The Truth About Cars » dealerships http://www.thetruthaboutcars.com The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. Sun, 03 Aug 2014 16:11:05 +0000 en-US hourly 1 http://wordpress.org/?v=3.9.1 The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars no The Truth About Cars editors@ttac.com editors@ttac.com (The Truth About Cars) 2006-2009 The Truth About Cars The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars » dealerships http://www.thetruthaboutcars.com/wp-content/themes/ttac-theme/images/logo.gif http://www.thetruthaboutcars.com Honda Dealerships Asked To Issue Waivers Over Defective Airbags http://www.thetruthaboutcars.com/2014/08/honda-dealerships-asked-issue-waivers-defective-airbags/ http://www.thetruthaboutcars.com/2014/08/honda-dealerships-asked-issue-waivers-defective-airbags/#comments Fri, 01 Aug 2014 10:00:33 +0000 http://www.thetruthaboutcars.com/?p=877626 Ever wonder what would happen if Dethklok decided to go into the automotive business, especially with the virtual band’s use of pain waivers as a legal means to protect themselves from whatever death and/or dismemberment would likely occur during a concert? Wonder no more: Honda is asking its dealers to ask their customers to sign […]

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Scholfield Honda Dealership

Ever wonder what would happen if Dethklok decided to go into the automotive business, especially with the virtual band’s use of pain waivers as a legal means to protect themselves from whatever death and/or dismemberment would likely occur during a concert?

Wonder no more: Honda is asking its dealers to ask their customers to sign a waiver acknowledging the used car they’re about to buy off the lot may have an Takata airbag that, in the event of a crash, could kill them upon deployment.

Automotive News reports the automaker’s Airbag Inflator Recall Disclosure and Acknowledgment waiver affects the following Honda and Acura vehicles:

  • 2001-2005 Accord V6
  • 2001-2007 Accord I4
  • 2002-2003 TL
  • 2002-2003 CL
  • 2002-2004 Odyssey
  • 2002-2006 CR-V
  • 2003-2006 MDX
  • 2003-2007 Pilot
  • 2003-2011 Element
  • 2005 RL
  • 2006 Ridgeline

Most dealers believe the waiver is a smart move by Honda, citing liability concerns. However, New Jersey lawyer Eric Chase says the waver could prove to be a problem for both parties:

If a dealer called me and said, “We’re talking about something that is under recall but we can’t repair it and it’s dangerous to the point we’d have to warn them about death,” I’d say, “You’ve got to do everything you legally can to make sure a consumer does not get behind that wheel.”

Meanwhile, a Honda representative said that once the automaker has gone through its VIN database and those of all 50 states’ DMVs to find and recall all vehicles affected by the Takata airbag crisis, dealers won’t need to issue the wavers come purchase time, instead using a VIN search to determine any potential problem with a given vehicle.

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Exporters Caught In Crossfire Over US Auto Exports To Chinese Customers http://www.thetruthaboutcars.com/2014/07/exporters-caught-in-crossfire-over-us-auto-exports-to-chinese-customers/ http://www.thetruthaboutcars.com/2014/07/exporters-caught-in-crossfire-over-us-auto-exports-to-chinese-customers/#comments Tue, 22 Jul 2014 13:00:20 +0000 http://www.thetruthaboutcars.com/?p=871418 Though most automakers prohibit sales of their wares to exporters, and though the government can sometimes block an export despite such exportation being legal, exporters in the United States are finding themselves in the crossfire over premium vehicle exports to Chinese consumers who prefer to pay lower U.S. prices over higher local prices. Automotive News […]

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Though most automakers prohibit sales of their wares to exporters, and though the government can sometimes block an export despite such exportation being legal, exporters in the United States are finding themselves in the crossfire over premium vehicle exports to Chinese consumers who prefer to pay lower U.S. prices over higher local prices.

Automotive News reports automakers are seeking help from the Secret Service and Customs to prevent any vehicle sold to a straw buyer from leaving port to the real customer residing in China, even though the exports are legal under current law.

Further, as the dealerships are paid in full for premium vehicles like the Land Rover Evoque or Tesla Model S, one federal judge in Ohio dismissed the alleged victimization of the dealer and automaker in her decision to make the federal government return two premium vehicles and $1.2 million in cash to an exporter.

Meanwhile, dealers must tread carefully around exporters, lest their automakers penalize such transaction, from chargebacks to being stripped of their franchise agreements. BMW, Porsche, Land Rover and Mercedes conducted the former to the tune of $30.4 million between 2008 and 2013.

Most of the legal trouble for exporters comes via tax evasion and identity faith, though those are ancillary to the civil lawsuits related to exporting premium vehicles to Chinese customers, who would otherwise be forced to pay two to three times the U.S. price at home. Said prices include heavy taxation and a 25 percent tariff on imported vehicles.

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GM Offers Incentives To Speed Up Ignition Recall Repairs http://www.thetruthaboutcars.com/2014/06/gm-offers-incentives-to-speed-up-ignition-recall-repairs/ http://www.thetruthaboutcars.com/2014/06/gm-offers-incentives-to-speed-up-ignition-recall-repairs/#comments Mon, 23 Jun 2014 10:00:02 +0000 http://www.thetruthaboutcars.com/?p=850106 With 2.6 million vehicles needing new ignition switches fueling service bay backlogs, General Motors is offering its dealership network incentives to speed up the process. Automotive News reports dealership service and parts managers who install 90 percent or more of the ignition-switch replacement kits by July 7 will receive a $250 credit for use at […]

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With 2.6 million vehicles needing new ignition switches fueling service bay backlogs, General Motors is offering its dealership network incentives to speed up the process.

