0000 http://www.thetruthaboutcars.com/?p=786673 Tesla brown front quarter

With the Ides of April fast-approaching before direct sales come to an end, Tesla filed an appeal with the New Jersey Superior Court asking to overturn a government ruling that banned the automaker from directly selling vehicles to consumers in its two New Jersey stores.

Automotive News reports Tesla proclaimed the action by the New Jersey Motor Vehicle Commission is not legal and harms consumers in the state:

As the [Motor Vehicle Commission] itself recognized when it licensed two Tesla locations in 2012, New Jersey law was clearly written to prevent car manufacturers from exploiting their greater market power to compete unfairly against dealership franchises that sell their cars, something that simply doesn’t apply to Tesla because it has no dealership franchises.

In response, New Jersey Coalition of Automotive Retailers president Jim Appleton felt confident that “the courts will recognize the compelling state interest in regulating the sale and distribution of new motor vehicles,” and that Tesla would fail to overturn the ruling. He added that NJCAR wasn’t out to push the EV automaker out of the state, but only wanted Tesla to play by the same rules as those in the state’s franchise dealer network.

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General Motors Puts Stop-Sale & Recall On Chevrolet Cruze Due To Axle Failure [W/ Full Text] http://www.thetruthaboutcars.com/2014/04/general-motors-puts-stop-sale-recall-on-chevrolet-cruze-due-to-axle-failure-w-full-text/ http://www.thetruthaboutcars.com/2014/04/general-motors-puts-stop-sale-recall-on-chevrolet-cruze-due-to-axle-failure-w-full-text/#comments Tue, 01 Apr 2014 20:24:27 +0000 http://www.thetruthaboutcars.com/?p=785465 2014-Chevrolet-CruzeRS-010-medium
Last weekend, Chevrolet issued a stop-sale 2013-2014 Chevrolet Cruze equipped with the 1.4L turbo-four with no initial reason for the action. A stop-sale is an order given by a manufacturer to dealers to cease the sales of a specific model of car to repair a problem. It can be anything from minor quality issues, up to major mechanical maladies. While not an uncommon event, this comes on the heels of a tidal wave of expanded recalls and investigations centered around the maligned Delta-Platform cars. TTAC was able to obtain a copy of the stop-sale notice for the B&B, which pinpoints the failure to the front-passenger half-shaft not meeting GM specifications, with the half-shafts possibly fracturing as the result. 

It is notable that this is the second time the Cruze was recalled for this exact issue last September. In GM’s letter to the NHTSA on September 23, 2013, GM noted the response time from the initial reports in July of 2013 to the initial stop-sale and recall in September of 2013 after receiving field report of the half-shafts breaking. GM found that poor quality control from the parts supplier lead to micro fractures inside the shaft. It’s unknown at this time why GM has again initiated this recall, but GM plans to release a full chronology in two weeks.

Below is a full text copy of the current stop-sale notice to dealers, and a partial copy of the recall letter which details the failure; the portion of the document left it is merely repair instructions for the technician.

GM CUSTOMER CARE AND AFTERSALES
DCS3173
URGENT – DISTRIBUTE IMMEDIATELY

Date: March 28, 2014

Subject: 14079 – Safety Recall — Stop Delivery Until Safety Recall Has Been Performed On Vehicle
Front Axle Right Half Shaft Fracture

To: All Chevrolet Dealers

Attention: General Manager, Service Advisor, Service Manager, Parts and Service Director, Parts Manager, New Vehicle Sales Manager

General Motors is announcing Safety Recall 14079 today. Please see the attached bulletin for details.

Vehicles involved in this recall were placed on stop delivery March 27, 2014. Once the service procedure contained in the bulletin has been performed on the vehicle, the vehicle is released from stop delivery and the vehicle can be delivered to the customer.

Customer Letter Mailing
The customer letter mailing date has not yet been determined.

Global Connect (GWM)
The “Investigate Vehicle History” (IVH) screen will be updated week of March 24, 2014. A list of involved vehicles in dealer inventory is attached to this message. Please hold all warranty transactions until the VIN appears in IVH.

Campaign Initiation Detail Report (CIDR)
The CIDR will be available in the near future.

END OF MESSAGE
GM CUSTOMER CARE AND AFTERSALES

And, finally, the recall report. Full text with photos detailing how to diagnose whether or not your Cruze has the defective half-shaft is here.

PRODUCT SAFETY RECALL

SUBJECT: Front Axle Right Half Shaft Fracture

MODELS: 2013-2014 Chevrolet Cruze Equipped with 1.4L Turbo Engine (LUV)

CONDITION

General Motors has decided that a defect which relates to motor vehicle safety exists in some 2013-2014 model year Chevrolet Cruze vehicles, equipped with a 1.4L turbo engine (LUV). The interconnecting tubular bar on the front right axle half shaft on some of these vehicles may not meet GM specification and could fracture and separate. If this occurs while driving the vehicle, steering and braking control would be maintained; however, the vehicle would lose power to the wheels and would coast to a stop. If a vehicle with a fractured half shaft is parked on an incline without the parking brake applied, the vehicle could move unexpectedly, resulting in a possible crash or injury to pedestrians.

