The Truth About Cars » Dealers http://www.thetruthaboutcars.com The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. Sat, 29 Aug 2015 15:27:23 +0000 en-US hourly 1 http://wordpress.org/?v=4.2.4 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 » Dealers http://www.thetruthaboutcars.com/wp-content/themes/ttac-theme/images/logo.gif http://www.thetruthaboutcars.com Toyota Asking Dealers To Stop Advertising Below Invoice, World Not Over Yet http://www.thetruthaboutcars.com/2015/08/toyota-asking-dealers-stop-advertising-invoice-world-not-yet/ http://www.thetruthaboutcars.com/2015/08/toyota-asking-dealers-stop-advertising-invoice-world-not-yet/#comments Mon, 24 Aug 2015 19:00:30 +0000 http://www.thetruthaboutcars.com/?p=1151489 At an upcoming dealer meeting in Las Vegas next month, Toyota will ask its dealers to stop advertising cars below invoice in an attempt to help keep residual values higher and keep dealers from competing in a “race to the bottom,” Automotive News is reporting. If accepted, Toyota would join Honda in penalizing dealers who […]

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"Both certified Toyota dealerships -- and those pending certification -- were built as part of the company's Eco-Image USA II initiative that puts an emphasis on environmental sensitivity when building new facilities or updating current facilities. For instance, under the program, panels used on the building's exterior are made up of 90 percent recycled aluminum and Toyota assists dealers with cutting edge green options, including different power sources such as solar, wind and geothermal."

At an upcoming dealer meeting in Las Vegas next month, Toyota will ask its dealers to stop advertising cars below invoice in an attempt to help keep residual values higher and keep dealers from competing in a “race to the bottom,” Automotive News is reporting.

If accepted, Toyota would join Honda in penalizing dealers who advertise cars below invoice. According to the report, after three reported violations in one year, Honda could withhold marketing money from a dealer — which could be $400 per vehicle. It’s unclear how Toyota may penalize its dealers who don’t comply with the proposed new rule.

A less-than-happy dealer said he would consider suing Toyota for price fixing if the ad mandate were enforced.

“This is not in the best interest of the consumer, and I’m not going to keep my mouth shut,” said Earl Stewart, who runs a dealership in Florida.

A Boston-area Toyota dealer said keeping other dealers from advertising below invoice could keep unscrupulous dealers from bait-and-switch tactics to lure buyers to a showroom with one price, and sell them on another.

“It would be wonderful if this move could put some sanity into pricing,” said Mike Hills, general manager of Bristol Toyota-Scion.

Stewart said that he sells three out of four cars below invoice and that his dealership is a no-haggle dealership, something Lexus will reportedly adopt soon. He said that if he can’t advertise below invoice, he would lose business.

(It’s worth mentioning that dealer holdback allows some dealers to sell below invoice, but still make a profit on the car.)

At its Scion stores, Toyota is reportedly streamlining its online shopping process to encourage buyers to shop and pay for a car online before having it delivered*.

*Only in states where that sort of thing is legal, of course.

No word on whether balloons on cars would still be allowed.

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Interest in Hybrid Cars the Same, But Not When Money is Involved http://www.thetruthaboutcars.com/2015/08/interest-in-hybrid-cars-the-same-but-not-when-money-is-involved/ http://www.thetruthaboutcars.com/2015/08/interest-in-hybrid-cars-the-same-but-not-when-money-is-involved/#comments Sun, 23 Aug 2015 14:00:21 +0000 http://www.thetruthaboutcars.com/?p=1150945 Two stories paint an interesting present reality for hybrid and electric vehicles in America. Interest in hybrid vehicles has stayed consistent for the last two years among people in the U.S., AutoGuide is reporting. But apparently dealers and buyers can’t keep their hands off of those cars in Connecticut, where that state recently offered up to $3,000 […]

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Two stories paint an interesting present reality for hybrid and electric vehicles in America. Interest in hybrid vehicles has stayed consistent for the last two years among people in the U.S., AutoGuide is reporting. But apparently dealers and buyers can’t keep their hands off of those cars in Connecticut, where that state recently offered up to $3,000 on the hoods of those cars, Automotive News is reporting.

According to a Harris Poll, 48 percent of polled Americans say they would consider a hybrid vehicle next time they’re in the market for a car, which is roughly the same number of people who said so in 2013. Interest in electric and plug-in hybrid cars was up slightly to 21 and 29 percent of respondents, respectively.

Getting people to pull the trigger on that purchase, it seems, is still a matter of dangling a tangible benefit — fuel economy and environmental benefit may still not be enough.

Jeff Aiosa, who owns a Mercedes dealership in New London, Connecticut, said his electrified B-Class cars weren’t going anywhere until that state started offering money directly to consumers to buy one.

“We weren’t selling them heavily before,” Aiosa told Automotive News. “The program certainly created some amped-up demand.”

Connecticut is offering money off the cars directly from a $1 million fund aimed at moving cars off lots. The state is putting up to $3,000 on the hoods of some cars, depending on battery size, to incentive purchases of hybrids and electric cars. Through July, about one-quarter of the incentive money available had been claimed.

“This is the type of program that can be a win-win-win for the state, auto manufacturers, dealers and consumers,” said Leo Karl, who owns a Chevrolet dealership. Karl said he was nearly out of 2015 Volts, which qualify for $1,500 from the program, and expects that the 2016 Volt, which will qualify for $3,000, will go quickly too.

Interestingly, part of the Connecticut program allows dealers who sell the cars to keep up to $300 of the incentive.

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I Tried To Buy A Charger Again, And Failed Again http://www.thetruthaboutcars.com/2015/08/tried-buy-charger-failed/ http://www.thetruthaboutcars.com/2015/08/tried-buy-charger-failed/#comments Thu, 20 Aug 2015 16:00:05 +0000 http://www.thetruthaboutcars.com/?p=1145953 The automotive journalism industry is infinitely weird. I’m much more likely to be recognized by someone in a foreign land than I am in my own city. Just recently, during Halifax’s Pride Parade, a man I didn’t know walked up to me and asked, “Are you Mark Stevenson?” It’s the first time that’s ever happened to me […]

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2015 Dodge Charger V6 AWD Rallye (3 of 13)

The automotive journalism industry is infinitely weird. I’m much more likely to be recognized by someone in a foreign land than I am in my own city. Just recently, during Halifax’s Pride Parade, a man I didn’t know walked up to me and asked, “Are you Mark Stevenson?” It’s the first time that’s ever happened to me in Halifax. Maybe I have the local LGBT demographic on lock, or at least the “G” part of the initialism.

Regardless of my popularity with the sharply dressed set, I can walk into virtually any local dealer and nobody will know who I am — which is absolutely perfect when you run into a salesman who states: “Let me be honest with you: I make $100,000 a year at this place and it’s made me not care about cars anymore.”

Of course, this was at a Dodge dealer that lacked any kind of automotive enthusiasm on its lot.

Undeterred, I am still occasionally Charger shopping. There are three Chrysler/Dodge/Jeep/RAM dealers in my immediate vicinity.

The first one I went to is a 10 minute walk down the street from my house; incredibly easy to spot from the highway thanks to all the bright orange Ram 1500s and neon-stickered minivans. Oh, and there’s always a Jeep sitting atop a man-made boulder. Always. The dealer doesn’t have a single Chrysler 300, Dodge Charger or Dodge Challenger and very few Dodge Darts, Dodge Durangos and Jeep Grand Cherokees. Even the used lot is as exciting as a Christian stripshow attempting to convey a message to its audience. Oh look, it’s a Charger! … 2014 SE automatic. Oh look, there’s a Challenger! … with horrible aftermarket wheels, Pep Boys portholes and a V-6 engine.

Needless to say, I wouldn’t be stopping by that particular dealer again, especially after the uninterested attitude I received last time from their sales staff. Instead, I went to another dealer that also sells Fiats and sits beside an Acura store, hoping that combination might spur said dealer into offering a wider selection.

Boy, was I wrong.

This second dealer — owned by a local, family-named dealership group — is certainly bigger than the first, but the models there were the same as the first, just more of them. The most interesting vehicle on the lot was a clapped-out Subaru Baja … owned by someone taking a peeking glance at a Jeep Patriot. I pray for her to this day.

I drove around the lot fully knowing I was not going to see a new Charger. As you may already know, the last time I was searching for a larger-engined Charger I went to the interwebs and came up with zero results within 200 miles. However, I was hoping I might see a used, previously fleet-owned 2015 Charger to satiate my desires.

The lower lot provided nothing but Journey after Grand Caravan after Cherokee. Holy, the Cherokees. The only “fun” members of the lot were some turbocharged Fiat 500s and a lone Challenger V-6 automatic. This was not going well. To the upper used lot I went.

My mother and her significant other had been here just a week previous and said there was a Chrysler 300 closely resembling what they’re looking to buy. Mom’s beau is now well into retirement and looking for a final rolling resting place for his last years at the wheel. Being a man of large stature, the 300 is well suited for him — but not so for me. I want a Charger, and the upper lot did have a few of 2014 and earlier vintage. No V-8s. No 2015s.

I was just about to leave when a salesman, likely in his late 40s, came rolling up the hill on his Yamaha golf cart. Instead of peeling out, I rolled down my window.

“Can I help you with something today, sir?”

(I have always hated when someone older than me calls me “sir”, but that’s outside the context of this story.)

“Maybe,” I replied. “Do you have any 2015 Chargers?”

“No, we didn’t get many, and they ones we did get are gone.”

While someone might get disenchanted with the response, I saw an opportunity.

“When does your 2016 model year allotment come in?”

“Well, normally it would be closer to the fall. We should have one then.”

They should have one then. I take a stab.

“Any chance it would be a V-8 model?”

It’s at this point Mr. Golf Cart opens up.