Automotive News reports dealership service and parts managers who install 90 percent or more of the ignition-switch replacement kits by July 7 will receive a $250 credit for use at an unnamed online gift shop. The credit carrot/stick combo is part of GM’s Ignition Switch Recall Completion Initiative, which will also offer $4,000 in credit to 50 qualifying dealerships chosen at random, while one dealership will receive $10,000; both credit incentives are meant to be split between service and parts managers.

Meanwhile, 199,457 vehicles have undergone the 70-minute surgery through June 16 according to the automaker, while 400,000 kits have arrived at dealership service bays thus far. GM holds that enough kits will be made to repair the majority of the affected vehicles by October. Customers will also receive new keys to go with the new switches.

Made in supplier Delphi’s plant in Mexico, the kits can also be applied to vehicles other than the ones they were meant to fix, but only if the affected customers aren’t able to have their vehicle repaired “in a reasonable time.” To ensure customers don’t miss out, GM will also conduct an outreach program via email in the next few weeks to those who haven’t begun the process of repairing their affected vehicles.

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FTC Launches Investigation Into Deceptive Marketing Of Biweekly Payments http://www.thetruthaboutcars.com/2014/05/ftc-launches-investigation-into-deceptive-marketing-of-biweekly-payments/ http://www.thetruthaboutcars.com/2014/05/ftc-launches-investigation-into-deceptive-marketing-of-biweekly-payments/#comments Fri, 23 May 2014 13:00:53 +0000 http://www.thetruthaboutcars.com/?p=829377 The Federal Trade Commission is launching an investigation into biweekly payments sold as a product by dealership finance departments on the basis that consumers may not be getting their money’s worth with such payments. Automotive News reports the National Automobile Dealers Association’s Legal and Regulatory Affairs unit “received a number of questions and comments about […]

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The Federal Trade Commission is launching an investigation into biweekly payments sold as a product by dealership finance departments on the basis that consumers may not be getting their money’s worth with such payments.

Automotive News reports the National Automobile Dealers Association’s Legal and Regulatory Affairs unit “received a number of questions and comments about biweekly payment F&I products,” and that the FTC recently issued civil investigative demands — requests for documents and/or testimonies — to dealerships regarding how biweekly payments are marketed by the latter’s finance departments. The organization emphasized to its members that finance employees are aware of and are properly trained “to accurately and adequately disclose all fees and costs, and not to overstate any potential benefits.”

Though biweekly payments are meant to bring consumers out of negative equity and the overall loan debt faster than other methods, NADA delivered an example where the fees associated with such payments ultimately hinder any savings on interest. The example given has a consumer save $656.61 on interest for a $27,342.96 loan on a vehicle, but pays $613.50 in total fees over 110 payments, providing little value for the consumer.

NADA concludes by warning dealers that deceptive marketing of savings allegedly offered by biweekly payments would land the dealers and their finance managers under the gun of the FTC.

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GM Changes Mind About Airbag Recall, Ignition Switches http://www.thetruthaboutcars.com/2014/04/gm-changes-mind-about-airbag-recall-ignition-switches/ http://www.thetruthaboutcars.com/2014/04/gm-changes-mind-about-airbag-recall-ignition-switches/#comments Wed, 30 Apr 2014 13:00:32 +0000 http://www.thetruthaboutcars.com/?p=812898 Automotive News reports General Motors, already being hammered from all sides from its delayed recall of 2.59 million vehicles affected by a defect in the ignition switch, issued a customer-satisfaction campaign in mid-March of this year for 1.2 million crossovers whose airbags may fail to deploy in a side-impact crash, an issue known to the […]

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Automotive News reports General Motors, already being hammered from all sides from its delayed recall of 2.59 million vehicles affected by a defect in the ignition switch, issued a customer-satisfaction campaign in mid-March of this year for 1.2 million crossovers whose airbags may fail to deploy in a side-impact crash, an issue known to the automaker since 2008. Once the National Highway Traffic Safety learned of the decision, however, GM did an about-face and upgraded the campaign to a full recall. In addition, its Executive Field Action Decision Committee considered a full recall as early as November 2010, opting to issue service bulletins four times between then and 2012 instead, which spokesman Alan Adler claims satisfied the issue thoroughly without the need for increased action.

Bloomberg says GM is tying its executive incentive packages based on earnings, global market share and quality. The plan was originally announced in February as a work-in-progress during a statement about a proposed pay package of $14.4 million with $10 million in long-term compensation for CEO Mary Barra, which will be decided upon during the automaker’s annual stockholders meeting in June. In the current announcement, GM believes that linking executive pay “to the achievement of both short- and long-term goals” will serve as “an important cornerstone of employee engagement.”

As for the switch itself, its time may have finally come as GM considers dropping the ignition key for push-button start throughout the automaker’s entire range, a technology found in 72 percent of all 2014 vehicles sold in the United States. The move would put it in line with consumers who view the button “as a convenience and a luxury feature” according to Edmunds.com senior editor Bill Visnic, adding that the ignition switch “is a very fussy, electro-mechanical part that’s seen [by consumers] as less reliable.” Potential issues surround the push-button start, however, including length of time between action and reaction, as well as drivers remembering to shut the engine down prior to departing the vehicle.