CORRECTION

Dealers are to inspect and, if necessary, replace the half shaft.

[...]

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Tesla Stays In NY, Loses Key China Exec http://www.thetruthaboutcars.com/2014/03/tesla-stays-in-ny-loses-key-china-exec/ http://www.thetruthaboutcars.com/2014/03/tesla-stays-in-ny-loses-key-china-exec/#comments Mon, 31 Mar 2014 12:59:13 +0000 http://www.thetruthaboutcars.com/?p=785169 Tesla Model S

Automotive News reports Tesla and Greater New York Automobile Dealers Association reached a compromise agreement over the weekend that would allow the EV automaker to keep their five stores while prevent Tesla or any other auto manufacturer from establishing more direct-sale stores in the state. In the words of Governor Andrew Cuomo:

Today’s agreement reaffirms New York’s long-standing commitment to the dealer franchise system, while making sure New York remains a leader in spurring innovative businesses and encouraging zero emissions vehicle sales.

Meanwhile, Tesla spokeswoman Liz Jarvis-Shean tells Bloomberg the Gigafactory will source supplies of graphite, cobalt et al from within North America, citing cost and environmental issues behind the decision. Currently, the majority of graphite found in the automaker’s battery packs come from synthetic sources in Europe and Japan, with future natural sources expected to come from Canada.

Over in China, where graphite mines and processing plants are being closed over air-quality issues, Tesla’s general manager Kingston Chang resigned his position for personal reasons. His departure, which the automaker declined to expand upon to Bloomberg, comes just as CEO Elon Musk prepares to expand further into the country’s auto market, who predicts sales to be on par with those in the United States as early as next year.

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GM Hits Social Media, As Part Number Debacle Adds Confusion http://www.thetruthaboutcars.com/2014/03/gm-hits-social-media-as-part-number-debacle-adds-confusion/ http://www.thetruthaboutcars.com/2014/03/gm-hits-social-media-as-part-number-debacle-adds-confusion/#comments Thu, 27 Mar 2014 13:32:08 +0000 http://www.thetruthaboutcars.com/?p=781977 2007 Chevrolet HHR 2LT Special Edition

The latest development in the GM ignition recall fiasc

Automotive News reports Barra recorded and released five short videos for GM’s YouTube channel in an ongoing attempt to minimize the damage to her company’s reputation in the court of public opinion. The overall message of the videos is that the public is the automaker’s compass, and GM will develop “a world class process” of vehicle safety evaluation so that nothing resembling the current crisis occurs in the future.

However, Bloomberg says this trial by fire is only the beginning for Barra’s tenure as GM’s CEO. Slow sales in the United States due to harsh winter weather at the start of the year, mitigating losses in Europe, restructuring of global operations in Australia and South Korea, and currency challenges in Russia and South America all have made their impact on GM’s stock value, falling 14 percent since Barra took the reins in mid-January 2014. She also must contend with Volkswagen — who knocked GM down to third in the Big Global Three trio last year — by maintaining or increasing pace in China against the Germans by as much as 10 percent.

Over in Washington, D.C., safety advocates have found the NHTSA lacks the resources needed to properly investigate provided data that could lead to a prompt recall, just as Congress has done all they could to strengthen the agency via the 2000 TREAD Act established in the wake of the 2000 Firestone-Ford recall case.

Currently, the NHTSA’s Office of Defect Investigations saw their numbers fall from 62 to 51 investigators over the years, and operates on an annual budget of $10 million since 2005. Meanwhile, the number of registered vehicles increased to 248 million in the same time, a number proving difficult to monitor — resulting in the recall crises experienced by Toyota and GM — as Advocates for Highway and Auto Safety president Jackie Gillan explains:

The idea of $10 million for an office that’s in charge of the safety of all these vehicles, undertaking investigations and doing the recalls, it’s just ridiculous. You look at the number of people working on this, you look at their inadequate funding, and you think to yourself, no wonder this is happening over and over again.

For their part, NHTSA spokesman Nathan Taylor defended his agency’s record, citing 929 recalls involving over 55 million vehicles in the last seven years as a result of their investigations. In addition, he says automakers paid a total of over $85 million in fines over delays, and notes fatalities related to defects are at an historic low. However, Taylor believes the process could be improved:

[The agency] pursues investigations and recalls wherever our data justifies doing so. NHTSA is constantly looking for ways to improve our process so we can better identify serious safety defects.

On the lawsuit front, Charles and Grace Silvas of Texas have asked U.S. District Judge Nelva Gonzales Ramos to force GM to issue a “park it now” warning to all affected owners not to drive their vehicles until the ignition switch is fixed. The possible class action suit — which could net up to $10 billion in damages — was filed not due to any fatalities experienced by the Silvas, but because the defect’s concealment led to lost resale value.