“Ohhh, ha ha, definitely not. We’re similar, you and I. We want to have fun with our cars. But, we would never order that in for the lot. Let me be honest with you: I make $100,000 a year at this place and it’s made me not care about cars anymore.”

On that last conversational highlight, we exchanged pleasantries and cards, and I went on my way.


One week later, I had the chance to speak with a Chrysler Canada employee and I figured this would be the time to ask him some questions.

“Did you read my piece on the Charger?” I asked him.

“Yes, I did,” he replied, seemingly unsure of where the conversation was going.

“So, I tried again to buy a Charger but I haven’t written it up yet. I asked the salesman if they would get any V-8 Chargers in for 2016 and he said no. What’s going on?”

He went on to explain the situation through an anecdote.

Before his current position, his place was in sales. At one point, he dealt with a dealer that would only order vehicles of certain colors. Nothing too flashy; just silver, white, and black. Red cars didn’t sell on his lot, the dealer complained. For years, this dealer would only order those three colors, and this former sales rep asked him, “Well, if you never have those colors, how are they supposed to sell?”

The dealer, likely in a fit of rage to prove himself correct, ordered one of his least favorite colors — and it promptly sold.

Jack hit the nail on the head when he explained we are not the manufacturer’s customers — dealers are. However, manufacturers still hold some considerable sway in what dealers receive in annual allotments.

There’s another dealer semi-local to me that just opened. It’s a Nissan store in the middle of nowhere. As part of their initial floorplan, Nissan Canada made the dealer take nearly 40 Nissan Titans. I don’t mean the new, Ford-esque Titan that Carlos Ghosn is looking to carve a niche for itself by sitting between the 1500s and 2500s of the Detroit automakers. I mean the old Titan that virtually nobody is buying and Nissan itself isn’t even talking about these days.

If Nissan can saddle that dealer with nearly 40 Titans, I am sure Chrysler could make each dealer in the region take one or two Chargers.

It’s a shame though as the 2015 Charger is vastly superior to that of just the year prior, but dealers are still making decisions based on it being the same car as before — just like customers do. One can walk into any Ford dealer here and test drive a Coyote-powered Mustang GT, and those dealers will sell every last Mustang they stock. If the Dodge dealers took a chance on a few V-8 Chargers, they might sell like hotcakes.

Might.

Unfortunately for me, they absolutely know those minivans, Jeeps and Rams will sell within the next month or two.

There’s also no impetus for Chrysler Canada to force Chargers on my local dealers in particular. The new car is wildly successful in other markets and the automaker can simply send more units to those areas where they also know the full-size LX cars will sell.

But, that leaves me feeling just like the salesman at the second Dodge store I visited. If I need to live in a world where fun is completely erased from the automotive landscape, I don’t want to do this anymore, and you’d have to pay me $100,000 to continue doing it.

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Could Cadillac Leave General Motors to Be on Its Own? http://www.thetruthaboutcars.com/2015/08/cadillac-leave-general-motors/ http://www.thetruthaboutcars.com/2015/08/cadillac-leave-general-motors/#comments Wed, 12 Aug 2015 19:00:04 +0000 http://www.thetruthaboutcars.com/?p=1139346 According to Cadillac CEO Johan de Nysschen, it probably could. According to Automotive News, de Nysschen told analysts that Cadillac would have a “a far higher degree of autonomy and self sufficiency” within two years, and the company could report its own profits and losses, separate from GM. Already, Cadillac contributes “a very sizeable contribution to the overall profit […]

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According to Cadillac CEO Johan de Nysschen, it probably could.

According to Automotive News, de Nysschen told analysts that Cadillac would have a “a far higher degree of autonomy and self sufficiency” within two years, and the company could report its own profits and losses, separate from GM.

Already, Cadillac contributes “a very sizeable contribution to the overall profit at General Motors” de Nysschen said, so let’s cut the dead weight already and keep the ugly sorority sisters in the basement?

Not so fast.

The Cadillac CEO admitted that the brand’s narrow portfolio and fledgling dealer overhaul could keep it under the GM umbrella — at least until 2018. The company is planning on several new models, including crossovers and sedans to help steady its financial base, that would begin arriving around 2018.

The company will sell 500,000 cars globally by 2020, de Nysschen reiterated to analysts yesterday. Last year, Cadillac sold 263,697 cars — more than 170,000 of those in the U.S. alone.

Chief engineer Dave Leone said that in the interim Cadillac needs to offer more than its German competitors for less money to gain traction in the luxury market — unlike it had in previous years.

Already, Cadillac has changed substantially its relationship with its dealers. The automaker said it would begin focusing its incentives on dealer experience and not necessarily sales, and it’s encouraging dealers to build standalone, boutique showrooms.

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This Year Could Be the Biggest Car-buying Year in 15 Years http://www.thetruthaboutcars.com/2015/08/year-biggest-car-buying-year-15-years/ http://www.thetruthaboutcars.com/2015/08/year-biggest-car-buying-year-15-years/#comments Mon, 10 Aug 2015 20:00:21 +0000 http://www.thetruthaboutcars.com/?p=1137538 Automakers could sell more than 17 million new cars and trucks in the U.S. this year, approaching the sales record set in 2000 of 17.4 million, Automotive News is reporting. Analysts raised their forecasts after a strong July for automakers and new cars that will be reaching showrooms in high-selling segments by the end of the […]

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Automakers could sell more than 17 million new cars and trucks in the U.S. this year, approaching the sales record set in 2000 of 17.4 million, Automotive News is reporting.

Analysts raised their forecasts after a strong July for automakers and new cars that will be reaching showrooms in high-selling segments by the end of the year. Last month was the 18th consecutive month for increasing sales.

Our own Timothy Cain thinks that regardless of the final number, 2015 will be a very, very, very good year for automakers.

Cain writes:

It’s been 18 months since monthly auto sales volume last decreased. That decrease, mind you, was brought about by a slight decline in the lowest-volume month of the year, January. In other words, growth in America’s auto industry is notable both for its rapidity and its consistency. It’s that consistency that makes it hard to believe the current pace won’t continue. Regardless of the outright volume attained by manufacturers competing in the U.S., 2015 will undoubtedly be better than 2014. Already, through just seven months, an additional 434,000 new vehicles have been sold compared with the same period one year ago.

Spurred by cheap gas prices, trucks are pacing the overall market as the fastest-selling segment in the U.S. this year. Sales of trucks grew 13 percent this year.

Automakers such as Honda and Chevrolet will introduce newer versions of their Accord and Malibu respectively in the coming months, and that should further stoke car sales, Automotive News points out.

The Wall Street Journal notes that while new car purchases are happening more frequently, and at higher prices, used car prices are finally starting to dip, which may be a relief to low-cost and entry buyers.

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Why Can’t We Buy Bentleys on Amazon Yet? http://www.thetruthaboutcars.com/2015/08/cant-buy-bentleys-amazon-yet/ http://www.thetruthaboutcars.com/2015/08/cant-buy-bentleys-amazon-yet/#comments Thu, 06 Aug 2015 20:00:27 +0000 http://www.thetruthaboutcars.com/?p=1135514 Chinese luxury car dealer Yongda and giant online retailer Alibaba are offering the next logical step in online car buying for luxury car buyers: point-and-click car buying. The South China Morning Post is reporting that Yongda, which has more than 200 high-end car dealerships in China, will make available its cars on the shopping site for browsers […]

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Chinese luxury car dealer Yongda and giant online retailer Alibaba are offering the next logical step in online car buying for luxury car buyers: point-and-click car buying.

The South China Morning Post is reporting that Yongda, which has more than 200 high-end car dealerships in China, will make available its cars on the shopping site for browsers to point, click, pay and drive away from a dealership.

Seems like a good idea for ultra-luxury cars.

According to Yongda, more than 20 luxury and ultra-luxury car makers will have available models online, including Land Rover and Bentley. To celebrate the new partnership, Alibaba will offer 4,000 models of the Chevrolet Epica at a 40 percent discount.

According to the companies, the partnership allows a broader base for Alibaba to appeal to a wider range of buyers. The online retail giant already sells cars that range between $15,000 and $25,000.

According to reports, roughly 20 million people signed up to finance their purchase through the online retailer.

It’s unclear how many dealerships Alibaba’s automotive division works with already, but the agreement with Yongda would offer 200 more dealerships where buyers would pick up their cars. Alibaba and Yongda would also offer a used car network where owners could sell their cars back to the companies online.

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The Deeper Dive: Catering to the Keepers http://www.thetruthaboutcars.com/2015/08/deeper-dive-catering-keepers/ http://www.thetruthaboutcars.com/2015/08/deeper-dive-catering-keepers/#comments Tue, 04 Aug 2015 12:00:46 +0000 http://www.thetruthaboutcars.com/?p=1091969 Automakers have collectively spent tens of billions of dollars trying to concoct schemes sales campaigns that make consumers perpetual debtors instead of long-terms owners. $129 a month. 0-percent financing. Move the decimal point here and the first payment there. Sprinkle a healthy amount of small print, toss in some advertising that pushes the right buttons, and […]

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Automakers have collectively spent tens of billions of dollars trying to concoct schemes sales campaigns that make consumers perpetual debtors instead of long-terms owners.

$129 a month. 0-percent financing. Move the decimal point here and the first payment there. Sprinkle a healthy amount of small print, toss in some advertising that pushes the right buttons, and keep driving down credit standards to the point where you maximize your long-term profits.

It takes the right financial recipe — and an awful lot of money — to keep any automaker in the black. The mathematical truth of the auto industry is that automakers can’t do anyone any favors, anywhere, if they don’t successfully cater to a healthy audience that embraces debt as a long-term financial proposition.

So with that said, how should automakers cater to the keepers among us? Those new car shoppers who buy once, and then try to keep their cars until they are often times worth more dead than alive?