Finally, Automotive News reports most dealers may never see a recalled vehicle enter their service bays, as many affected owners either never receive the recall notice or receive the document, but end up tossing or otherwise forgetting about the recall. Further, even with a recall in the headlines like the one GM is still working through, some owners may not have the inclination to go through with repairs, whether due to time, other priorities or apathy.

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Dealers Still Waiting For Replacements, DeGiorgio Linked To Original Design And Upgrade http://www.thetruthaboutcars.com/2014/04/dealers-still-waiting-for-replacements-degiorgio-linked-to-original-design-and-upgrade/ http://www.thetruthaboutcars.com/2014/04/dealers-still-waiting-for-replacements-degiorgio-linked-to-original-design-and-upgrade/#comments Mon, 14 Apr 2014 14:00:51 +0000 http://www.thetruthaboutcars.com/?p=797362 Automotive News reports dealers are still waiting for the ignition switches meant to replace the out-of-spec switch at the center of the ongoing recall crisis at General Motors. The switch was to have arrived at dealerships beginning this week, yet most dealers are in a “holding pattern” on deliveries. Once the parts do arrive, service […]

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GM ignition diagram

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

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

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

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

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

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

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

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

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

 

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GM Dealers Deal With Part Backlog, CEO Asked To Back Rental Car Bill http://www.thetruthaboutcars.com/2014/04/gm-dealers-deal-with-part-backlog-ceo-asked-to-back-rental-car-bill/ http://www.thetruthaboutcars.com/2014/04/gm-dealers-deal-with-part-backlog-ceo-asked-to-back-rental-car-bill/#comments Wed, 09 Apr 2014 14:03:25 +0000 http://www.thetruthaboutcars.com/?p=791337 Automotive News reports the repairs of some 2.6 million vehicles affected by the 2014 General Motors ignition switch recall will be delayed by one week as the needed part slowly enters into the automaker’s dealership network. Though most dealers thought they would be receiving the part Monday, GM spokesman Kevin Kelly insisted the part was […]

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

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

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

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

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

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

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

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

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

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

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

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GM Shareholders Unflappable As Recall Repairs Begin This Week http://www.thetruthaboutcars.com/2014/04/gm-shareholders-unflappable-as-recall-repairs-begin-this-week/ http://www.thetruthaboutcars.com/2014/04/gm-shareholders-unflappable-as-recall-repairs-begin-this-week/#comments Mon, 07 Apr 2014 12:58:22 +0000 http://www.thetruthaboutcars.com/?p=788714 In spite of General Motors losing $3 billion in shareholder value over four weeks since the recall crisis began, Bloomberg reports investors are holding onto their shares in the belief the automaker will recover from the debacle. Though questions about the delay persist, most shareholders are pleased with how CEO Mary Barra is guiding her […]

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

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

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

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

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

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

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

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

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GM Adds Clinton Media Director To Crisis Team http://www.thetruthaboutcars.com/2014/04/gm-adds-clinton-media-director-to-crisis-team/ http://www.thetruthaboutcars.com/2014/04/gm-adds-clinton-media-director-to-crisis-team/#comments Fri, 04 Apr 2014 19:27:37 +0000 http://www.thetruthaboutcars.com/?p=787369 In an interview with New York Magazine, consumer advocate Ralph Nader said General Motors CEO Mary Barra has “a good opportunity” to make serious changes to the corporate cost culture that gave rise to the 2014 ignition recall crisis. Suggestions include appointing an independent ombudsman with a direct line to the president and CEO for […]

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Original 5 tower complex, John Portman, 1977

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

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

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

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

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

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

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

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

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

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

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

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

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

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GM Hits Social Media, As Part Number Debacle Adds Confusion http://www.thetruthaboutcars.com/2014/03/gm-hits-social-media-as-part-number-debacle-adds-confusion/ http://www.thetruthaboutcars.com/2014/03/gm-hits-social-media-as-part-number-debacle-adds-confusion/#comments Thu, 27 Mar 2014 13:32:08 +0000 http://www.thetruthaboutcars.com/?p=781977 The latest development in the GM ignition recall fiasc Automotive News reports Barra recorded and released five short videos for GM’s YouTube channel in an ongoing attempt to minimize the damage to her company’s reputation in the court of public opinion. The overall message of the videos is that the public is the automaker’s compass, […]

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2007 Chevrolet HHR 2LT Special Edition

The latest development in the GM ignition recall fiasc

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Tesla Reader’s Digest Vol. 1: The Politics Of Dancing http://www.thetruthaboutcars.com/2014/03/tesla-readers-digest-vol-1-the-politics-of-dancing/ http://www.thetruthaboutcars.com/2014/03/tesla-readers-digest-vol-1-the-politics-of-dancing/#comments Mon, 24 Mar 2014 12:19:42 +0000 http://www.thetruthaboutcars.com/?p=779249 In the first edition of the Tesla Reader’s Digest, Washington state makes nice with Tesla’s business model as Arizona ponders doing the same — while fighting three other states for the right to host Tesla’s Gigafactory, no less. Meanwhile, General Motors pens a letter to Ohio asking the state to force the EV automaker to […]

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Tesla Roadster and Model S

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

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

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

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

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

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

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

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

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

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

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Less Than Thirty Percent Of Kia Dealers To Sell 2015 K900 http://www.thetruthaboutcars.com/2014/02/less-than-thirty-percent-of-kia-dealers-to-sell-2015-k900/ http://www.thetruthaboutcars.com/2014/02/less-than-thirty-percent-of-kia-dealers-to-sell-2015-k900/#comments Thu, 27 Feb 2014 13:55:24 +0000 http://www.thetruthaboutcars.com/?p=756329 Kia’s first RWD V8 premium sedan for the United States is set to arrive next month, though less than 30 percent of all Kia dealerships will be ready to welcome the K900 when the first shipments arrive. Edmunds reports the $60,000 sedan — aimed at the Lexus LS 400 and Mercedes S550 — will be […]

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Kia’s first RWD V8 premium sedan for the United States is set to arrive next month, though less than 30 percent of all Kia dealerships will be ready to welcome the K900 when the first shipments arrive.

