The Wall Street Journal reports that GM is in talks with Renault over the future of the Saturn dealer network. GM has already given up on the possibility of receiving any kind of cash consideration for Saturn; a deal with Renault would see Saturn essentially handed over to the French firm. According to the WSJ, Renault is considering Saturn as an American-market brand for its Renault and Samsung Motors products. Why Renault wants to compete with its sister-firm, Nissan, in that brand’s biggest market isn’t immediately apparent. Maybe Ghosn doesn’t like Marchionne hogging the spotlight. Meanwhile, Chinese automaker Geely has submitted a bid for GM’s Saab “division” (it’s more at brigade strength currently). Unfortunately, nobody is sure if this bid is for real or if it’s just a gambit to pressure Ford into accepting Geely’s Volvo bid. Or maybe Geely has just fallen for all things Swedish. We’re told to expect a Saab deal in “early summer,” and with bankruptcy looming, look for Saturn to be offloaded post-haste as well. (Thanks to rod panhard and Mr Sparky for the tip.)

Short answer: no. But that doesn’t stop The Detroit News from practically begging the man they say “has accomplished almost everything in the auto industry” to reach for the stars. Er, planets. “We have been offered an opportunity to look at Saturn,” say Penske Automotive Group spokesfolks. But “it’s very premature to assume anything will be done. I can confirm to you that we are looking at it.” And that’s enough to get Motown’s cheerleaders all hot and bothered. Motor Trend‘s pick for Car Czar negotiating with the UAW’s pick for Car Czar (now GM advisor on the Saturn “sale”) negotiating the fate of GM’s best dealer network? Sign me up for that smoke-filled room!

TTAC commentator Xander Crews responded to this morning’s post about a $5k surcharge added to the sale of a new Camaro (at least in theory), and the negative remarks about car dealers made by some of our Best and Brightest.

A few things, but first a disclaimer I’m a manager at a domestic dealership.

1. Just as it is considered okay and “fair” for a customer to shop 50 quotes and “beat up” a dealer until they sell a car at or below not only sticker but in alot of cases invoice it should be okay to charge over MSRP on any vehicle. Hell if a dealer wants to charge $5000 over sticker for a F150 XLT he can, just remember as the consumer you have the right to say “no I’m not going to pay that”. So long as it legally and properly displayed, there’s no problem with doing it. It is up to the individual store to weigh the consequences of their actions vs the potential benefits. If they piss off enough people with stuff like that they will lose customers.

After crying that bankrupt automakers can’t sell cars (as in, “there but for the grace of the taxpayers go we”), Chrysler is requesting $753 million to do what it said was impossible. And who minds profit-draining record incentives when taxpayers are picking up the tab? Automotive News [sub] breaks down Chrysler’s request for $4.6 billion of DIP financing, and reveals that incentives are no longer just about moving metal.

With up to 1,200 dealers and 16 factories set to be uninvited from “the reinvented GM,” union locals and dealerships with their livelihoods on the line are preparing to fight the future. With the UAW leadership on board for an equity position in the new GM, locals are scrambling to show their willingness to give up once-cherished perks to keep their plants open. Bloomberg reports that workers at GM’s Spring Hill plant have ratified a local agreement that “allows GM to schedule its hourly workers for weekend shifts without paying special premiums, ends the policy of paying overtime based on a daily shift instead of a 40-hour workweek and loosens the work rules so that workers may be used for a broader variety of tasks.” Sadly, since Spring Hill’s Chevy Traverse production is likely to be moved to Lansing Delta to take over Saturn Outlook production capacity, this sudden rash of reality probably won’t save the plant.

Once again, TTAC has received an embargoed press release. Once again, please don’t send us anything you don’t want us to publish before you want us to publish it unless we agree beforehand (which we won’t). An agreement requires two parties. And party they might down at your local Buick dealer’s service department. A Consumer Reports (CR) survey of 349k vehicles (full methodology unavailable upon request) reveals that, “Among the top scoring in dealership maintenance satisfaction were Lexus, Buick, and Acura, with 85, 83 and 82 percent satisfaction rates, respectively. At the other end of the spectrum, Volkswagen, Suzuki, Jeep, and Nissan owners were far less satisfied with dealer service at 67, 69, 70, and 70 percent respectively.” But wait! There’s more! “Despite the turmoil surrounding the American auto industry, six American automakers (Buick, Saturn, Mercury, Cadillac, Lincoln and Oldsmobile) ranked among the top ten in terms of customer satisfaction with dealership maintenance.” Pay no attention to the word “Oldsmobile.” Notice the word maintenance. Not repair.