USA Today reports that Barclays analyst Brian Johnson is predicting that GM will create a settlement fund between $1 billion and $1.5 billion for affected customers, on top of banking $1 billion to pay the potentially sizable fine issued by the U.S. federal government when all is said and done. Johnson says the funds could be funneled through “Old GM,” which would maintain the wall protecting “New GM” from pre-bankruptcy liabilities.

Reuters and USA Today both warn of potential headaches dealerships and repair shops will likely experience as the recall crisis continues to unfold.

One major headache for dealers and independent parts stores will be sifting through the spare parts room to find which ignition is the improved part, and which one is the defective unit. The problem comes from both sharing the same part numbers — GM 10392423 and Delphi D14611 — a move that is considered to be counter to standard operating procedure when fixing a defective part.

For repair shops, this means the only way to tell which part is which — outside of possessing forensic engineering tools — is by disassembling every single ignition related to the recall.

The second issue: Finding enough loaner vehicles for every affected customer. Thus far, GM received 9,000 requests for such vehicles, but despite calling upon rental companies such as Enterprise and Hertz for backup, dealers are having a hard time placing customers in loaners, including Kolar Chevrolet general manager Dwayne Haapanen:

There’s been a bit of a struggle finding the cars. I burned up all my loaner fleet, and we’ve been renting from Enterprise — and now they are out of cars.

Consumers are also having a hard time obtaining a loaner, though quantity isn’t the only issue. GM’s hotline for recall questions and loaner requests has seen long waits for callers, as well as a lack of thorough training for those manning the phones, sometimes leading to request denials. The automaker is adding staffing and improving training to alleviate the problems.

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Gov. Perry Pushing For Direct Sales In Texas To Attract Gigafactory http://www.thetruthaboutcars.com/2014/03/gov-perry-pushing-for-direct-sales-in-texas-to-attract-gigafactory/ http://www.thetruthaboutcars.com/2014/03/gov-perry-pushing-for-direct-sales-in-texas-to-attract-gigafactory/#comments Thu, 27 Mar 2014 13:09:14 +0000 http://www.thetruthaboutcars.com/?p=782065 Texas Governor Rick Perry circa January 2014

With the possibility of bringing Tesla’s Gigafactory — and its 6,500 jobs — to Texas, Governor Rick Perry is actively pushing for legislation which would do away with the direct-sales ban currently preventing the EV automaker from doing more than presenting their wares to local customers.

The Dallas Morning News reports Perry took his stance on the issue to FOX Business’ “Opening Bell” earlier this week, explaining that it was in the state’s “best interest” to revisit what he says some people would view as “antiquated protections” for Texas’ franchise dealership network:

The people of Texas will say, ‘We don’t need to be protected. We like to be able to negotiate straight away.’ I think it’s time for Texans to have an open conversation about this, the pros and the cons. I’m gonna think the pros of allowing this to happen outweigh the cons.

Currently, Tesla has two showrooms in Houston and Austin, with a third soon to arrive in Dallas. As of this writing, however, none of the trio can do more than provide visitors with information about Tesla’s lineup, prompting interested parties to complete their purchase online or in a state more favorable to direct sales.

The move to allow direct sales would add another incentive for Tesla to build their Gigafactory in Texas, which Perry proclaims would give his state a much-desired cachet. Dallas-Fort Worth Metropolitan New Car Dealers Association president Lee Chapman, however, disagrees with the kind of incentive Perry wishes to use in luring Tesla:

The system we have was put into effect by the state to protect consumers and dealers. [Dealers are] always open to discussion, [but] at this point, we have not been given anything to discuss other than the right to sell cars here in exchange for a plant.

 

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Tesla Business Model Reconsidered In NJ, Talking Point In 2016 Presidential Election http://www.thetruthaboutcars.com/2014/03/tesla-business-model-reconsidered-in-nj-talking-point-in-2016-presidential-election/ http://www.thetruthaboutcars.com/2014/03/tesla-business-model-reconsidered-in-nj-talking-point-in-2016-presidential-election/#comments Wed, 26 Mar 2014 13:30:25 +0000 http://www.thetruthaboutcars.com/?p=781313 tesla-model-s-logo

Even though the door on Tesla’s direct sales model appeared to be closed in New Jersey, the Garden State is reconsidering its position just as the automaker’s way of doing business could find itself a major talking point in the 2016 run for the White House.

Automotive News reports that New Jersey Assemblyman Tim Eustace introduced a bill which would allow Tesla to continue selling its cars to the state’s consumers. The bill, which is the third in a series of actions related to the currently strained relationship between the two parties, comes on the heels of the state’s Motor Vehicle Commission’s decision to reinforce existing law banning direct sales by automakers, which would have unintended consequences for the local economy according to Eustace:

Because of this new rule, an interested buyer looking for more fuel-efficient, environmentally-friendly vehicle options can go look and ask questions about an electric car in New Jersey, but will have to go to Pennsylvania or New York if he or she actually wants to buy the car. How does sending business to other states help New Jersey’s economy?