This is one of the more challenging questions of the car business. You can try espousing reliability, quality, precision and a whole lot of other nice comforting words into the advertising of a given brand. One brand may try to represent themselves as “The Relentless Pursuit of Perfection” while another says that they are “Built Like No Other.”

Is this what a keeper really wants? Do they want a fortress of interminable longevity as their daily commuter? Or are many of them just as willing to try something nice for now and buy something else a few years later if the right opportunity comes around?

How do you get your keepers to become traders?

I see two unusual ideas that are beginning to chip away at the keeper mentality.

The Exchange: The typical idea of a car exchange has usually revolved around changing personal needs and tax avoidance. You exchange one vehicle that was bought at one stage of your life — say, a compact sports car that was bought at a time when you were single — for another one that’s a better fit for your next stage, such as a crossover to support a young family.

The other party can be a private seller or a dealer and, in most states, you’re able to avoid states taxes completely or minimize them by simply making the two vehicles comparable in value at the time of exchange.

TT RS front quarter, photo courtesy Michael Karesh

 

High trade-in values for late-model cars is one common way of getting keepers into this habit of trading in their old cars for new ones. What used to be just a haphazard promotion devised by a local sales manager has now become a highly refined system of targeting specific consumers who have the right cars and trucks for this exchange. In the coming years, don’t be surprised if automakers and their dealer networks start to develop online exchanges that offer low ‘exchange’ prices which help sell new cars and bring in popular vehicles for their CPO programs.

The 200k Kit: Traditionally automakers have focused on provided extended warranties to those folks who want to keep their cars over the long haul. The issue for these warranties is that their lack of use can be seen as an intentional rip-off. Consumer Reports recently completed an extended study where they found “55 percent of owners who purchased an extended warranty hadn’t used it for repairs during the lifetime of the policy.” On average, those who did use it spent several hundreds more for the coverage than they saved in repair costs.

In a world where long-term reliability is becoming more of a given, maintenance needs may become the bigger issue for those customers who want to keep their cars for the long run. Why not offer an extended service contract that guarantees a blanket 25-percent discount for all the maintenance needs of a given vehicle up to 10 years or 200,000 miles?

Service contracts have been around for decades. This is nothing new. However, their importance for everyday consumers is evolving, and long-term care of a keeper’s car with OEM parts and dealer personnel can represent a better way to bring keepers closer to the brand in ways that an extended warranty simply can not do.

What are your thoughts? This business does not have easy answers and I have learned over the last 12 years as a car dealer and remarketing manager that ‘keepers’ can be your most challenging and least profitable customers. Many of them embrace six simple words when it comes to the automobile: “Don’t spend money. Don’t buy anything.”

Are these two ideas possible win/win scenarios? If so, what else would work?

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QOTD: Can You Blame the Dealer For Your Defect? http://www.thetruthaboutcars.com/2015/07/qotd-can-you-blame-the-dealer-for-your-defect/ http://www.thetruthaboutcars.com/2015/07/qotd-can-you-blame-the-dealer-for-your-defect/#comments Fri, 17 Jul 2015 11:00:26 +0000 http://www.thetruthaboutcars.com/?p=1118273 Several times in the last few weeks I have had a friend come up to me and tell me that they bought a used car, there is some problem with it, and now they want to sue the dealer. And if not a lawsuit, then at least they want some sort of compensation, like a […]

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Several times in the last few weeks I have had a friend come up to me and tell me that they bought a used car, there is some problem with it, and now they want to sue the dealer. And if not a lawsuit, then at least they want some sort of compensation, like a free replacement car.

I generally listen intently to their problem, and confirm that I’m understanding it, and make eye contact to show that I care, and then tell them something along the lines of the fact that this is the single stupidest thing I’ve ever heard in my entire life.

Here’s a newsflash for everyone out there who bought a used car with a problem: You bought your vehicle in as-is condition. This means you must accept it “as it is,” even if how it “is” is fitted with brake pads that are actually USB sticks. Even if its mirrors are sun visor mirrors taped on the mirror housings. Even if it is a Pontiac G6. You now own this car and you signed the papers saying so. The dealership held up its part of the obligation in selling you the car. Now you must hold up your part of the obligation in getting the thing the hell off the dealer’s lot.

When people come to me and ask me about buying a used car, I almost always tell them to get a mechanical inspection before they give the dealer any money. “Get a mechanical inspection,” I always say. “For God’s sake, get a mechanical inspection.” When pressed for more advice, it’s usually along the lines of, “If you don’t get a mechanical inspection, then you have the IQ of dishwashing soap.”

A few months later, they come back to me and tell me that the dealer didn’t want them to get a mechanical inspection, so they bought the car anyway, and now they discovered that the transmission only powers the front left tire and the windshield wipers are actually felt-tip pens tied to the wiper arms with rubber bands. It is at this moment when I ask them never to speak to me again.

No, what I really tell them is they’re screwed. Not sort of screwed; not kind of screwed. They’re totally, completely, 100-percent screwed. They own the car, it’s now theirs, and if they come to the dealer with their problem, the dealer is going to laugh in their face and tell them to please leave, because they are busy selling a car made entirely of sandpaper to another person who didn’t get a mechanical inspection.

This doesn’t seem fair. After all, doesn’t the dealer have an obligation to sell a quality product to everyone? In my mind, the answer is no.

Cars are complicated and dealerships are possibly even more complicated. When a car is bought by a dealership or traded in, the idealistic customer probably thinks it’s inspected top to bottom for mechanical issues, fixed perfectly, then placed on the lot at the lowest possible dollar amount required to make a profit. If a disabled veteran comes in, they give him the car for free.

In reality, the dealer has no time to inspect every single used car that comes in on trade or from an auction. Instead, the dealer just cleans the thing, sticks it on its front line, and hopes you buy it. They have no idea what’s wrong with it. They don’t care what’s wrong with it. If you want to know what’s wrong with it, you have to figure that out for yourself.

And that’s why smart shoppers get a mechanical inspection. It takes a while and it’s a pain in the ass, since you have to take the car from the dealer to a mechanic, wait while it’s being inspected, then drive back to the dealer to retrieve your own car — but it’s necessary. Once, when I took a car for a mechanical inspection, the service advisor walked up to me at the end of the inspection. “Anything serious?” I asked. “Nothing ten grand can’t fix,” he replied.

Ten grand.

So in my opinion, buying a used car is a risky proposition — and if you take the risk, you have to be prepared to face the consequences. Am I wrong? Do you think a dealer has an obligation to fix its used cars, or buy them back if they’re awful? And what about a private seller? Let me know your thoughts below.

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Report: TrueCar Drew Hard Line with AutoNation Over Data http://www.thetruthaboutcars.com/2015/07/report-truecar-drew-hard-line-autonation-data/ http://www.thetruthaboutcars.com/2015/07/report-truecar-drew-hard-line-autonation-data/#comments Mon, 13 Jul 2015 18:00:27 +0000 http://www.thetruthaboutcars.com/?p=1114737 Automotive News has interesting insight into the tenuous, and now soon-to-end, relationship between TrueCar and car dealer-giant AutoNation. The report details a May lunch between TrueCar CEO Scott Painter, President John Krafcik and Senior Vice President of Dealer Development Mike Timmons, and AutoNation COO Bill Berman and Chief Marketing Officer Marc Cannon. At the lunch, TrueCar executives reportedly […]

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AutoNation CEO Mike Jackson

Automotive News has interesting insight into the tenuous, and now soon-to-end, relationship between TrueCar and car dealer-giant AutoNation.

The report details a May lunch between TrueCar CEO Scott Painter, President John Krafcik and Senior Vice President of Dealer Development Mike Timmons, and AutoNation COO Bill Berman and Chief Marketing Officer Marc Cannon. At the lunch, TrueCar executives reportedly said they would require data from all AutoNation sales — regardless if they were generated by TrueCar — for the two companies to continue doing business.

“Over my dead body,” AutoNation CEO Mike Jackson said later, according to Automotive News.

Last week, when Jackson announced the split between AutoNation and TrueCar he laid most of the blame at TrueCar’s “unconscionable and unprecedented” demand for more than 40 data points for each car sold at AutoNation. AutoNation sells more than 550,000 annually at its 240 dealerships across the United States.

The dealer said roughly 3 percent of its sales can be attributed to TrueCar leads, which it charges $299 and $399 per new- and used-car purchase. AutoNation said it pays TrueCar around $550 per sale, for which TrueCar unjustifiably takes credit. TrueCar said internal auditing revealed that they were responsible for nearly 7 percent of AutoNation’s sales.

“We know exactly the degree to which AutoNation underreported,” Painter said. “It’s massive.”

“Customers go many places before and after a TrueCar visit, and just because they were momentarily on the TrueCar site doesn’t mean I should have to pay them $300. So there’s a big disagreement there,” Jackson said.

In a May 23 letter to Berman and Cannon, TrueCar specifically outlined the customer data it was seeking and said it was already “firing” dealers who failed to comply.

“In the trailing 12 months, TrueCar suspended over 300 dealers who did not meet marketplace or customer requirements. We are prepared to take similar action here should AutoNation elect not to follow our marketplace requirements,” the letter states.

TrueCar’s request for data included customer’s names, addresses, phone numbers and e-mail addresses in addition to data on the newly purchased car.

Dealers have said turning over such extensive data could lead to privacy concerns and enable TrueCar to steal customers in the future.

AutoNation said it would start up its own portal for customers similar to TrueCar, and would back away from third-party vendors in the future.