Yesterday, TTAC reported that GM wasn’t waiting for bankruptcy to launch a dealership jihad: a 42 percent cull designed to placate The Presidential Task Force on Automobiles and, let’s face it, common sense. After that report, one of our GM moles gave us a heads-up that GM Marketing Maven Mark LaNeve was addressing the dealers live via satellite on some super-secret mission. Turns out it wasn’t LaNeve’s four missing “weekly updates” on GM’s reinvention. Automotive News [AN, sub] reports that Mark was using GM’s bird to flip the bird at GM dealers. In fact, the sales chief has declared war on his “underperforming” stores, vowing (by omission) not to pay the terminated dealers a penny in compensation. “There was no money for anything other than what the franchise agreement calls for,” a dealer informed. “Meaning we can send back new cars, parts, special tools and some signage.” And once again, AN has withheld critical information. In this case, it’s a two-day delay on LaNeve’s characterization of the dealers caught in the cross-hairs.

One of our moles has emailed ALL the dealer paperwork on GM’s Total Confidence program. Blogger, editorialist and aspiring car reviewer (knees must) that I am, I shall leave it to you, our Best and Brightest, to dissect the offer and how GM dealers might sell the plan (or simply give up and sign the opt-out sheet). Michael Karesh, former TTAC partner and ongoing TrueDelta operator, has done some stellar work uncovering the flaws in the residual guarantee part of the Total Confidence program. If you want the inside skinny via Michael’s Delta force, click here. If you want the read the real deal, jump.

Many a member of TTAC’s Best and Brightest have publicly pined for the day when they can order their new car over the internet, bypassing those son of a bitch bastard dealers [not paraphrasing]. Our contacts within the Chrysler Listens consumer advocate board report that the three-headed marketing mavens are sounding out the possibility of losing all those pesky middle men and women eating into their [theoretical] profit. Not one, not two, but three polls sound out the possibility of online ordering or, to use their phrase, “reservation.”

Bloomberg (and a lot of other good-news-hungry outlets) are reporting that a recent surge in used car prices indicates that new car sales may soon rise. The theory: a falling supply of used cars and a glut of new cars will lead buyers back to the new car F&I guy. Of course, that assumes that there’s a falling supply of used cars. For that assumption, the MSM turns to . . . new car dealers: “A survey by Wachovia Securities analyst Rich Kwas showed that 42 percent of dealers report ‘too little’ used-car inventory.” Yes, well, they would do, wouldn’t they? As new car sales plummet, franchised dealers’ supply of used trade-ins declines by, oh, roughly the same amount. Or more.

Good news, everyone! A finance company whose risky investments in auto and real estate loans required it to beg for $6B in bailout cash is at the ready to teach you the secrets of smart financial planning. According to a release at PR Newswire, GMAC “has bolstered its effort to provide consumers with personal finance education with a $20,000 grant to InCharge® Education Foundation, Inc. (ICEF). The funding will be used to co-sponsor a series of financial literacy courses throughout the country in 2009. The courses, named ‘Smart Edge by GMAC,’ are designed to help people make better financial decisions by providing them with information about budgeting, real estate and automotive finance, insurance, credit reports, credit scoring, and other tools.” Lesson number one? Pay your CEO $11.6M even if you’ve been bleeding red ink all year. Lesson number two? Savagely screw over the people your business relies on.

Credit Suisse First Boston (CSFB) has had a look at Chrysler, Ford and GM inventories vs. the Seasonally Adjusted Annual Rate of Sales (a.k.a. SAAR), and it’s even uglier than we thought. Given that The Big 2.8 have already cut WAY back on production AND increased incentives, it seems that the US new car market is suffering from the worst case of constipation since WWII. CSFB’s analysis gives us further reason to doubt GM’s motives in declaring a 45 percent production increase for the second quarter of ’09. Whatever the reasoning behind GM’s announcement, it has nothing to do with market reality. These numbers also cast the chortling IHS Global Insight analyst—who bashed Honda for its inventory problems—in a slightly different light. But I’ll save those bon mots for after the data dump . . .

* Big 3 inventories fell by about 3% from Jan to Feb, compared to the normal seasonal increase of about 2.5%. Despite the favorable move in absolute stocks, the overstocked level worsened, owing to a dismal sales level that lowered our estimate of the number of vehicles dealers should be holding.