For their part, the New Jersey Coalition of Automobile Retailers, lobbying on behalf of the state’s franchise dealer network, stressed that while they have no intention of driving Tesla out of business, they only want Tesla to play by their long-established rulebook. Association president Jim Appleton is willing to work with the automaker to a point, however:

We hold as sacrosanct the franchise system. There is no resolution to this problem that allows Tesla to operate outside the franchise system forever. But we’re open to accommodations if Tesla can make the case that there’s a reason why they can’t.

Meanwhile, Tesla has a new ally in the form of U.S. Senator Marco Rubio of Florida, who, in his support for the business model, puts him in opposition of New Jersey governor Chris Christie in the run to represent the Republican base against the Democrat nominee during the 2016 U.S. presidential election.

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GM Rallies Rentals, Braces For Further Investigation http://www.thetruthaboutcars.com/2014/03/gm-rallies-rentals-braces-for-further-investigation/ http://www.thetruthaboutcars.com/2014/03/gm-rallies-rentals-braces-for-further-investigation/#comments Mon, 24 Mar 2014 12:35:40 +0000 http://www.thetruthaboutcars.com/?p=779185 Saturn-Ion-RedLine

General Motors has issued a new recall for 355 vehicles, while also facing a possible lawsuit by an investor over “immorality”. GM may also face a new probe involving the automaker’s bankruptcy and its relation to the original recall that thrust GM into the headlines, just as the agency responsible for investigating the problem at GM faces an audit from the Department of Transportation.

The New York Times reports the Justice Department has added an additional probe into their ongoing investigation of the 2014 recall of 1.76 million vehicles over a defective ignition switch linked to 31 crashes and 12 deaths.

The probe questions whether GM knew everything about the problem going into the 2009 bankruptcy — the automaker said they were alerted as early as 2001 — and failed to disclose the defect in full to both the federal government and the public during bankruptcy proceedings. This separate probe is being handled by the same group of FBI agents and federal prosecutors in New York who also brought forth the fraud case against Toyota that ended in a $1.2 billion settlement last week.

Meanwhile, Automotive News reports Transportation Secretary Anthony Foxx has asked the Department of Transportation’s inspector general Calvin Scovel to conduct an audit of the National Highway Traffic Safety Administration as to whether or not the agency properly looked into the issues leading up to the February 2014 recall, in light of the aformentioned crashes and deaths. The audit, according to Foxx, is to ensure “that DOT and NHTSA have a full understanding of the facts regarding the GM recall and can take corrective actions to enhance NHTSA’s safety function to the extent necessary and appropriate.”

On the investor front, Bloomberg reports a GM investor has filed a lawsuit against both the automaker and current CEO Mary Barra over every recall issued since late February this year.

In filing his complaint with the U.S. District Court in Detroit, George Pio called the automaker’s lack of immediate action “illegal and immoral,” and that news of the recalls, investigations et al surrounding GM as of late “triggered a sharp decline in the company’s share price, wiping out billions in shareholder value.”

The suit is filed on behalf of any individual who purchased stock between November 17, 2010 and March 10, 2014; no money damages have been specified.

Adding fuel to the fire are two stories from Edmunds, with the first related to the original recall regarding free loaner vehicles to those affected while their own vehicles are serviced beginning next month.

GM has called upon Enterprise, Hertz, Avis and other rental companies to help the automaker assemble a fleet for affected owners to use until the ignition switch is replaced. Though the original policy states GM owners are placed into GM vehicles, the scope of the original recall means if no related loaners are available, owners will be placed into vehicles from Ford, Honda, Chrysler et al. Underinsured owners will see a temporary boost in coverage from the automaker, as well. One source in the rental world tells us that this has been a massive undertaking for GM – with so many owners of the affected cars being under 25 (the minimum rental age at many companies) arranging coverage for these owners has been an extraordinary task.

As for the second report, Edmunds says 355 vehicles will be recalled within the week due to a transmission shift cable adjuster defect that could lead to a handful of 2014 models rolling away from where they were parked. Affected models include the Buick Regal, LaCrosse, Verano and Enclave; Chevrolet Cruze, Malibu and Traverse; and the GMC Acadia. All affected have the issue in their automatic transmissions.

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Tesla Reader’s Digest Vol. 1: The Politics Of Dancing http://www.thetruthaboutcars.com/2014/03/tesla-readers-digest-vol-1-the-politics-of-dancing/ http://www.thetruthaboutcars.com/2014/03/tesla-readers-digest-vol-1-the-politics-of-dancing/#comments Mon, 24 Mar 2014 12:19:42 +0000 http://www.thetruthaboutcars.com/?p=779249 Tesla Roadster and Model S

In the first edition of the Tesla Reader’s Digest, Washington state makes nice with Tesla’s business model as Arizona ponders doing the same — while fighting three other states for the right to host Tesla’s Gigafactory, no less. Meanwhile, General Motors pens a letter to Ohio asking the state to force the EV automaker to play by the same rules as they already do, pricing of the Model S falls in Europe, and Edward Niedemeyer offers his view on how Tesla can topple the auto dealer monopoly.