 

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Obama’s New Overtime Rules May Hit Dealers Particularly Hard http://www.thetruthaboutcars.com/2015/07/obamas-new-overtime-rules-may-hit-dealers-particularly-hard/ http://www.thetruthaboutcars.com/2015/07/obamas-new-overtime-rules-may-hit-dealers-particularly-hard/#comments Sun, 12 Jul 2015 17:00:30 +0000 http://www.thetruthaboutcars.com/?p=1113673 Car dealerships may be forced to pay some of their employees more under new overtime rules proposed by President Barack Obama, Automotive News is reporting. The proposed overhaul for employees who make less than $50,000 a year could impact dealers who make a significant portion of their earnings from salary, rather than commission. The suggested overtime rules […]

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Barack Obama + Connected Vehicles

Car dealerships may be forced to pay some of their employees more under new overtime rules proposed by President Barack Obama, Automotive News is reporting.

The proposed overhaul for employees who make less than $50,000 a year could impact dealers who make a significant portion of their earnings from salary, rather than commission.

The suggested overtime rules would apply to roughly 40 percent of the American workforce, rather than the 8 percent the current rules apply to now. The Department of Labor estimates more than 5 million workers would be covered by the new rules.

Douglas Greenhaus, an attorney for the National Automobile Dealers Association, told Automotive News that the new rules would apply to mostly support workers in dealerships. Mechanics, service managers or sales staff likely wouldn’t be effected.

“This would impact those who get the majority of their pay from salary,” Greenhaus said.

The changes would raise the overtime threshold from $23,660 annually to $50,440. The federal poverty line for a family of four is $24,008.

Dealers may cut pay for workers who fall under the new guidelines, Greenhaus said. The NADA would analyze the new rules and lobby the administration based on what dealers may want.

“The important thing is to maintain as much as possible the flexibility for the employer and employee on how to compensate,” Greenhaus said.

The public comment period for the new overtime rules ends Sept. 4.

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Details of AutoNation, TrueCar Split Coming into View http://www.thetruthaboutcars.com/2015/07/details-autonation-truecar-split-coming-view/ http://www.thetruthaboutcars.com/2015/07/details-autonation-truecar-split-coming-view/#comments Fri, 10 Jul 2015 19:00:30 +0000 http://www.thetruthaboutcars.com/?p=1113017 Details between the AutoNation and TrueCar split are becoming clear, Automotive News is reporting. After yesterday’s announcement that the web service and nationwide dealership chain were splitting up — in which AutoNation laid most of the blame on unreasonable demands by TrueCar during contract negotiations — the company’s respective CEOs have been getting nasty. “Our partnership with AutoNation just […]

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Details between the AutoNation and TrueCar split are becoming clear, Automotive News is reporting.

After yesterday’s announcement that the web service and nationwide dealership chain were splitting up — in which AutoNation laid most of the blame on unreasonable demands by TrueCar during contract negotiations — the company’s respective CEOs have been getting nasty.

“Our partnership with AutoNation just turned into, in a very real sense, a choice for the consumer,” TrueCar CEO Scott Painter told Automotive News. “It really makes them our competition.”

Automotive News details the dust-up between AutoNation and TrueCar as a war fought over customer data. Roughly 3 percent of AutoNation’s sales could be directly attributed to TrueCar leads, AutoNation CEO Mike Jackson told Automotive News. TrueCar asked for data on all of AutoNation’s 550,000 annual car sales.

“It’s none of their business,” Jackson said.

TrueCar may have asked AutoNation to comply with rules it enforces with other dealers.

“This isn’t AutoNation dropping TrueCar,” Painter told Automotive News. “This is a very deliberate step on our part. We went to them and said, ‘You must comply with the rules.’”

The added layers of intrigue come from the quickly intersecting business models by AutoNation and TrueCar. TrueCar is rapidly developing dealer-esque services, and AutoNation announced last year they’d move away from third-party vendors like TrueCar to develop their own web-based lead generation.

TrueCar has been beset with several setbacks in recent years, and its customer data collection has come under fire, as well.

 

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Record Sales Pace Partially Fueled by Record Incentives http://www.thetruthaboutcars.com/2015/07/record-sales-pace-partially-fueled-record-incentives/ http://www.thetruthaboutcars.com/2015/07/record-sales-pace-partially-fueled-record-incentives/#comments Thu, 02 Jul 2015 19:00:52 +0000 http://www.thetruthaboutcars.com/?p=1106289 The Detroit Bureau is reporting that even though June was a record sales month for many automakers, many of those sales were partly fueled with record incentives from the manufacturer. Buyers could get up to $8,000 knocked of the price of a Kia K900 or up to $7,000 off of Ford hybrids or electric cars — […]

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Insane People at the Stock Photo Dealership

The Detroit Bureau is reporting that even though June was a record sales month for many automakers, many of those sales were partly fueled with record incentives from the manufacturer.

Buyers could get up to $8,000 knocked of the price of a Kia K900 or up to $7,000 off of Ford hybrids or electric cars — even $8,000 for the 2015 Ford C-Max Energi.

Despite the higher-than-normal incentives, the Detroit Bureau reported that the Average Transaction Price for a new car in June was $31,848, up around 1 percent over last year.

Two automakers increased spending on their incentives by more than 30 percent over the same time last year — Nissan and Hyundai. As a percentage of incentives offered to ATP, Kia (11.7 percent), Hyundai (10.5 percent), Nissan (10.3 percent), GM (10.2 percent) and FCA (10.2 percent) were the biggest spenders last month.

As expected, many of the heavily incentivized cars were slow-moving models or cars with narrow appeal, which automakers could immediately offset by selling massive amounts of huge crossovers with equally huge margins.

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No Fixed Abode: Walljobbed. http://www.thetruthaboutcars.com/2015/06/no-fixed-abode-walljobbed/ http://www.thetruthaboutcars.com/2015/06/no-fixed-abode-walljobbed/#comments Tue, 30 Jun 2015 14:00:28 +0000 http://www.thetruthaboutcars.com/?p=1102601 I grew up in the back of two-door family cars ranging from a ’67 Camaro to an ’83 Civic 1500 “S”. It never seemed like a hardship to me. Nor does it seem like a hardship to have my six-year-old son in the back of my Accord Coupe. He knows how to let himself in […]

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I grew up in the back of two-door family cars ranging from a ’67 Camaro to an ’83 Civic 1500 “S”. It never seemed like a hardship to me. Nor does it seem like a hardship to have my six-year-old son in the back of my Accord Coupe. He knows how to let himself in and out of the back seat. It’s no different from having a four-door sedan and letting him out of the back door. Ninety-nine percent of the time I don’t even think about it.

The other one percent of the time is when I clean the interior of the car. It takes the strength of Hercules and the flexibility of a Cirque du Soleil headliner to get the explosion of fast food, Legos, school paperwork, and miscellaneous unidentifiable items out of the cave behind the front seats. And then I have to condition the leather, you see, which would work better if my arms were between six and eighteen inches longer. So having done all that this past Sunday, I figured I’d do my other least favorite job: brake dust removal. I was already in a bit of a bad mood, crouching next to my Griot’s Garage bucket and shaking out my favorite horse-hair wheel brush, when I saw it.

Oh, hell no.


It was just a two-inch scratch on the rim of the rear wheel, from parallel parking downtown. Most people wouldn’t think twice about it. But I just about lost my mind, because:

a) I don’t scratch wheels. In more than fifteen years of owning cars with low-profile alloy wheels, I’d only scraped one wheel prior to Sunday.
b) That wheel also being one of the wheels on my Accord. I’d scraped it a few months ago on a curb. But two weeks ago I had the tires rotated as part of a 22,500-mile service, which meant that this was a second scrape, likely from the same thing.

The idea that I’d scraped two wheels in under a month was enough to make me consider tearing up my license and riding a bicycle downtown from now on. I was still in a foul mood as I put some Armor All on the front tires, which were torn up from a couple of trackdays.

Wait.

I’d just had the tires rotated front to rear. By rights, the worn shoulders should have been on the back now. But they were still up front. And a quick check of the other three wheels revealed that none of them were scraped. That was good news because it meant that my lifetime wheel damage count was stuck at one. But it meant that I’d been walljobbed.

Car and Driver’s brilliant and innovative technical editor, Patrick Bedard, wrote a column entitled “The Wall Job” back in the magazine’s glory days. A “wall job”, if you haven’t already figured it out, is when a shop takes a car in for service, parks it against the wall for a few days, then returns it to the customer along with a bill for work that the customer cannot readily verify. The various consumer-protection laws that require  the customer be given the option of getting the “old parts” back are meant to address the wall-jobbing problem. I don’t know how effective they are. To begin with, most people can’t tell the difference between a control module for a Rolls-Royce Ghost and a distributor cap for a Rolls-Royce Silver Ghost, and they aren’t interested in getting a bag full of mystery junk with their credit-card receipt.

Furthermore, much of modern automotive service leaves no parts behind. The five hours of diagnosis with a Bosch “Hammer” tool that your dealer supposedly put in before figuring out why your 964 Carrera stalls at lights? The road testing that was necessary to figure out that mystery vibration? How do you know how much of it was done, if any?

The first thing I did when I realized I’d been wall-jobbed on my tire rotation was to pop the hood on the Accord and look carefully at the oil. Oil changes are famous walljob candidates, but in this case the dealer had done right: the oil was clear and clean. The filter, too, looked new. So that much, as least, was correct. On the other hand, I had serious doubts that the “multi-point visual inspection” required by Honda, and paid for by me, had been performed.

I looked at the receipt and saw that I’d paid $19.95 plus tax for the rotation. That’s something I can do myself, but it takes me a bit of time and annoyance to do it. Twenty bucks to save a dirty half hour of my time is a deal with which I can live. But twenty bucks for nothing? The hell with that.

This morning I called the dealership. My service advisor was brusque at first. “Why do you think your tires haven’t been rotated?” I explained. She seemed doubtful. “What do you want me to do?”

“I want my twenty bucks back.”

“Are you willing to bring the car by so we can look at it?”

“Absolutely.”

“Sometimes it’s hard to tell if the tires have been rotated.”

“Not in this case.” And then I discussed the nature of my part-time job as an automotive writer and how I could earn twenty dollars back by mentioning the name of the dealer in an article.