Edmunds reports the $60,000 sedan — aimed at the Lexus LS 400 and Mercedes S550 — will be sold by dealerships who signed up for the $30,000 training and display package designed around the K900, according to Kia spokesman Scott McKee:

The experience is designed to shift the culture, prepare authorized K900 dealers to welcome customers who may have never visited a Kia dealership and bring with them expectations set by other luxury brands. That cultural change will have a ripple effect through our network, elevating the experience for all Kia customers.

Kia executive vice president of sales and marketing Michael Sprague added that 220 of Kia’s 765 dealers in U.S. premium markets along the coasts and within the South and Chicago have signed up thus far, though he expects more will join the party once the first phase of the training and marketing push behind the K900 is successful.

As for what customers will see when the K900 arrives in those select showrooms, the premium sedan will have its own space, with dark wood inlays cut into the floor, displays highlighting various color and trim options, and a touchscreen device showing a video of the car’s interior.

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Only Select Fiat Dealers Will Get Alfa Romeo Franchises http://www.thetruthaboutcars.com/2014/02/only-select-fiat-dealers-will-get-alfa-romeo-franchises/ http://www.thetruthaboutcars.com/2014/02/only-select-fiat-dealers-will-get-alfa-romeo-franchises/#comments Tue, 25 Feb 2014 12:00:32 +0000 http://www.thetruthaboutcars.com/?p=753569 Fiat Chrysler Automobiles is set to bring Alfa Romeo back into the United States market after a two-decade absence with the 4C, but only the best-performing Fiat dealerships will be selected to sell the first new Alfas when the lighweight $60,000 sports car rolls off the dock in June. The Detroit News reports the majority […]

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Alfa Romeo 4C

Fiat Chrysler Automobiles is set to bring Alfa Romeo back into the United States market after a two-decade absence with the 4C, but only the best-performing Fiat dealerships will be selected to sell the first new Alfas when the lighweight $60,000 sports car rolls off the dock in June.

The Detroit News reports the majority of Fiat dealerships who were promised an Alfa wing will not be along for the ride in 2014. FCA CEO Sergio Marchionne stated that his company would only allow “the best-performing Fiat dealers to participate” based on “simple dealer metrics” and efficacy in representing Fiat. Though he also added that said dealers knew who they were, FCA spokesman Rick Deneau countered his boss’s statement, saying that those dealers “have not been identified yet.”

While the 4C will be the only Alfa offering available this year, it will be joined in 2015 by the Giulia, Giulietta and a new Spider co-developed with Mazda, which will also underpin the latter’s new MX-5 roadster. The 4C is motivated by a turbocharged four-pot driving 240 horses out of the back gate, pushing the 1875-pound sports car from naught to 60 in 4.5 seconds.

However, follow-through hasn’t been FCA’s strong suit regarding Alfa’s return, with the brand originally promised to Fiat dealers in 2012, then last year before settling upon June 2014. The return was also promised to come with a full lineup to display in showrooms, but only the 4C will be setting the pace this year as it goes up against the Porsche Cayman and Chevrolet Corvette Stingray.

According to IHS Automotive, selected Fiat dealers will move 500 4Cs in 2014, with 8,400 more in 2015 once more dealers join the fray. IHS also expects Alfa to move 28,000 units in the U.S. by the end of 2016.

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Ford Repair Shops to Undergo Mandatory Certification For Aluminium F-150s http://www.thetruthaboutcars.com/2014/01/ford-repair-shops-to-undergo-mandatory-certification-for-aluminium-f-150s/ http://www.thetruthaboutcars.com/2014/01/ford-repair-shops-to-undergo-mandatory-certification-for-aluminium-f-150s/#comments Tue, 28 Jan 2014 17:15:58 +0000 http://www.thetruthaboutcars.com/?p=725842 Own a Ford dealership with a repair shop? Should your mechanics and body repair crew desire to the ability to repair the new aluminium F-150, then prepare to seek certification with a substantial price tag. At a National Automobile Dealers Association meeting this weekend, the Blue Oval announced a certification program for Ford dealers with […]

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2015-ford-f-150

Own a Ford dealership with a repair shop? Should your mechanics and body repair crew desire to the ability to repair the new aluminium F-150, then prepare to seek certification with a substantial price tag.

At a National Automobile Dealers Association meeting this weekend, the Blue Oval announced a certification program for Ford dealers with repair shops in order to be able to work on the new F-150s. The program — which includes tooling upgrades alongside training — will range between $30,000 and $50,000, though Ford will pitch in with $10,000 for each dealership’s shop upgrade and certification.

The move goes against an earlier statement made by the automaker, which did not require dealer-owned repair facilities to be certified to work on the aluminum-bodied truck. However, the certification is in line with requirements from German automakers whose lineups include vehicles heavily utilizing the metal.