GM intends on increasing vehicle production in the second financial quarter, from 380k to 550k. I know: it’s a major WTF moment. There is no evidence whatsoever that the U.S. new car market is headed for recovery. If anything, the opposite is true, what with home foreclosures and unemployment rising like steam from a New York City manhole. Not to mention the headline of The Detroit News story wherein this information resides: “GM Dealers Balk at Ordering New Vehicles.” The article reports that GM’s orphaned HUMMER, Saturn and Saab dealers aren’t ordering any more vehicles (duh), and current inventory levels at the other stores are, to use the old Bentley power output description, “adequate.” No wonder GM spokesman Chris Lee said “that [production] number could be adjusted.” Still, you’d kind of hope GM PR could do better than that, what with more than a decade of spinning bad news into gold (for the executives anyway). And so they do . . .

Or die trying given the late unpleasantness of all things economic. But the model that Euroda, a group of 4,000 Opel/Vauxhall dealers, is attempting is innovative enough to attract some attention. Under the arrangement, member dealers would donate €150 per vehicle sold over the next three years. Euroda would use the estimated €400m to buy a minority stake in Opel/Vauxhall, which cannot secure support from European governments without better long-term viability plans. Euroda seems to be acknowledging the symbolic nature of the effort, telling Automotive News [sub] that even taking a minority stake sends “a clear signal of support” to the government, worker and customer stakeholders.

U.S. News and World Report is reporting to the world the news that US car dealers are working a new angle: buy one, get one free (BOGOF). OK, a buck.

Seattle NBC-affiliate KING5 reports on one such offer from Washington’s Bill Pierre Ford. “General manger Curt Bush dreamed up the unique promotion. If you buy a super duty truck at a sticker price of $50,000, you get a Ford Focus for $1.” If the Fords don’t interest you, Pierre’s dealership network is doing the same thing with Chevrolet products. “On Pierre’s Chevy lot next door, you can buy a Tahoe and get an Aveo for $1.”

But the tactic is not unique to Washington state. Reno, Nevada CBS-affiliate KTVN found a similar offer in their area. “At Reno Mazda-Kia, if you buy a 2008 Sorrento at full price, you can get a Spectra for $1,” they report. “The price tag for the Sorrento is about $28,000.”

We’ve seen similar reports elsewhere: Buy-one-get-one-free Dodge Rams in Florida, for instance, or an Illinois deal offering a Chrysler PT Cruiser for $1 when you buy a Chrysler Pacifica at full price.

Gee! They’re giving them away! Well, obviously not.

Less than sixty days ago, I wrote about my brother’s seemingly quixotic quest to purchase a year-old Pontiac G8 at something less than sticker price. Time after time, he’d been placed on endless hold, denied test drives, and generally treated with the type of courtesy normally reserved for guest stars of “To Catch a Predator.” After more than ninety days of intermittent searching, the best price we’d been able to find was a sorta-invoice deal from a dealer in Texas, more than a thousand miles away. Did I mention his trade-in? It was a 63k-mile Mazda RX-8 which was on its second rotary engine thanks to an autocross motor implosion and which also featured a fascinating array of scratches, rocker-panel dents, and impact-wrench-installed suspension upgrades.

Everyone’s favorite feel-good broadsheet, SubPrime Auto Finance News, reports that 13 members of congress have written a letter to Fed Chairman, Ben Bernanke, and Treasury Secretary, Tim Geithner, requesting another raid on TALF, the Term Asset-Backed Securities Loan Facility. The congressional bagmen “applaud the joint efforts of the Federal Reserve Board and the Department of Treasury to promote liquidity in consumer loan markets through the Term Asset-Backed Securities Loan Facility.” Because making $200B available was an interesting start. “However,” continue the servants of the public trust, “we are concerned that the program may not sufficiently address the problems facing the domestic automobile industry.” Oh dear.

DATE: March 3, 2009 GM 09-03

TO: All General Motors Dealers & Saturn Retailers

FROM: Jim Bunnell, Executive Director, NA Vehicle Sales, Service & Marketing

SUBJECT: Vehicle Buyback Policy

…This letter also communicates GM’s policies for the repurchase of light and medium duty new vehicle inventory (herein after motor vehicles) upon the termination of a GM Dealer or Saturn Retailer (herein after “Dealer”) when there is no replacement Dealer. GM’s repurchase obligations are outlined in Article 15 of the General Motors Dealer Sales & Service Agreement and Article 21 of the Saturn Retailer Agreement (herein after “Dealer Agreement”). This bulletin provides the specific definition of “current model year” as referenced in the Dealer Agreement and outlines specific procedures for vehicle repurchases under both Articles. This letter does not replace, modify or alter the terms of the Dealer Agreement, and implementation of these policies is subject to applicable law.