“We’ll call you back.” Which they did, an hour later. Good news! My entire seventy-eight dollar service had been refunded. And they’d be happy to rotate my tires for free. I told them I’d handle it myself, and that I was satisfied with the deal. In truth, I wasn’t. Not really. From now until the time my car is out of warranty, I’ll be verifying everything they claim to have done myself. I could change dealers, but what’s the point? The new dealer could be just as bad, or worse. Better to deal with these people. Maybe they’ll be more likely to do the work now.

I’ve written time and time again about how far more of the car business revolves around dealers than most people realize. Everything from product mix to warranty terms is a product of interactions with dealers. They are enshrined by state laws that the dealer associations purchase at considerable expense. They are the true customers of the manufacturers. And when their interests conflict with yours, they will nearly always win the battle.

After hanging up the phone, I asked myself if this incident would keep me from buying another Honda. The truthful answer is: probably not. I don’t like Honda dealers in general, and I’ve yet to see one that treats the customer with the consideration and truthfulness that I’ve experienced as an owner of BMWs, Audis, Mercedes-Benzes, and even Land Rovers, but that’s what you get for shopping in the discount aisle. Wal-Mart doesn’t treat its customers the way that Nordstrom does, and Honda dealers don’t treat their customers the way that Audi dealers do. Moreover, Honda can’t do much to change the state of affairs any more than a husband in a thirty-year marriage can dictate terms to his wife, and for pretty much the same reasons.

If the manufacturers had any real power on the ground of customer/dealer interactions, they’d make damned sure dealers didn’t endanger their next thirty-three-thousand dollar transaction to make a quick twenty bucks on a walljob tire rotation. But dealers don’t look at it that way. They see the chance to make a few hundred, or even a few thousand dollars, every day. That adds up in a hurry, and it makes a lot more difference to the bottom line than another “mini-deal” to some jerk who has the invoice price and the incentives printed out in a manila folder and doesn’t want to pay a penny of net profit on his next car.

So from now on, I’ll treat my dealer like Reagan treated Gorbachev. Trust, but verify. And if the day ever comes that my opinion or my vote might possibly matter to anyone as regards the possibility of manufacturer-owned stores in Ohio, I’ll be right there in the ballot box. But really, what chance is there of that? What chance do mere voters have against people who make twenty dollars a shot all day, every day, for precisely nothing? How do you out-vote someone who uses your own money to buy votes? Didn’t there used to be a political party that promised to rebalance the scale in the favor of the consumer? What about the Supreme Court? I hear they’ve been doing a lot for individual liberties lately – but when it comes to dealer franchise protection, they sided with the multi-millionaire “little guys”, not the customer.

I guess you really can put a price on change. That price is $19.95.

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No Fixed Abode: They Paved Manuals, and Put Up a Four-Door Coupe http://www.thetruthaboutcars.com/2015/04/no-fixed-abode-paved-manuals-put-four-door-coupe/ http://www.thetruthaboutcars.com/2015/04/no-fixed-abode-paved-manuals-put-four-door-coupe/#comments Thu, 23 Apr 2015 12:00:01 +0000 http://www.thetruthaboutcars.com/?p=1051649 I come to bury Derek Kreindler, not to praise him. No, wait. I come to praise Derek, not to bury him. Scratch that. I come to agree with Derek, and to disagree with him. And to agree with him again. Wait a minute, it will make sense. One of the several admirable ways in which […]

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inteior

I come to bury Derek Kreindler, not to praise him.

No, wait.

I come to praise Derek, not to bury him.

Scratch that.

I come to agree with Derek, and to disagree with him. And to agree with him again. Wait a minute, it will make sense.

One of the several admirable ways in which my erstwhile boss and even more erstwhile employee diverged from conventional auto-journo thinking was his relentless focus on the real reasons behind automobile manufacturers’ product-planning decisions. Every time some writer for Social Justice Hooning And European Vacations trotted out the usual complaints about the lack of brown diesel-powered, stick-shifted, MB-Tex-interior, E30-sized station wagons, Derek would unleash hell on the poor fellow, pointing out that American consumers get the model mix they’re getting because it is the model mix for which they have voted, again and again, with their wallets. He never tired of forcibly redirecting the assignment of responsibility for today’s tepid dealership inventory from the OEMs to the buyers.

In doing this, he was breaking the fourth wall of automotive journalism a bit. Everybody in the business talks to the same product planners and has access to the same numbers, but nobody wants to annoy the reader by pointing out his culpability in the disappearance of enthusiast-focused automobiles. It’s a funny double standard. You’re allowed to injure the customer by pretending that the Porsche IMS issue and a hundred other similarly offensive quality problems don’t exist, you’re allowed to screw him over by puff-piecing junk product, but you’re not allowed to add insult to those injuries. Instead, the writer conspires with the reader after a fashion, by pretending to believe that the reader is ready to buy a brown diesel manual wagon the moment one appears. This gratifies the reader, who as a consumer of automotive media fancies himself to be quite different from the two million other people who took delivery of a CR-V-shaped nonentity-mobile in the past year. All those other people bought CR-V-esque things because they are idiots, but he did so because the hipster wagon of his dreams did not happen to be available. This mild conspiracy is widely held to benefit all parties involved and it leads to many people writing very complimentary things in the comments section – but Derek didn’t play that.

Young Mr. K’s refusal to give new-car buyers a pass on that matter, even if they were valued members of the B&B, was both admirable and charming. Yet as a grizzled old veteran of the showroom sales floor, I have to wonder if all of the blame for – say, the existence of the BMW X4 – can be placed directly on the shoulders of the American middle class. Could there be another reason that we, the *ahem* enlightened cognoscenti showing our black fleece in uneven and miniscule distribution among endless flocks of white sheep, cannot get the cars that we are truly ready to buy?

Or, to strip the veneer of genericity from the question – why the fuck did I have to buy a two-door car in order to get a manual transmission in a Honda Accord V6?

08accordex-l-v6_27.jpg

Let’s apply Derek’s reasoning to that question. Is it because nobody wants a V6 manual Accord sedan? I doubt that. Somebody wants it. I want it. I’ve talked to other people who bought a stick-shift coupe or an auto sedan because they couldn’t have the manual sedan they wanted. The problem is that we, the Would-Be Stick Sedan Buyers Of America (WBSSBOA), are not Honda customers. We think we are, and the auto-journo-industrial complex pretends that we are, and the TV ads pretend that we are, but we are not.

We are the customers of Honda dealerships. Honda dealerships, in turn, are the customers of Honda. When Honda sells a car to the floorplan bank of a dealership, son, that car is sold in Honda’s eyes and it doesn’t matter if it sits behind the detail shop for seven years before getting a temp tag on it. In practice, of course, dealerships almost always move the metal sooner than that, even when the metal is garbage. And in exchange for agreeing to borrow money to buy millions of dollars’ worth of inventory that they then have to sell using regional TV spots and newspaper ads and free popcorn and deceptive business practices and whatnot, the dealers get to tell Honda just how the fuck it’s gonna be. Their power is not absolute – note that you can now have A/C and/or a stereo factory-installed in a Honda, which breaks the heart of the scumbag dealers who loved the profit from those add-ons the way John Bonham loved alcohol – but it is formidable.

1995 Ford Explorer

Now let’s sit down for a moment so Uncle Jack can tell you a story. In 1995, I worked at a very small Ford dealership. We had room on our lot for fewer than 200 cars and trucks of all kinds, period, point blank. But you can bet your sweet bippy that at least ten of those trucks would be absolutely identical Explorer 4WD XLT 945A package trucks in Medium Willow Green. Why? Because we could sell every one we got. If an eleventh Explorer 4WD XLT 945A package truck in Medium Willow Green showed up and we didn’t have room for it, we’d make the service employees park down the street.

How many Explorer Eddie Bauer trucks did we have? Never more than two, and usually none. It was simple. The Bauers didn’t sell in volume significant enough to justify keeping one in stock. Ninety-five percent of the people who came on the lot looking for a Bauer could be moved to an XLT 945A. The reverse was not true, because the Bauer cost so much more to lease due to its lack of “top to bottom sticker discount”, a concept on which I shall perorate further some other time.

“But Jack,” you say, “why didn’t you keep five Willow Green XLTs in stock and five Bauers (or, G-d help me, Limiteds) in stock?” Good question. The answer is simple. We could never be assured of a constant allocation stream for Willow Green XLTs. So we needed to get every one we could get, even if it meant occasionally having fifteen in stock, because that way we didn’t ever face a situation where we sold six of them in a weekend (happened All. The. Time.) and had none left. Faced with a choice between the certainty of selling a Willow Green XLT and the possibility of selling a red Bauer, we chose the XLT, in bulk, constantly.

Every Ford model had the equivalent of the Willow Green XLT. For the Escort, it was the cheapo LX hatchback in Jade Green. For the Taurus, it was the GL sedan in silver. For the F-150, it was the XLT supercab in red. We could not afford to be out of stock on these items. Being out of stock on these items would lead to losing the customer to another dealer who had these items in stock.

As a result, our under-200-unit dealership lot, viewed from the air, had a very monocultural look to it. We really only sold about twenty different combinations of model and equipment. Everything else was a special order. If you special ordered, you could have that black Explorer Limited 2WD. But you’d wait. And this is America, where people don’t wait.

Skoda Showroom, UK

If you go to Europe, on the other hand, you’ll see that car showrooms are just that — showrooms. You look at the car they have, then you order the car you want. You are the customer. The dealership is the delivery method. This method is so radically different in all of its implications for the underlying business practices that I feel it should be repeated:

And swear I meant that there so much that they give that line a rewind

In Europe, You are the customer. The dealership is the delivery method.