Dealers who opt for certification claim that by doing so, they would have exclusivity — and more business — around F-150 repairs such as the ones that might be required by the new F-150. Ford also hopes the strategy pays off for their dealer network’s shops, as 80 percent of repair work performed on their offerings are done by independent repair shops.

Ford also outlined its strategy for making the vehicle easier to repair, with the trucks being built in a modular fashion that allows for a cheaper, easier method of replacing damaged components. Aside from ease of repair, Ford also aimed at keeping insurance premiums in line with the current truck, so as not to ward off buyers who feared excessive insurance costs.

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$57 Million Chicago Ford Dealership Delayed As Aldermen Play Politics http://www.thetruthaboutcars.com/2013/08/57-million-chicago-ford-dealership-delayed-as-aldermen-play-politics/ http://www.thetruthaboutcars.com/2013/08/57-million-chicago-ford-dealership-delayed-as-aldermen-play-politics/#comments Tue, 13 Aug 2013 21:25:17 +0000 http://www.thetruthaboutcars.com/?p=499269 FMG Holdings, which operates a number of car dealerships in western Michigan under the name of Fox Motors, had planned on spending $57 million turning an abandoned industrial site on Chicago’s North Side into a large Ford store but it has now given Chicago politicians an Oct. 1st deadline to either approve or deny their […]

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FMG Holdings, which operates a number of car dealerships in western Michigan under the name of Fox Motors, had planned on spending $57 million turning an abandoned industrial site on Chicago’s North Side into a large Ford store but it has now given Chicago politicians an Oct. 1st deadline to either approve or deny their zoning application after the issue has gotten mired in local politics and injected with the issue of race.

According to Automotive News, FMG had approached Alederman Scott Waguespack about his support of their plan to develop a 102,000 square foot Ford dealership in his ward, Chicago’s 32nd. The store would replace a defunct dealership also in Chicago, and it would employ about 200 people.

Waguespack solicited feedback from constituents, who approved, so he decided to support FMG, though he turned down their request for a tax-increment financing subsidy. The Chicago Plan Commission also approved the zoning request, but then the plan stalled after other aldermen representing predominantly Hispanic wards got involved, asking what Ford has done to give franchises to Hispanics.

One of the aldermen, Danny Solis, chairman of the City Council’s Latino Caucus, also chairs the City Council Committee on Zoning, which has tabled Fox’s request twice. Solis gives Ford’s lack of any Hispanic owned dealerships in the Chicago area as his reason. “We want some form of commitment from Ford,” Solis says. “Ford should be sensitive to giving a fair shake to the Hispanic community.”

While Ford may not have any stores in Chicagoland owned by Latinos, one particular Latino, Jose Diaz, whose family used to own a Miami, Florida Chrysler dealership and who is said to maintain a residence in Chicago, seems to be the person that Solis has in mind, as it is Diaz’s name that Solis has suggested to Ford. Diaz has been promoting his own plan to open up a dealership in a different location than in the 32nd ward. He’s also given campaign contributions to Latino aldermen, inlcuding $6,800 to Solis’  25th Ward Regular Democratic Organization. Solis denies a connection between those contributions and his inaction on Fox’s zoning request.

Chicago Mayor Rahm Emmanuel’s office said that the request will come up for a committee vote on Sept. 4 and a full city council vote later in September.

Because of the delay, Fox says that it had to extend an option to purchase that would have expired in early August but a spokeswoman said that it would be the last extension the company would seek and that if a decision wasn’t rendered before October, they would walk away. Still, the company knows it has to be diplomatic.

“From our experience, when you go through zoning, it has to do with whether you’re complying with the law,” Monica Sekulich, general counsel at Fox Motors, told the Automotive News. “We’re frustrated by the [Chicago] process. But we’re optimists. … We are excited about doing this deal.”

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Car Buying Now Brought To Your Doorstep http://www.thetruthaboutcars.com/2013/04/car-buying-now-brought-to-your-doorstep/ http://www.thetruthaboutcars.com/2013/04/car-buying-now-brought-to-your-doorstep/#comments Tue, 16 Apr 2013 16:12:57 +0000 http://www.thetruthaboutcars.com/?p=484846 In a move sure to cause concern at every brick and mortar car dealership, Tred.com has begun a program that allows you to order a car online and have it delivered to you at your home for a test drive. For just $349, a fee that is refundable should you actually purchase a car through […]

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In a move sure to cause concern at every brick and mortar car dealership, Tred.com has begun a program that allows you to order a car online and have it delivered to you at your home for a test drive.

For just $349, a fee that is refundable should you actually purchase a car through the service at their “great price,” Tred will bring the car of your choosing to your house where, presumably, you will be able to better assess its qualities by stuffing it with your kids and their related paraphernalia, your bicycles and any other life-essentials that you happen to have laying about. Narrowed down your options but still not set on which exact car you want? For just 499 refundable upon purchase dollars, you can have two cars delivered.

In an era where more and more car buying research is done on-line, this seems like a natural extension of that process. I assume the purchase price is similar to other car buying services offered at places like Costco so this really comes down to a matter of convenience. The cars will be delivered by a “concierge” who will help explain the various features of the vehicle and help you decide which features may or may not be right for you. Good thing or not? You decide.