GM’s policies applicable to vehicle repurchases are provided below:

Anyone remember the John Houseman ad for Smith Barney? “They make money the old-fashioned way. They UHN it.” Well, you can put that idea in an urn, at least when it comes to Washington State car dealers. Now that times are tough, the dealers have successfully lobbied (a euphemism if there ever was one) their state legislators to increase car dealers’ “document fees” from $50 to $150. Get ready to get ill, courtesy The News Tribune.

Such an increase could let auto dealers statewide pocket as much as $100 million to $150 million, money that would go straight to their bottom line. Those figures assume dealers will sell 1 million cars and trucks and that all dealers would charge the maximum fee allowed, as most do.

Sen. Tracey Eide, D-Federal Way, said she sponsored Senate Bill 5816 at the request of the Washington State Auto Dealers Association and its 328 dealerships, and one of her former constituents, Mary Byrne, former owner of Nissan of Fife. Byrne now is a partner in Advantage Nissan in Bremerton.

It gets worse.

When I was a little boy, my father regaled me with tales of magical creatures that lurked in the Ardennes Forest, the Alps and the high steppes of the Cossack Frontier. Dozens of ’em. And yet Dad forgot the one about the Magical Depreciation Fairy. You know: the creature that lurks in vast concrete expanses that harbor shining metal dragons that enslave weaker members of our society. I shall now inform the Best and Brightest of the characteristics of the Magical Depreciation Fairy, lest ye fall victim to its devious ways.

Despite the fact that all of the Detroit firms are actively trimming their dealer ranks, the National Automotive Dealers Association (NADA) is calling on the federal government to guarantee dealer floorplan loans. According to Automotive News [sub] NADA is requesting “anybody and everybody” in the government step up and prevent (once again) a necessary downsizing in the auto business. NADA spokesfolks say the auto retail industry’s $100 billion in annual floorplan credit is drying up, and “the cost to government for guarantees would be little or nothing.” Ipso facto. And yet the $25 billion in “136” loans took $7.5 billion to guarantee. NADA is bringing its somewhat short-on-the-details message of hope to Congress, the White House, the Treasury Department, the Federal Reserve, and the Small Business Administration this week.

Benjamin Franklin said it’s better to be a pessimist and pleasantly surprised than an optimist and constantly disappointed. Followers of Motown’s meltdown—and the wider malaise affecting the entire auto industry—know it’s going to be a long time before the pleasant surprise part of the equation. Bloomberg reports, “Confidence among U.S. consumers plunged to a record low in February, signaling spending will slump further as unemployment soars. The Conference Board’s index declined more than forecast to 25 this month, the lowest level since data began in 1967, from a January reading of 37.4, the New York-based research group said today.” Lest we forget, the housing bubble begat the auto bubble which begat the collapse which lit up the turbos on Detroit’s decline, as it powered unthinkingly on its Thelma and Louise trajectory. So how’s that housing thing going? Do you really want to know?

Now that GM’s Car Czar is slinking off into the sunset before his bankruptcy-proof pension becomes a bone of contention (“I’ll have to check with my accountant about that”), the man of Maximum is shooting off his mouth in the great Lutzian style. “My personal favorite would be to see Saturn survive and prosper,” GM’s vice chairman told Automotive News [sub], “But frankly, the reality is that that is probably not going to be the outcome.” Does this sound a bit like finding out you were dumped via a batch e-mail? AN somehow managed to find a doomed Saturn dealer (as they all are, now) who didn’t use expletives when hearing of the multimillion-dollars-per-year executive’s casual execution of the Rethink brand. “That really seals our fate,” said Lasser, owner of Saturn of Denville, Saturn of Mount Olive and Saturn of Livingston. “I think they knew this fact months ago, and they never shared it with us.” So who killed the non-electrifying cars?

When it comes to “why can’t U.S. car companies kill their dead brands?” TTAC has always pointed the finger straight at America’s 50-state patchwork of franchise laws. If GM killed, I dunno, Saab, every Saab dealer in these here United States would drag The General’s ass down to the local courthouse demanding—and receiving—reparations. Lest we forget, Oldsmobile’s termination cost GM a billion dollars back when a billion dollars was a lot of money. If, however, Chrysler, GM or Ford filed for Chapter 11, they could kill brands and dealers at will—without paying ex-dealers anything more than the cost of their inventory. And maybe not even that. Franchised dealers can see the writing on the wall, and they’re not happy. So they’re proactively legislating a new post-C11 deal for themselves—inflating the claims against the automakers’ assets, increasing the likelihood that the D2.8’s bondholders will file for same.