The Detroit News ran our former EIC (originally published at Bloomberg View) a few inches to explain the situation Tesla faces with its revolutionary-for-the-United States model of doing business from the rent-seeking opposition found in the entrenched dealer franchise system. Though the automaker has already been locked out of Texas and New Jersey due to such opposition thus far, Niedermeyer offers that CEO Elon Musk has a few potential allies — including Fiat Chrysler Automobiles, eBay, Costco and TrueCar — who could help him and the U.S auto industry as a whole bring about a future where all automakers can sell directly to customers.

Reuters and CNN Money report the states of Washington and Arizona are or soon will be signing legislation allowing Tesla to market directly to consumers; previously, the automaker’s sole Washington direct-sales efforts were in Seattle, whereas Arizona only allowed showrooms, pushing sales across the border to California.

The Washington legislation came as a result of campaigning from that state’s Tesla-owning constituents with help from a lobbyist, which will allow the automaker to expand into more cities while forcing every other automaker — upcoming or long-established — to sell through franchise dealerships, a situation advocates claim will need to be remedied when legislatures return to Olympia next January.

Arizona, however, is coming around to help improve the state’s chances in becoming the home of Musk’s grand energy project, the Tesla Gigafactory. Autoblog Green also reports Tucson has not only a suitable site for the 1,000-acre, 10 million-square-foot battery factory, but the tax incentives to lure 6,500 jobs away from Nevada, Texas and New Mexico.

As for the other three states, New Mexico is working on an economic package, while Nevada remains silent on their moves, and Texas has incentives galore in spite of banning direct-sales, the latter of which could hurt the state’s chances.

Speaking of direct-sale bans, Automotive News reports General Motors penned a letter to Ohio governor John Kasich over concerns his state could open the door to Tesla. GM’s senior vice president of global communications and public policy Selim Bingol explains his employer’s viewpoint:

We understand discussions are ongoing over legislation which could provide a broad exemption for a single manufacturer, Tesla Motors Inc., to circumvent long-established legal precedent on how new motor vehicles are marketed, sold and serviced in your state.

GM is not alone, as lobbyists representing the Ohio Automobile Dealers Association warned the state legislature last week that by allowing Tesla to sell directly to consumers, it would allow all automakers to do the same, casting the franchise model to the wind.

Finally, Tesla may be fighting a different battle in Europe. Inside EVs reports pricing of the Model S has dropped in Germany and Netherlands 6,700 euro and 4,000 euro respectively to 65,300 euro and 66,200 euro. Though Tesla cites currency appreciation against the dollar, low demand and lack of a sufficient Supercharger network may be to blame.

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NADA, House Committee Press CFPB On Lending Rules http://www.thetruthaboutcars.com/2014/03/nada-house-committee-press-cfpb-on-lending-rules/ http://www.thetruthaboutcars.com/2014/03/nada-house-committee-press-cfpb-on-lending-rules/#comments Thu, 20 Mar 2014 09:00:25 +0000 http://www.thetruthaboutcars.com/?p=776401 CFPB

Uncertainty on auto lending rules resulting from the Consumer Financial Protection Bureau’s methodology behind consent orders issued to lenders found overcharging or otherwise misleading minority borrowers has prompted calls from the National Automobile Dealers Association and the House Financial Services Committee for a detailed explanation from the bureau on said methodology.

Automotive News reports complaints made by NADA, the U.S. Chamber of Commerce, the auto finance industry and Congress regarding the CFPB’s enforcement of consumer protections, all citing a lack of clarity behind the enforcement, as NADA general counsel Andy Koblenz explained during a panel discussion at a conference held this week by the U.S. Chamber:

It’s almost like the cop standing by the side of the road, pulling people over for speeding. Someone says, “OK, I want to comply. What’s the speed limit?” And they say, “I’m not going to tell you. After the fact, I’ll look back and I’ll tell you whether you were speeding.” That’s not fair, and it’s ultimately going to drive credit out of the market.

In 2013, the bureau issued guidance upon findings of dealerships charging minority consumers higher dealer reserve than other similar borrowers, proclaiming the action a “disparate impact,” and thus, illegal discrimination.

The specific charge prompted the House Financial Services Committee to send a letter to CFPB director Richard Cordray requesting a thorough explanation on the bureau’s methodology for determining an occurrence of disparate impact, with answers due no later than March 13; the deadline passed with no response, and a subpoena may soon follow.