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Selling The Viper Costs As Much As Buying A Dart http://www.thetruthaboutcars.com/2012/09/selling-the-viper-costs-as-much-as-buying-a-dart/ http://www.thetruthaboutcars.com/2012/09/selling-the-viper-costs-as-much-as-buying-a-dart/#comments Mon, 24 Sep 2012 16:46:44 +0000 http://www.thetruthaboutcars.com/?p=461353 Chrysler dealers hoping to sell the SRT Viper will have to pony up $25,000 – about the price of a loaded Dodge Dart – to be able to sell the supercar. What does the $25 grand get you? The $25,000 fee is actually part of a two-tier system, outlined by Automotive News as such   […]

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Chrysler dealers hoping to sell the SRT Viper will have to pony up $25,000 – about the price of a loaded Dodge Dart – to be able to sell the supercar.

What does the $25 grand get you? The $25,000 fee is actually part of a two-tier system, outlined by Automotive News as such

 

“• For $5,000 each, any of the 2,347 Chrysler Group dealerships may buy a base agreement for tools, equipment, training, signs and, perhaps most important, preferential ordering and additional allocation of such vehicles as the Jeep Grand Cherokee SRT8, says Ralph Gilles, head of the SRT brand.

• For an additional $20,000, the high-performance agreement also permits dealers to sell the Viper.”

SRT boss Ralph Gillies described the typical SRT buyer as “…much higher income, much higher education levels…”, which could be marketing speak for “we’re not selling them to office cleaning company founders anymore”. Of course, the bit about “additional allocation of SRT Jeeps”, is an interesting clause too, isn’t it?

 

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Blind Spot: America’s New Motor City http://www.thetruthaboutcars.com/2012/05/blind-spot-americas-new-motor-city/ http://www.thetruthaboutcars.com/2012/05/blind-spot-americas-new-motor-city/#comments Mon, 21 May 2012 20:40:16 +0000 http://www.thetruthaboutcars.com/?p=445389 Throughout the history of the automobile in America, one city has been synonymous with the industry and culture of cars. Booming with America’s great period of industrialization, Detroit became the Motor City, the hometown of an industry that created a blue-collar middle class and a culture based on personal mobility. But as America has entered […]

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Throughout the history of the automobile in America, one city has been synonymous with the industry and culture of cars. Booming with America’s great period of industrialization, Detroit became the Motor City, the hometown of an industry that created a blue-collar middle class and a culture based on personal mobility. But as America has entered the post-industrial age, as the focus of our economy has shifted from production to consumption, Detroit has been left behind. Long used to defining consumer tastes, Detroit was caught unawares by the changes wrought by globalization and the rise of information technology. And as America’s traditional auto industry struggles to redefine itself in the new economy, another Motor City is rising to meet the challenges of a new age.

Though not often recognized as such, Los Angeles has long been America’s “other” car capital. Developing during the rise of the automobile, Los Angeles has become a place where automobile ownership is not just a necessity, but a fundamental aspect of the culture. And as a result of its headlong embrace of the automobile, Southern California has contributed some of the most important elements of automotive culture. From the drive-through fast food joints that now dot America’s landscape to Harley Earl’s design revolution, from hot rod culture to smog control, it is impossible to imagine modern American life without L.A.’s unique automotive achievements.

Industrial-age Detroit was surely grateful for Southern California’s innovative attempts to reshape society around the cars it produced. But as long as the automakers dominated the wealth produced by America’s love affair with the automobile, Los Angeles was seen as little more than Detroit’s best customer. Though an important ally in promoting automotive culture, Los Angeles’s value to the industry was little more than offshoot of its major industry: entertainment. But as global competitors entered the US market, Southern California’s car-crazed culture became one of the first to embrace the imports. And as Detroit’s near-monopoly began to erode, the balance of power shifted: from this point on, consumers would drive automotive tastes with increasing independence.

With this shift, Los Angeles began its ascent in the automotive world. While Detroit lay mired in the industrial age, Southern California developed a taste for the new global menu of automotive options, and simultaneously embraced the new revolution in information technology. Its status as a taste-maker grew, and its focus on consumer opinion, fashion and communication put it in close touch with the values that were reshaping America’s economy. Now, with the information and consumer-economy revolutions largely realized, Southern California is becoming the new center of gravity for America’s auto business.

In fitting with the values of this new world, L.A.’s automotive juggernauts neither produce nor themselves sell automobiles. Instead of factories and dealerships, they have invested in server farms and data models. Rather than controlling information to maximize profits in support of an industrial supply chain, they create and share information in service of the consumer and market efficiency. And through this revolution, the two titans of Southern California’s “automotive industry,” Edmunds and Truecar, have become some of the biggest players in the business of buying and selling cars.

Edmunds.com got its start just as Los Angeles was coming into its own as the capitol of American automotive consumption, and well before the information revolution began to take hold. In 1966, it began publishing booklets which consolidated automotive specifications as a tool to help buyers make informed decisions. Over the years, it has evolved this service from print to CD-ROM, to web page and mobile app. And with new technology, it has dramatically expanded its services, offering everything from news, reviews, and specifications to industry analysis and forecasting, from a live consumer-advice hotline to dealer reviews and its “True Market Value” pricing tool. Never losing focus on its original insight, that consumers need help navigating the crowded new car market, Edmunds has embraced every new technology to expand on its mission and become the most established gatekeeper to the burgeoning world of online auto research and sales.