In America, the dealer is the customer. And the dealer wants quick-turning inventory. He does not have a lot of space to store that inventory and he doesn’t have unlimited funds with which to purchase it. Therefore, it isn’t just important a potential in-stock unit have a buyer; it’s important it have a buyer right now.

Let’s say that Honda brought the V6 manual sedan back. And let’s say that they needed a minimum production run of 10,000 in order to make it worthwhile. That’s about eleven units for every Honda dealer in America. Can the dealers sell eleven manual V6 sedans each in a year? I bet they could. But they would rather have that spot for an automatic I-4 sedan, because that car is a guaranteed quick sale. They can sell that spot in the lot more than eleven times a year with an I-4 automatic EX. And here’s the thing: they can use that spot on their lot for an I-4 EX in another color, which keeps customers on their lot. Customers like seeing all the available colors of a car in stock. It helps sell cars that aren’t in that color, because it creates the illusion of choice. Towards that end, we always had one white XLT 945A next to the green ones – so people could look at it and then buy the green one. So the reason you can’t get a manual V6 sedan is simple: the dealer loses money keeping it in stock, even if/when it sells, compared to the potential for stocking more popular choices in that space.

Why can’t you special-order a V6 manual sedan? The same reason Honda wouldn’t sell me a brown V6 manual coupe, even if I paid extra and waited for it. Manufacturers are extremely allergic to small-batch production. Honda does not want to sell 2,000 special-order manual V6 sedans a year. It creates an entire extra model to EPA certify and put in the brochure and observe for recalls. It’s too much hassle. Similarly, they don’t want to sell 500 brown V6 manual coupes. Better to force that small buyer group into just a few colors.

“But Jack,” you’re saying, “you’re describing conditions that have been in place for thirty years. What’s changed?” Well, what’s changed is the model mix, particularly at manufacturers like BMW. It’s exploded. They used to make one 3 Series – the 320i – and it had two doors, no choice. Now they make so many variants of the Three that some of them are called Fours and others are called X3s and others are called X4s and cut-down ones are called X1 and 2 Series.

The BMW dealer of 1980 just needed space for a few 320i coupes. Today’s BMW dealer needs guaranteed in-stock inventory of no fewer than a dozen highly popular variants of the 3 Series. When the X4 debuted, your local BMW dealer needed to make room on its lot to stock, say, five X4s in silver with Premium and cold weather packages. Where’d that space come from? Did it come from high-profit stuff like the 760Li or M6 Gran Coupe?

Of course not. It came from oddballs, the 328i Sport manuals, the Z4s, the non-DCT M3s. The space came from inventory that doesn’t have a guaranteed turn. The same is true for the V6 manual Accord, which used to be available for sale even though it was low-volume. That space can be better used for the HR-V or a Pilot Touring or any of the dozen-plus other vehicles Honda didn’t sell in this country twenty years ago. Where do you think the space for the repugnant CLA comes from at your local Benz shop? Not from gloss-black S-Classes with basic option packages. Not from GLE350s or whatever they’re called now. It comes from manual SLK250s and C250 Sports.

Is there a fix for the situation? In the short term, absolutely not. In the long term, it is possible that local assembly and more flexible supply lines could reduce the wait time for new-vehicle orders to a window that the average American could accept. Say, one week. I think if BMW could deliver a 3-Series to its customers seven days after they specced it out, as many as half of those customers would choose a custom order. Too bad that scenario won’t come true until long after the last vestige of character has been entirely removed from all available automobiles. By the time Honda can just-in-time me a brown V6 manual Accord with cloth interior and 17″ wheels, it won’t be possible to make one.

In the meantime, what can you do? It’s simple. Buy something weird. Order something the dealer doesn’t have. A different color. An odd combination of options. A lime-green coupe with a brown interior. Vote with your wallet for something else. Doesn’t matter what it is. Because when you order a car from the factory and refuse to consent to taking a dealer-traded vehicle or the next-best thing they have in stock, you become something you’ve never been before.

You become an automaker’s customer.

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Last Remaining United Kingdom Cadillac Dealer Closes http://www.thetruthaboutcars.com/2015/01/last-remaining-united-kingdom-cadillac-dealer-closes/ http://www.thetruthaboutcars.com/2015/01/last-remaining-united-kingdom-cadillac-dealer-closes/#comments Wed, 07 Jan 2015 19:44:03 +0000 http://www.thetruthaboutcars.com/?p=973201   In a move that that will be mourned by…well, I am not sure by who, the lone surviving Cadillac retailer in England has closed its doors. English trade journal Car Dealer Magazine reports that dealership Bauer Millett in Manchester shut down just before Christmas. Citing the high cost of doing business and increased competition, owner Mitch Millet also gave […]

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DTGFP Bush - 005.jpg  George W Bush Britain Visit

 

In a move that that will be mourned by…well, I am not sure by who, the lone surviving Cadillac retailer in England has closed its doors. English trade journal Car Dealer Magazine reports that dealership Bauer Millett in Manchester shut down just before Christmas. Citing the high cost of doing business and increased competition, owner Mitch Millet also gave up his Alfa Romeo, Abarth, Jeep and Chrysler franchises.

Millet did not say, but we imagine selling large left-hand drive American vehicles would be quite a challenge in the UK.

Cadillac President Johan de Nysschen has previously announced that Caddy will return to England in 2019, complete with diesel models. No word if the automaker is going to open an office on Savile Row.

Paging DeadWeight, paging DeadWeight…

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Cadillac Exec: “No Petrolheads Need Apply” http://www.thetruthaboutcars.com/2014/12/cadillac-exec-petrolheads-need-apply/ http://www.thetruthaboutcars.com/2014/12/cadillac-exec-petrolheads-need-apply/#comments Tue, 09 Dec 2014 13:00:38 +0000 http://www.thetruthaboutcars.com/?p=954809 It is not our intention to pile on poor Cadillac after our recent discussion, but comments made last week by the automaker’s marketing manager Ewe Ellinghaus must be noted. Speaking to Advertising Age, he repeated the new company mantra about the carmaker becoming a “the first luxury brand that happens to make cars,” and then added: “When I recruit new people, I don’t […]

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Casa-de-Cadillac-_Christmas-1955 Courtesy curbsideclassic.com

It is not our intention to pile on poor Cadillac after our recent discussion, but comments made last week by the automaker’s marketing manager Ewe Ellinghaus must be noted. Speaking to Advertising Age, he repeated the new company mantra about the carmaker becoming a “the first luxury brand that happens to make cars,” and then added:

“When I recruit new people, I don’t need petrolheads. We have more than enough petrolheads and we will still. I need people with experiences in other industries, but with luxury brands.”

We must assume that Ellinghaus, most recently with Montblanc pens and formerly with BMW, was using the European term equivalent to what we call a “car guy” or “car gal.” If so, Cadillac’s future is as bleak as the B&B thinks it is, and not just because of products.Ellinghaus and new Cadillac president Johan de Nysschen are assembling a team of perfectly-diverse and social-media savvy managers from non-automotive luxury companies who probably know all the right restaurants in their new home in New York City. That is fine but choosing not to hire proven car industry folks is just plain dumb. A car guy or gal is someone who has succeeded because they understand that sales only comes from great cars, great marketing and great dealers.  Bob Lutz is a car guy. Soichiro Honda was a car guy. Lee Iaccoca was a car guy. Ellinghaus says Cadillac has cars guys on staff but we can’t think of any; either way he insulted them all by saying, “we have more than enough petrolheads.”

Ford Motor Company has a true car guy on the rise by the name of Henry Ford III. The great-great grandson of the company’s founder actually spent a summer at Galpin Ford in Los Angeles selling cars to better understand the retail side of the business. We doubt you will ever see de Nysschen or Melody Lee, their “Director of Brand and Reputation Strategy” talking to Cadillac shoppers on a showroom floor, let alone ever setting foot in one of their retailers. Speaking of dealers, Cadillac needs a major overhaul of their dealer body, one that is lagging behind other luxury brands in customer handling. Whoever will be in charge of dealer relations needs to be a major car person, not Amber from Tiffany’s.

One issue not discussed by our commentariat in our last Caddy story was the impending move of their sales and marketing team from Detroit to Manhattan. One good thing about being in New York is the chance to hire managers away from the US headquarters of BMW, Mercedes-Benz and Subaru in northern New Jersey. (Oh, wait, they are not hiring petrolheads.) Separating themselves geographically from the rest of GM might be a good idea, but they went the wrong direction: they should have gone west to car-crazy Los Angeles. Lee recently said that people in New York City are a “little bit ahead of everyone else,” another insult to GM’s Michigan workforce. That may be, but people in Los Angeles are ten steps ahead when it comes to knowing great cars.

At least Ford was visionary enough to open an Orange County, CA office in 1999 as headquarters for its former “Premier Auto Group” brands, Range Rover, Volvo, Jaguar, Aston Martin, and Lincoln. Cadillac should have done the same. Ford was thus smack in the middle of the market where import luxury brands sell upwards of 20% of their cars and where Mercedes-Benz sells 50% of its AMG hot rods. Automotive trends start in Los Angeles, not New York.

Ford's old SOCAL luxury brand building; Caddy should have done the same

Ford’s former LA luxury brand building; Cadillac should have moved to SoCal rather than SoHo

Ford execs could walk downstairs on a Saturday morning and meet hundreds of knowledgeable car folks at the premiere “Cars and Coffee” gathering in the country. When the Caddy crew walks out of their Soho high-rise, what car folks will they be able to meet and greet other than limo and taxi drivers?

Cadillac has massive product issues and their sales are tanking this year. Industry insiders wonder how long de Nysschen and his crew will last at Caddy. We think his next move should be to Acura so he can say he worked for the trifecta of Muddled Brand Image, Nutty Nomenclature Automakers: Infiniti, Cadillac and Acura. At least he will be in Southern California, surrounded by petrolheads.