In defense, CFPB deputy director Steve Antonakes said the bureau has, and intends to use in full, five regulatory tools in fighting disparate impacts: rulemaking; consumer complaints; supervision and examination; enforcement; and consumer education. Further, the bureau itself has said in the past it has used proxies in determining legally protected classes in lending.

However, Capital One chief counsel Andy Navarette — whose employer refunded $140 million for alleged misleading marketing involving product add-ons for credit cards after the bureau issued a consent order to the lender — would like to see the CFPB make “a broader use of the rulemaking tool” in future decisions related to auto lending:

You have 5,000 auto lenders in this country. Tackling individual institutions via supervision or enforcement may change behaviors at those individual companies. But it’s not going to move markets in a way that actually produces consistent rules of the road for the industry.

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GM Hires New Safety Czar As Barra, Service Bulletins Go Under The Microscope http://www.thetruthaboutcars.com/2014/03/gm-hires-new-safety-czar-as-barra-service-bulletins-go-under-the-microscope/ http://www.thetruthaboutcars.com/2014/03/gm-hires-new-safety-czar-as-barra-service-bulletins-go-under-the-microscope/#comments Wed, 19 Mar 2014 17:15:11 +0000 http://www.thetruthaboutcars.com/?p=775713 File photo of General Motors logo outside its headquarters at the Renaissance Center in Detroit

General Motors CEO Mary Barra has appointed executive Jeff Boyer to the newly created position of Vice President, Global Vehicle Safety. Meanwhile, Barra and her company’s use of service bulletins in lieu of recalls will both go under the microscope, with the new CEO likely to testify before Congress next month.

Automotive News and Just-Auto report Boyer will provide vehicle safety updates on a frequent and regular schedule to GM’s senior management, board of directors and Barra:

This new role elevates and integrates our safety process under a single leader so we can set a new standard for customer safety with more rigorous accountability. If there are any obstacles in his way, Jeff has the authority to clear them. If he needs any additional resources, he will get them.

Boyer, Barra and a number of GM execs are likely to testify before Congress sometime next month over the decade-delayed recall of 1.76 million vehicles affected globally by a flawed ignition switch that could deactivate engine power and airbags if the key is weighed down by unessential items, with her statements to highlight GM’s focus on the consumer in light of the recall going forward.

Meanwhile, the automaker’s use of service bulletins in lieu of potentially costly recalls — such as the aforementioned ignition recall — may cost GM more than the $35 million in fines the National Highway Traffic Safety Administration could levy on the automaker in terms of reputation, though they may not be alone in sharing the blame.

In 2005 and 2006, two bulletins related to the switch were sent to dealerships with instructions for dealers to ask drivers to remove unessential items from their key rings. Bulletins in general are issued for non-safety issues affecting a vehicle, and are made know only to service shops and the NTHSA, though a 2012 law entitled Moving Ahead for Progress in the 21st Century — requiring the NTHSA to create a searchable public database by 2013 — would have solved the problem had the agency fulfilled the mandate.

According to Center for Auto Safety executive director Clarence Ditlow, bulletins such as the two issued by GM over the switch result in only 10 percent or fewer affected vehicles undergoing necessary repairs, while recalls as administered by the NTHSA through the Motor Vehicle Safety Act pull in 70 percent.

Ditlow also says automakers — looking out for financial incentives — generally seek out other fixes short of an official recall, placing the NTHSA in the position of negotiator when a recall is needed, leading to the situation where the agency itself is under the microscope as Congress probes into why the NTHSA didn’t push hard enough for a recall as early as 2007, when two deaths in Wisconsin related to the switch were brought up before GM executives.

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Viper Production Sidelined For Two Months Due To Slow Sales http://www.thetruthaboutcars.com/2014/03/viper-production-sidelined-for-two-months-due-to-slow-sales/ http://www.thetruthaboutcars.com/2014/03/viper-production-sidelined-for-two-months-due-to-slow-sales/#comments Wed, 19 Mar 2014 09:15:53 +0000 http://www.thetruthaboutcars.com/?p=775697 anodized-carbon-srt-viper-la-auto-show-04

Due to slow sales, Fiat Chrysler Automobiles will halt production of the SRT Viper for the next two months, with 91 hourly workers temporarily booted to the unemployment line.

Automotive News reports the Conner Avenue Assembly Plant in Detroit will go into hibernation beginning April 14, with production to resume June 23.

Speaking of 91, that was the number of Vipers sold in the United States between January and February of this year, with a 412-day supply of 756 unsold vehicles as of March 1.

Factors leading to the temporary shutdown include unseasonably cold weather, and the habit of dealers keeping the doors locked on the exotic car, hindering sales. SRT brand head Ralph Giles aims to change the latter through a factory team tour of the U.S. already underway in the South, allowing customers to take the Viper for a test-drive. The tour will expand north once warmer weather arrives.