Entering Edmunds’ brightly-colored offices in Santa Monica, it becomes instantly clear that the company looks to Silicon Valley rather than Detroit. With its whiteboard walls, open cubicles, espresso machines and video game room, the ambience is clearly inspired by Google rather than GM. And like Google and Facebook, Edmunds is finding that its consumer service is just the beginning of its opportunities. So massive is the traffic that Edmunds’ car buying website generates, it has developed its own value as a model for the larger market. As the patterns of research at Edmunds.com shift, the company can track changes in interest in specific cars and brands with an ingenious in-house application, giving it insights into the market that no automaker  can ignore. By serving consumers with the latest technology, Edmunds can not only generate huge revenue from advertising and sales leads, but create valuable intelligence for the industry as well.

Though Edmunds’ business model may now embrace the industry as well as consumers, it hasn’t lost sight of its original mission. Indeed, as it has assumed leadership in the burgeoning auto consumer services industry, it has embraced its role as an advocate for automotive consumers in every venue. Leading this charge is former CEO and current Vice Chairman, Jeremy Anwyl, an intense, often-iconoclastic dynamo who has become the closest thing the automotive business has to a public intellectual. Rising to prominence through his regular commentary and industry analysis, Anwyl has become a regular figure at Washington D.C. hearings on everything from fuel economy regulations to distracted driving. Over a brief lunch, he jumped with ease from topics as diverse as EV tax credits and NHTSA incident reporting to sales forecasting and media criticism, fusing a generalist’s fascination with every aspect of the automotive business and culture with an unshakeable focus on serving consumers. While Detroit’s executives often seem inward-looking and overly focused on their traditional industry patterns, Anwyl demonstrates the importance of an automotive culture that engages every arena in which automobiles play a role. His ability to serve as the auto consumer’s advocate-in-chief, not only serves Edmunds’ mission and image well, it helps cement the consumer power that launched his company to prominence.

But Edmunds’ rise, from booklet printer to market-making, policy-influencing juggernaut, has not gone unnoticed. Numerous companies have tried to match its success and compete for its influence, but few have given it any real trouble. The simple fact is that Edmunds has been working at its mission so long, and has been so in tune with cultural and technological shifts, that any rival would have to make enormous investments in order to match its suite of services and aura of leadership. And yet, in just a few short years, one company has managed to break through Edmunds’ near-monopoly, and join it as the second Southern Californian juggernaut of automotive consumer services. That company is TrueCar.

The short roots of TrueCar’s stunning rise to prominence lead back to Edmunds. Formed by a core of Edmunds employees, TrueCar grew out of just one element of Edmunds’ sweeping empire: the “True Market Value” pricing tool. While the larger site spread its resources across an entire ecosystem of consumer information and advocacy, TrueCar’s mission was laser-focused on creating the best real-time pricing tool on the web. By investing in every possible source of data on new car sales, and by developing a slick, intuitive interface focused solely on delivering localized market price transparency, TrueCar has been able to claw out a niche in one of the most lucrative automotive consumer services. And though Edmunds downplays comparisons with TrueCar, it’s clear that the upstart firm has established itself as a major player.

TrueCar’s more focused culture is evident in its almost zen-like offices high atop Santa Monica’s historic clock tower. In sharp contrast to Edmunds’ primary colors, copious espresso machines and young employees blowing off steam at the company pinball machine, TrueCar’s headquarters are smaller, less self-conscious, and a more obviously-focused workplace. Not that TrueCar couldn’t have a vast Google-like complex if it wanted: just last year, in the depths of of the economic downturn, the company brought in a $200 million round of investment. But, as CEO Scott Painter explains, TrueCar’s spends its millions largely on acquiring and analyzing pricing data. Where Edmunds seeks to offer a complete research and shopping experience, Painter refuses to break focus on pricing until total market transparency is achieved.

But where Edmunds’ broader focus has allowed it to assume the mantle of consumer advocate in a generally non-confrontational manner, TrueCar’s narrower but deeper approach to serving consumers has ruffled feathers among dealers and manufacturers. For an industry long used to consumers overwhelmed by the vast variety of brands, models and trim levels, and for dealers who have long relied on asymmetrical information to pad their profits, TrueCar’s crusade for pricing transparency has tipped the balance of power so far towards consumers as to be seen as a threat.

Towards the end of 2011, TrueCar, falling victim to its own success, came into conflict with dealer groups, manufacturer “dealer marketing allowance” schemes, and state regulators tasked with protecting local franchise laws. In the wake of that confrontation, TrueCar has had to make some specific changes in how it operates its business, but the industry’s reaction showed that TrueCar’s mission to deliver real pricing transparency was changing the way automotive retail works. And as Detroit has proved over the last 40 years, businesses who cling to a comfortable past in the face of inexorable historic forces get left behind.

Though Edmunds and TrueCar eye each other warily, and though there is certainly some overlap in their business models, they aren’t really competitors. Together, they form the vanguard of a movement to use information to empower consumers, and I would argue that a consumer that wants to make the most of this new movement would use Edmunds to help decide what kind of automobile might suit them best, and use TrueCar to help price and negotiate for it once that decision has been made.

Competition between the two will make both better, which in turn will arm consumers with ever-greater power in the marketplace. In this way, the two behemoths of online car buying services will continue to strip power from the automakers, force them to pay closer attention to consumers, and drive the innovations that will allow producers to more efficiently serve an increasingly-informed market. And as this dynamic plays out, the producers and marketers of Detroit and elsewhere will have no choice but to recognize the rise of America’s new Motor City in sunny Southern California.