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GM Recalls 988 Dealerships http://www.thetruthaboutcars.com/2014/11/gm-recall-988-dealerships/ http://www.thetruthaboutcars.com/2014/11/gm-recall-988-dealerships/#comments Wed, 26 Nov 2014 16:44:37 +0000 http://www.thetruthaboutcars.com/?p=947185 In an unprecedented move that has sent chills down the white-belted spines of American car dealers, General Motors has declared nearly 1,000 of its 4,355 US retailers as “unfit and downright dangerous” to its customers and will be recalled immediately. GM Vice-President of Franchise Dealer Relations Bentley Reuss said in a news conference in Detroit […]

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Closed Chevy Store Courtesy rekarchitects.con

In an unprecedented move that has sent chills down the white-belted spines of American car dealers, General Motors has declared nearly 1,000 of its 4,355 US retailers as “unfit and downright dangerous” to its customers and will be recalled immediately.

GM Vice-President of Franchise Dealer Relations Bentley Reuss said in a news conference in Detroit today that the manufacturer was, “equally concerned about our customers’ emotional and mental well-being as we were with their physical health when we did the ignition recall. When GM dealers berate car buyers, throw the keys to the their trades on the roof and fail to disclose products like Lifetime Tire Nitrogen on their contracts, it hurts our mutual clients.”

Reuss noted that an independent survey of recent buyers of GM products identified 988 dealers who handled the sales process poorly. Reuss was quick to point out this was not a termination of the affected retailers’ dealer agreements as that would be prohibited by state auto dealers franchise laws. “We had a ton of our recall lawyers about to bolt to Takata,” said Reuss. “We put them to work reviewing the state laws and they found there was nothing prohibiting a manufacturer from recalling a dealer when customer’s mental health was put in danger by a dealer.”

When asked about why this groundbreaking action was taken, in spite of the company’s excellent showing in the recent J. D. Power Sales Satisfaction survey, Reuss laughed and said, “You mean J.D. Monopoly? We and our dealers control that survey 100%. Let’s just say that it is amazing what free oil changes can do. We did our own independent survey which yielded accurate results.”

Reuss admitted that the dealer abuse of car buyers had been going on “for some time” but that GM senior management was never told about it until earlier this year and that the person in charge of customer satisfaction initiatives has been fired.

Empty-Car-Lot-Courtesy aldersonarts.com

Reaction from the recalled dealers was predictable. Said David White, owner of Brandywine Chevrolet in suburban Philadelphia, “Its ironic that when business is bad, GM wants you to move the iron at any cost, customer satisfaction be damned.  We’ve sold a ton of cars for Chevy and this is the thanks we get. The funny thing is that our local GM factory guy was in my office when the announcement came out and he was not told about it. It didn’t stop him from trying to sell us some of those crappy Volts, though.”

Recalled dealers’ inventory will be shipped to the nearest same-franchise dealership, with the exception of the Corvette which will be redistributed at “the local Zone Manager’s discretion,” said Reuss.

Reuss noted that their review also uncovered 28 Pontiac, Oldsmobile and Saab stores still in operation despite the elimination of those franchises in the late 2000’s. Those retailers will be terminated rather than recalled. “Those dealerships were actually showing great customer satisfaction numbers so we are sad to see them go. Again,” said Reuss.

Tesla stock rose on the GM recall news, though founder Elon Musk said, “There goes our plans to partner with Cadillac next year to sell our cars.”

If you couldn’t already tell, this is a satirical article. -Ed.

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Kuniskis: Dealers Must Prove Themselves Worthy Of Selling Hellcat Challenger http://www.thetruthaboutcars.com/2014/09/kuniskis-dealers-must-prove-worthy-selling-hellcat-challenger/ http://www.thetruthaboutcars.com/2014/09/kuniskis-dealers-must-prove-worthy-selling-hellcat-challenger/#comments Wed, 10 Sep 2014 13:00:53 +0000 http://www.thetruthaboutcars.com/?p=910074 Dodge dealers wanting to help their customers destroy wannabes with the 2015 Challenger SRT Hellcat will themselves need to prove their worth to the brand before a single car leaves the carrier. Automotive News reports allocations of the 707-horsepower war machine will be based on the total number of all Dodges sold during the past […]

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2015 Dodge Challenger SRT with the HEMI® Hellcat

Dodge dealers wanting to help their customers destroy wannabes with the 2015 Challenger SRT Hellcat will themselves need to prove their worth to the brand before a single car leaves the carrier.

Automotive News reports allocations of the 707-horsepower war machine will be based on the total number of all Dodges sold during the past 180 days, according to brand chief Tim Kuniskis, with a second allocation in December will focus on the previous 90 days of such sales and the traditional 30-day inventory turn.

Further, Dodge will measure how many days each Hellcat remains on the lot after the initial allocation, with the goal of moving them off the lot as quickly as possible if more are to be delivered later on. Kuniskis acknowledges this may be a headache for those who opt to make a market adjustment similar to the one performed at a recent Los Angeles Chevrolet dealership, where a Camaro Z/28 was priced to move at $106,165:

If you want to market-adjust the car, that’s your right. But if your days-on-lot goes above what the other guys that are selling them at MSRP is, they will end up earning the allocation because their days-on-lot will be lower. Some dealers are going to have heartburn with that.

Kuniskis adds that he wants to see each Hellcat out there on the road for all to enjoy instead of sitting in a showroom “with a rope around it” like the Viper, and that his brand “worked hard” to price the beast at an attainable $60,990 with shipping included.

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Ally IPO Brings New Subprime Lending Options To The Table http://www.thetruthaboutcars.com/2014/04/ally-ipo-brings-new-subprime-lending-options-to-the-table/ http://www.thetruthaboutcars.com/2014/04/ally-ipo-brings-new-subprime-lending-options-to-the-table/#comments Tue, 22 Apr 2014 13:15:43 +0000 http://www.thetruthaboutcars.com/?p=807346 With Ally Financial’s IPO now making the rounds on the New York Stock Exchange, the former financing arm of General Motors has its eyes on taking more of the subprime market, a move benefiting dealers once the last ties to the U.S. federal government have been severed and sold to the stock market. Automotive News […]

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With Ally Financial’s IPO now making the rounds on the New York Stock Exchange, the former financing arm of General Motors has its eyes on taking more of the subprime market, a move benefiting dealers once the last ties to the U.S. federal government have been severed and sold to the stock market.

Automotive News reports Ally is moving forward with plans to lower cost of funds by paying off older high-interest debt, as well as issuing the IPO that would allow the U.S. Treasury to sell its remaining 17 percent ownership in the automotive lending company in the near future, having already sold 95 million shares for $2.4 billion through the IPO early this month.

In turn, Ally would be able to use bank deposits to fund “near prime” consumers — those with credit scores between 620 and 660 — in financing new car leases and purchases. Currently, the lender holds 11 percent of its portfolio in subprime lending, though the percentage was obtained through more expensive funding sources.

Once bank deposits are made available, however, the increased lineup of options for Ally would provide more flexibility for gaining more share in the subprime market, a strategy CEO Michael Carpenter says is “dealer-centric.”

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Dealers Uneasy About Turnover At GM’s Sales & Marketing Team http://www.thetruthaboutcars.com/2014/02/dealers-uneasy-about-turnover-at-gms-sales-marketing-team/ http://www.thetruthaboutcars.com/2014/02/dealers-uneasy-about-turnover-at-gms-sales-marketing-team/#comments Tue, 11 Feb 2014 11:30:34 +0000 http://www.thetruthaboutcars.com/?p=739065 As inventories of unsold cars surge past 100 days’ supply, GM has shuffled its sales and marketing organizations in an attempt to move some of that bloated inventory. Last week, GM moved Buick-GMC sales chief Brian Sweeney, 46, to the top sales post at Chevrolet, taking over for the retiring Don Johnson. Sweeney’s replacement will be […]

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Duncan Aldred, Brian Sweeney and Don Johnson.

As inventories of unsold cars surge past 100 days’ supply, GM has shuffled its sales and marketing organizations in an attempt to move some of that bloated inventory. Last week, GM moved Buick-GMC sales chief Brian Sweeney, 46, to the top sales post at Chevrolet, taking over for the retiring Don Johnson. Sweeney’s replacement will be Duncan Aldred, 43, who most recently has been running GM’s British brand, Vauxhall. Both executives will will report to new U.S. sales chief Steve Hill, 53.

Automotive News is reporting that the continued changes in personnel at GM’s sales and marketing divisions has been a source of frustration for dealers and ad agency executives in recent years. Some dealers feel that what they see as GM’s strongest product lineup in generations is being compromised by chaos in the marketing team responsible for promoting those new products.

“The changes can be a distraction. It makes it hard for dealers to buy into the go-to-market strategy,” said the unidentified owner of a Chevrolet dealership and a Buick-GMC store out West who spoke to Automotive News.

When he takes the job, Sweeney will be Chevy’s fifth U.S. sales chief in less than five years. Cadillac has had four sales chiefs during that period.

Paul Edwards took over U.S. marketing for Chevy only last month, appointed by the brand’s global marketing chief, Tim Mahoney, who himself has been on the job for just 10 months. Cadillac’s global marketing boss, Uwe Ellinghaus, 44, started in that position last month.

 

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Domestic Automakers’ Inventories Soar Past 100 Days’ Supply http://www.thetruthaboutcars.com/2014/02/domestic-automakers-inventories-soar-past-100-days-supply/ http://www.thetruthaboutcars.com/2014/02/domestic-automakers-inventories-soar-past-100-days-supply/#comments Tue, 11 Feb 2014 11:00:26 +0000 http://www.thetruthaboutcars.com/?p=738929 Inventories of unsold cars and light trucks have swollen to their highest levels since the recession while sales growth in the U.S. market has slowed significantly in the past five months. That combination could mean larger discounts and incentives and lower profit margins in 2014. According to Automotive News, all three domestic automakers started February with […]

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Inventories of unsold cars and light trucks have swollen to their highest levels since the recession while sales growth in the U.S. market has slowed significantly in the past five months. That combination could mean larger discounts and incentives and lower profit margins in 2014. According to Automotive News, all three domestic automakers started February with more than a 100-day supply of unsold vehicles. Industry-wide automakers had 88 days’ worth of vehicles at the start of February, the highest February inventories have been since 2009, when the industry was at its nadir.