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GM Recalls 1.55 Million More, Investigations, Fence-Mending Ongoing http://www.thetruthaboutcars.com/2014/03/gm-recalls-1-55-million-more-investigations-fence-mending-ongoing/ http://www.thetruthaboutcars.com/2014/03/gm-recalls-1-55-million-more-investigations-fence-mending-ongoing/#comments Tue, 18 Mar 2014 14:00:49 +0000 http://www.thetruthaboutcars.com/?p=774729 Saturn Outlook

As the recall of 1.76 million General Motors vehicles over a faulty ignition switch — a recall possibly prompted by a Georgia lawyer’s own dealings — continues to hammer away at the automaker’s “new” image, and with dealers doing all they can to mend fences between GM and its customers, three separate recalls have been issued to a total of 1.55 million vehicles.

Automotive News and Bloomberg report CEO Mary Barra asked GM executives to bring forward and give more attention to any products under review at a faster clip. The result? A recall affecting the following in the United States market:

  • 303,000 2009 – 2014 Chevrolet Express/GMC Savana full-size vans, whose instrument panels will be “reworked” to meet current crash standards meant to protect unbelted passengers
  • 63,900 2013 – 2014 Cadillac XTS sedans, whose brake boosters may suffer from corrosion issues, leading to overheating; two fires thus far have been linked to the defect
  • 1.18 million 2008 – 2013 Buick Enclave/GMC Acadia/Chevrolet Traverse/Saturn Outlook crossovers, whose wiring harnesses for the seat-mounted side airbags may be pinched, leading to non-deployment

Meanwhile, dealers are preparing for next month, when customers whose vehicles fall under the ignition switch recall will begin arriving to have the issue fixed. Though the repair will take around 30 minutes to complete, customers will be offered loaner cars if needed, as well as towing services and, should the customer wish to replace the car rather than the switch, a $500 discount toward a new car.

In turn, dealers will be at the front line of mending the fence between “New GM” and customers affected by the recall. Sam Slaughter, owner of Detroit-based Sellers Buick-GMC, says dealers will need to place the ignition repairs at the top of their service schedules, as well as lend a sympathetic ear to customers feeling burned by the automaker.

Meanwhile, Virginia-based Chevrolet-Cadillac dealer Jim Stutzman worries the recall, as transparent as it has been as of late, is throwing a spanner into the works:

It seems like every time we start to move forward, another shoe drops that puts us right back into that world view that says “These guys are total screw-ups. They just can’t operate like Honda or Toyota.” It’s a shame.

That said, the recall may have been delayed longer, and affected fewer customers, had not Georgia lawyer Lance Cooper — who had filed a wrongful-death lawsuit against GM on behalf of the family of Brooke Melton, whose 2005 Chevrolet Cobalt lost power due the faulty switch, ultimately leading to her death — pushed U.S. government regulators into looking closer into the issue via a letter issued shortly after the first recall of 800,000 vehicles.

In the lawsuit, Cooper procured more than 32,000 pages of similar lawsuits and other documents, as well as gathered depositions and assessments from several engineers and dealers regarding the switch. The lawsuit was settled last September two months before the suit’s trial date for an undisclosed amount, though a related suit — focused on Thornton Chevrolet and their failure to correct the problem that led to Melton’s death — could still go to trial.

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Tesla Hires Renault-Nissan Communications Director http://www.thetruthaboutcars.com/2014/03/tesla-hires-renault-nissan-communications-director/ http://www.thetruthaboutcars.com/2014/03/tesla-hires-renault-nissan-communications-director/#comments Thu, 13 Mar 2014 12:35:00 +0000 http://www.thetruthaboutcars.com/?p=770985 tesla-model-s-10

In preparation to enter the Chinese market while battling state governments of direct sales, Tesla has hired Renault-Nissan communications director Simon Sproule to the role of vice president of communications and marketing for the EV automaker.

Bloomberg reports Sproule’s experience gained from stints with Microsoft, Jaguar, Ford and Renault-Nissan may be of benefit to Tesla, according to AutoTrends Inc. principal Joe Phillippi:

In many respects he’s got the perfect background. He’s been on the tech side, he’s been on the international auto side and he works for a CEO with peripatetic qualities who runs more than one company.

Sproule will be responsible for marketing Tesla to Europe and China — who aim to increase sales of its Model S 55 percent through exports to the two markets this year — while aiding in the fight with various state regulators over direct sales to customers, including this week’s blow-up between the automaker and New Jersey.

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GM Offers Cash Allowance, NHTSA Cites Lack Of Sufficient Data Amid Recall Fallout http://www.thetruthaboutcars.com/2014/03/gm-offers-cash-allowance-nhtsa-cites-lack-of-sufficient-data-amid-recall-fallout/ http://www.thetruthaboutcars.com/2014/03/gm-offers-cash-allowance-nhtsa-cites-lack-of-sufficient-data-amid-recall-fallout/#comments Thu, 13 Mar 2014 11:39:58 +0000 http://www.thetruthaboutcars.com/?p=770961 2007 Pontiac G5

1.37 million owners in the United States affected by the ignition switch recall issued by General Motors last month will be offered $500 toward the purchase or lease of a new vehicle just as the National Highway Traffic Safety Administration cites a lack of sufficient data as the reason said recall wasn’t issued sooner.