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Capsule Review: 1994 Infiniti J30 and the Magic Lease http://www.thetruthaboutcars.com/2010/06/capsule-review-1994-infiniti-j30-and-the-magic-lease/ http://www.thetruthaboutcars.com/2010/06/capsule-review-1994-infiniti-j30-and-the-magic-lease/#comments Sat, 05 Jun 2010 20:16:48 +0000 http://www.thetruthaboutcars.com/?p=358250 “We need young, college-educated people like you,” the man said, “because the old way of selling cars is dead and gone. That’s why I was hired — to bring the dealership into the present day.” And with those thoroughly self-deceived words, the new sales manager at “Infiniti Of Columbus” welcomed to me to the team […]

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“We need young, college-educated people like you,” the man said, “because the old way of selling cars is dead and gone. That’s why I was hired — to bring the dealership into the present day.” And with those thoroughly self-deceived words, the new sales manager at “Infiniti Of Columbus” welcomed to me to the team in March of 1994. It was the end of winter in Ohio, but it was just the middle of Infiniti’s long winter of discontent. We had three products. There was a facelifted Q45 which precisely nobody wanted. There was a facelifted G20 which cost nearly as much as a Lexus ES300 while closely resembling a Nissan Sentra inside and out. Note, however, that the G20 shared nothing but the engine with the aforementioned Sentra. On any given month, we would sell two G20s and no Q45s. In fact, during my entire six months’ tenure at the store, we only sold two Q45s, one of them to a salesman who was quitting to go work for Merrill Lynch.

It was the new-for-1993 J30 that kept the lights on and paid our meager draws against commission. The jellybean-shaped, rear-wheel-drive sedan was available as a J30 or J30t. Neither car had any options available: in an amazing reductio ad absurdum of the Japanese export philosophy, the equipment list was the same for every single car that came off the boat. The “t” model added HICAS four-wheel-steering, a rear spoiler that truly spoiled the otherwise interesting design, and some cross-spoke wheels. They were hideously expensive — $37,995 and up in an era where an LS400 could be had for fifty grand or less — and they were both controversial-looking and suspiciously similar to a Nissan Altima at a distance. (Jerry Hirschberg designed ‘em both.)

It didn’t matter. We rarely sold any outright, but more than 20 would leave the lot every month thanks to the Magic Lease.

The head honchos at Nissan USA knew the car was overpriced, and badly so. Their solution was elegant. The oh-so-English Jonathan Pryce was hired to do a series of advertisements about “the astonishing J30″, and a genuinely astonishing lease program was put into place. $1500 down, $399 a month, 36 months, 36,000 miles. Extra miles were cheap and the dealership management always just threw the down payment away, so most people paid about $450 a month, tax included, for a 45,000 mile contract with nothing out of pocket. “t” models were $15 a month more.

The numbers were ridiculous. The cars were “capped” — sold to Nissan Financial — for about $34,000. The three-year residual was expected to be about $29,000. Ha! We had six-month-old buyer’s-remorse specials on the lot that wouldn’t fetch $29K. Nissan was just sending its problems into the future. Who cares? At that price, we could make them disappear.

Still, plenty of buyers could think of reasons to look this gift horse in the mouth. Almost nobody liked the looks. The trunk was minuscule and the rear seats didn’t fold. The sunroof was steel, not glass. The car was noisy and cramped inside. Although it was essentially a four-seat 300ZX, it wasn’t a four-seat 300ZX Turbo, which meant it was slow. (JDM variants got a 4.1L V8 and a turbo 2.5V6, as I recall.) Infiniti had virtually no brand equity, to put it mildly. We all learned that our best chance to move the iron was to convince unaccompanied spouses to sign before the better half could show up and say, “$399 is a lot for an Altima.”

The irony was that there was plenty to love about the J30. It was put together like a Zenith El Primero. The materials quality shamed both Lexus and ze Chermans. The “t” was a little spooky at high speeds, since the HICAS never seemed to give the same response twice in third-gear corners, but that was part of the fun. The stereo was damned good. It really felt like a high-quality piece.

My new boss was new to the auto industry. This was good, because he didn’t do anything that sales managers typically did, such as scream incoherently for no reason. He let us take weekends off. Most importantly, he didn’t understand the NADA Guide and therefore he always paid Dealer Retail for trade-ins. Once I understood that, I called my father and he dragged his boat-anchor Audi 100LS into the shop, crossing his fingers that the transmission didn’t perform its usual gearchange gymnastics during the test drive. His wish was granted and he left with two $399/month J30s. One was triple black, the other was blue with a cream interior. Most importantly, they were 1994 models. The 1995 car was chock-full of cost-cutting and it was obvious when you sat in one.

Our no-hassle sales philosophy and enlightened approach to customer satisfaction didn’t help us sell used cars at Dealer Retail plus a few grand. The lot filled up. The floorplan overflowed. One day the dealership principal showed up at the building. It was before noon and he was sober. These were bad signs. The sales manager was escorted out of the building. The replacement was a fat, oily Macedonian fellow from a Hyundai shop in the iffy part of Columbus. His first official act was to wholesale most of the used lot at a six-figure loss. His second official act was to fire the sullen-looking college kid who parked his Kawasaki Ninja on the showroom floor in the evenings. Thus released, I walked the earth like Caine, or at least rode it like a douchebag, until my next dealership job. It was there that I witnessed a salesperson exchange sex for a chance to sell a Thunderbird, but that’s another story.

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