As a portent of things to come, on Friday GM began a nearly month long Presidents Day promotion on Chevrolet, Buick and GMC vehicles, with some of GM’s biggest incentive offers in months.

In January, sales declined 3 percent and the seasonally adjusted annualized selling rate fell to 15.2 million, the lowest since April. Much of that decline was attributed by automakers to the severe winter weather that blanketed much of the country. Analyst, though, say that there are other factors besides the weather.

Morgan Stanley analyst Adam Jonas said that after four years of growth, the sales pace “appears to have stalled.”

“The industry stands at a crossroads,” Jonas told AN. “We really think the best of the U.S. auto replacement cycle is over. The incremental buyer is moving from someone who needs to replace their car to one who just wants to, making financial willingness to lend and credit availability more important than ever.”

Car companies are minimizing the impact of rising inventories and so far most are not giving in to increasing incentives.

GM’s inventory grew by about 32,000 units in January in a month that saw sales fall 12% from the previous year. That resulted in a 114-day supply of vehicles as of Feb. 1, the highest among major automakers, up significantly from 81 days a month earlier.

Ford Motor’s Feb. 1 supply was up to 107 days, after starting the year at 73 days, and Chrysler Group had a 105-day supply, up from 79 days. Chrysler’s inventory situation was helped by strong sales of the new Jeep Cherokee.

 

 

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Dealers: Lengthy Long-Term Financing A Necessary Evil http://www.thetruthaboutcars.com/2014/02/dealers-lengthy-long-term-financing-a-necessary-evil/ http://www.thetruthaboutcars.com/2014/02/dealers-lengthy-long-term-financing-a-necessary-evil/#comments Thu, 06 Feb 2014 15:40:01 +0000 http://www.thetruthaboutcars.com/?p=734833 Though many a dealer knows lengthy long-term financing is a bad deal for all involved, Automotive News reports that attendees at the recent American Financial Services Association’s Vehicle Finance Conference in New Orleans acknowledged that such financing is necessary to do business. Longer terms and low interest rates have kept the average monthly payment on those […]

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Suckers at the Stock Photo Dealership with a Credit Card

Though many a dealer knows lengthy long-term financing is a bad deal for all involved, Automotive News reports that attendees at the recent American Financial Services Association’s Vehicle Finance Conference in New Orleans acknowledged that such financing is necessary to do business.

Longer terms and low interest rates have kept the average monthly payment on those loans flat despite increases in loan terms used to finance a new or used vehicle purchase. Currently, the average length of a loan for a new car is at 65 months (used cars are at 61 months), but the fastest-growing category are loan terms from 72 to 84 months, which are likely to leave consumers upside-down come trade-in time; brand and dealership loyalties are also affected negatively by this category.

As for why dealers continue to offer superlong-term financing, varying factors in each consumer, like credit scores and trade-in issues, contribute to the need to offer options in order to make a purchase or lease affordable for the consumer.

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Mazda to Upgrade U.S. Dealer Network, Cull Underperformers, Focus On 35 Key Markets http://www.thetruthaboutcars.com/2013/12/mazda-to-upgrade-u-s-dealer-network-cull-underperformers-focus-on-35-key-markets/ http://www.thetruthaboutcars.com/2013/12/mazda-to-upgrade-u-s-dealer-network-cull-underperformers-focus-on-35-key-markets/#comments Tue, 17 Dec 2013 11:00:12 +0000 http://www.thetruthaboutcars.com/?p=681818 Akira Marumoto, Mazda’s executive VP for North America, said that the company will revamp its dealer network as it aims to increase U.S. sales by a third over the next two years.  Automotive News reports that underperforming dealers will be culled and dealers in poor locations will be encouraged to open up new stores in […]

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Mazda-Dealership

Akira Marumoto, Mazda’s executive VP for North America, said that the company will revamp its dealer network as it aims to increase U.S. sales by a third over the next two years.  Automotive News reports that underperforming dealers will be culled and dealers in poor locations will be encouraged to open up new stores in more promising places. The company has identified 35 key metropolitan markets where it will focus its sales and marketing efforts. Mazda is highly dependent on North American sales with almost a third of its global sales taking place here.

Mazda currently has 637 franchised dealers in the United States. Marumoto, speaking at last month’s Tokyo auto show, wouldn’t say how many U.S. dealers the company thinks it needs, or how many dealers might be jettisoned or moved, but he did say that the company will be “aggressive” and that “Our initiatives are bearing fruit.” 2013 will likely be the fourth year in a row that Mazda had increased its U.S. sales.

Masamichi Kogai, Mazda’s new CEO set a goal to sell 400,000 units in the fiscal year ending March 31, 2016, up from a projected 300,000 units in the current fiscal year, which itself would be an increase of about 10% over the previous fiscal year that ended March 31, 2013. Through November, sales are up 5% over last year. 400,000 units would be a record for Mazda, whose previous best year was 1986, when it sold almost 380,000 cars and light trucks in the U.S. Marumoto said that most of the additional 100,000 U.S. sales will come from the CX-5 small crossover, which competes in a hot segment, and the newly redesigned Mazda3. Lower volume vehicles like the Miata MX-5 and Mazda’s larger CUV offering, the CX-9, are hoped to show incremental increases in sales with greater profit margins than the high volume vehicles. The introduction of a diesel engine is hoped to increase Mazda6 sales as well.

Marumoto said that the CX-9 and the Miata will soon be redesigned. “Toward the fiscal year ending March 2016, we will have a new CX-9, and those are the models where we are prioritizing for profit improvement,” he said. “The MX-5 Miata, because it’s a sports car, they sell quite well in the first three years.” The next Miata is being developed in conjunction with Fiat, which will sell the roadster as an Alfa Romeo.

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Virginia Allows Tesla To Establish Traditional Dealership http://www.thetruthaboutcars.com/2013/10/virginia-allows-tesla-to-establish-traditional-dealership/ http://www.thetruthaboutcars.com/2013/10/virginia-allows-tesla-to-establish-traditional-dealership/#comments Fri, 04 Oct 2013 15:16:49 +0000 http://www.thetruthaboutcars.com/?p=604601 One week after we mused that electric carmaker Tesla would never be able to defeat current state laws prohibiting factory direct automobile sales and thus must join the franchised dealer model, the company proved us wrong thanks to the Commonwealth of Virginia. According to Automotive News, the Virginia Department of Motor Vehicles and, amazingly, the […]

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"tesla

One week after we mused that electric carmaker Tesla would never be able to defeat current state laws prohibiting factory direct automobile sales and thus must join the franchised dealer model, the company proved us wrong thanks to the Commonwealth of Virginia.


According to Automotive News, the Virginia Department of Motor Vehicles and, amazingly, the Virginia Automobile Dealer Association have come to an agreement to allow Tesla to open one dealership in the state. Tesla currently operates a order-taking outlet in a mall in Tysons Corner, a suburb of Washington, D.C., while their nearest service center is in Rockville, Maryland. Although details of the agreement are sealed, it is likely that Tesla will be allowed to build a full service store in the Tysons Corner area.

Tesla has been wrangling with the state for some time. Their request to open a dealership had previously been denied by the state’s DMV and the company was appealing the ruling in a county court. The next step is for the Virginia Motor Dealer Vehicle board to grant Tesla a business license.

Tesla had previously won approval to sell its vehicles in the state of New Hampshire but having a point near the nation’s capital is huge for the company’s exposure. Besides having near-perfect client demographics for the product, it affords CEO Elon Musk the opportunity to showcase his dealership to members of Congress, whom he is considering lobbying to pass a federal law allowing factory direct car sales to customers.

As this agreement has been in the works for some time, we cannot say if our editorial had any influence on the Virginia entities, but we cannot help but wonder if TTAC commenter and dealer apologist Ruggles, who posted a remarkable one hundred and seventy-four comments on our story last week, might have been in Richmond this week, wearing the lawmakers down until they caved.

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Volkswagen Cuts Sales Targets For US Dealers http://www.thetruthaboutcars.com/2013/07/volkswagen-cuts-sales-targets-for-us-dealers/ http://www.thetruthaboutcars.com/2013/07/volkswagen-cuts-sales-targets-for-us-dealers/#comments Wed, 24 Jul 2013 23:30:17 +0000 http://www.thetruthaboutcars.com/?p=496971 Despite planning to sell 486,000 units in America this year, Volkswagen has trimmed its sales targets to 440,000 units, after shedding market share in the first half of 2013. The slowdown is sales has caused Volkswagen to offer aggressive incentives on vehicles, such as 0 percent financing across the board, while workers at its Chattanooga […]

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Despite planning to sell 486,000 units in America this year, Volkswagen has trimmed its sales targets to 440,000 units, after shedding market share in the first half of 2013.

The slowdown is sales has caused Volkswagen to offer aggressive incentives on vehicles, such as 0 percent financing across the board, while workers at its Chattanooga plant have been laid off. Inventories of VW cars remain high, and have risen to 105 days supply as of July 1st, up from 92 days in June. Dealers are crying out for key products like a mid-size crossover, but so far, Volkswagen has only announced a revival of the failed Phaeton luxury car.

On the dealer side, Volkswagen has been struggling with an unhappy dealer body, which was ranked last in a NADA survey. A reworking of VW’s bonus complicated bonus system for dealers, which ended up undoing some of the changes made in January 2013, helped boost satisfaction levels, but dealers are still facing a tough time after three years of rapid growth.

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