Automotive News and Bloomberg report the cash allowance offer will apply to 2013 through 2015 Chevrolet, Buick, GMC and Cadillac models, with the following explanation issued to dealers in a notice delivered March 4:

GM will not market or solicit owners using this allowance. We ask that you not market to or solicit these customers either. This allowance is not a sales tool; it is to be used to help customers in need of assistance.

For owners opting to have their affected vehicles repaired, a free loaner will be made available for the duration of the repair, as well as free towing to the dealership if so requested. Said repair work is scheduled to begin early next month.

Meanwhile, NHTSA acting administrator David Friedman explained that a lack of sufficient data regarding the ignition switch behind the recall prevented his organization from forcing such a recall out of GM sooner than last month:

If we had that information, if GM had provided us with timely information, we would have been able to take a different course with this. We took several efforts to look into this data.

At the end of the day, with the data we had at that time, we didn’t think that was sufficient to open up a formal investigation.

The NHTSA is facing criticism over their lack of action as of late from both Congress — who are launching their own investigation over the recall — and former employees, such as former administrator Joan Claybrook. Claybrook asked the Transportation Department’s inspector general to look into why “no one [was] evaluating why NHTSA failed to carry out the law” in regards to the issue, which had been known in some capacity to the organization since 2006 when investigators were sent to document a high-speed fatal crash in Wisconsin involving a Chevrolet Cobalt and two women resulting from the switch cutting off engine power while preventing air-bag deployment.

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Tesla Vacating New Jersey Market Amid Direct-Sales Ban http://www.thetruthaboutcars.com/2014/03/tesla-vacating-new-jersey-market-amid-direct-sales-ban/ http://www.thetruthaboutcars.com/2014/03/tesla-vacating-new-jersey-market-amid-direct-sales-ban/#comments Wed, 12 Mar 2014 11:10:33 +0000 http://www.thetruthaboutcars.com/?p=770345 tesla courtesy nicholas fleury via flickr

In the wake of the New Jersey Motor Vehicle Commission’s decision to enact new rules banning direct sales of vehicles by automakers, Tesla may have no other recourse than to vacate the local market come April 1.

Automotive News reports Governor Chris Christie’s administration faces accusations by Tesla from the decision, stating the automaker and the New Jersey Coalition of Automotive Retailers both agreed they would “address their issues in a more public forum: the New Jersey Legislature.”

In turn, the governor’s office responded by reminding Tesla that in order to conduct their brand of selling in New Jersey, the automaker “would need to engage the Legislation” in drafting a bill that would allow for direct sales.

Begging to differ, Tesla vice president of business development Diarmuid O’Connell explained his employer’s standpoint:

The statute in New Jersey plainly allows Tesla to be licensed to sell cars there. Indeed, the Motor Vehicle Commission has licensed Tesla under that statute ever since October 2012, and any suggestion that Tesla was told “since the beginning” about any problem with its ability to be licensed there is false. The only thing that has changed is the Christie Administration’s sudden decision to go around the Legislature in an attempt to enact a rule that the statute doesn’t permit. Worse, it has done so without any reasonable notice or even a public hearing.

NJ CAR president Jim Appleton, however, believes the commission is doing what is mandated in the enforcement of the statute. He doesn’t want to see the automaker leave the state, only wanting to help Tesla “operate in a manner consistent with the law.”

The commission’s decision places New Jersey on a list of states barring direct sales, including Arizona, Ohio and Texas.

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Tax Refunds, Easy Credit Boost Used Car Prices http://www.thetruthaboutcars.com/2014/03/tax-refunds-easy-credit-boost-used-car-prices/ http://www.thetruthaboutcars.com/2014/03/tax-refunds-easy-credit-boost-used-car-prices/#comments Mon, 10 Mar 2014 13:42:53 +0000 http://www.thetruthaboutcars.com/?p=768770 145640_cars_KJH_

A combination of income tax refunds issued in January and February with accessible financing have boosted used-car prices overall in the first two months of 2014.

Automotive News reports prices rose 1.1 percent year to date, and 0.8 percent over the past month, according to the Manheim Used Vehicle Value Index. Meanwhile, the IRS processed 40.4 million returns in the first two months of the year, refunding $125.8 billion to taxpayers at an average of $3,112, which helped in propping up wholesale used vehicle prices.

Easy credit with attractive terms also aided used-vehicle pricing, making the market “more profitable than the underlying unit sale numbers would suggest” according to Manheim.

Overall sales fell 1 percent from the previous year, and 12 percent from January to 2.05 million units, with used compact cars falling the hardest at 3 percent from last year due to heavy supply and competition from newer vehicles. Used truck sales rose 8 percent in the same period due to high demand and low inventories.

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