GM’s “different kind of car company” is furiously trying to forge a future amid plummeting sales and little outside interest in buying the brand. Saturn’s Franchise Operations Team has been meeting with GM executives in hopes of creating some kind of strategy for the brand’s dealer network. According to Automotive News [sub] the options were narrowed down at a meeting last week, and after further refinement they should be presented to Saturn dealers later this week. When asked if this spelled the end for the Saturn name, Franchise Operations Team member Todd Ingersoll told AN “everything is fluid. You can’t commit to any option.” But he also indicates that “you don’t need four options to kill a brand.” So what’s really going on?

Remember the “worst case sales scenario” in GM’s viability plan? It predicted 11.5m annual sales in the US. Unless a turnaround arrives sometime this year, there’s no chance that sales will hit that number. According to Automotive News [sub], annual sales expectations for 2009 have dropped to 9.8m units. But there’s still a surprising amount of unfounded optimism among Detroit’s spinners and marketing mavens. Specifically, Ford’s execs say that retail sales have “stabilized” over the past four months. Too bad, then, that they’ve stabilized at an abysmal rate of 8.5m units per year. “We’re heartened to see it stabilize — although stabilizing at an awful level,” said Ken Czubay, Ford vice president of U.S. sales and marketing. Heartened? Seriously? But enough of the maudlin posturing. There are scapegoats to blame!

A dealer writes:

Say I order a pickup truck from the Chrysler mothership: an ’09 Dodge Mega Cab Cummins 4×4. MSRP: $59k. Invoice: $53k. Hold back: $2,400. Chrysler bills my bank for invoice ($53k). My bank gets the title and pays for truck. [ED: this is also known as floor-planning or flooring.] I take delivery of the truck, I sell the truck. Two weeks later, my floor-planning bank transfers the funds to Chrysler. First, I have to pay off the flooring liability: the Ram’s invoice price ($53k). Then I wait for the factory rebate money. That’s why it costs so much to operate a franchise dealership: the operating capital requirment is huge. We are fronting the manufacturer’s cash flow by overpaying for the units when we (the dealer) buy them from factory.

OK, so the latest GM Fastlane PR exercise is actually entitled “What Is GM Doing With The Money?” Defensive much? Anyway, coming from Fastlane, there’s obviously no mention of giving Cadillacs away. Or throwing cash down the Delphi hole. Or paying Brazilian workers to sit on their hands. No, having received $13.4b, GM’s Steve Harris reveals that GM’s plan is to (wait for it) comply with the terms of the loan! In other words, “prove that we can repay the loan, achieve a positive net present value, and meet federal fuel efficiency and emission requirements, and manufacture advanced technology vehicles in the U.S. ” And with the federal money, GM is “making progress,” says Harris. How? By building concepts like the Cadillac Converj. And announcing vehicles like the 2010 Equinox (Saturn Vue cannibalism!) and the 2012 Spark and Orlando (which debut after the loan is due). Hallelujah! And though Harris mentions the UAW Job Bank shutdown and “discussion” of plans to reduce dealers by 400 per year, his effort to “do a better job of communicating our successes (and) how we will be changing going forward” leaves out all the interesting bits.

Not buyers of Dodge Vipers per se. Some 127 of them found their way to a Dodge dealer in January, a 74 percent gain from last year’s total. Of course, that may have a little something to do with the fact that A) Dodge dealers are dealing as if their life depends on it (which it does) and B) the chances of buying a new Viper are decreasing by the minute. Especially since Chrysler revealed that it wants to sell the model as a brand to . . . someone. Oh how we laughed! Well, not Autoblog obviously, despite having reported that American tuner Saleen was a suitor (after having reported that Saleen’s busy going belly-up). I mention this not because I’ve been dying to put the boot in to Autoblog ever since my reader-inspired vow of fraternity, but because it raises the obvious question. Is Chrysler lying when it told the MSM that it has three companies interested in buying its Viper tooling and trademarks? (Setting aside the question of whether or not Cerberus has already mortgaged these “assets.”) Here’s AB’s take:

Despite looking at a half-sized Q1 production plan, GM says it will bump truck production in the month of March. Production will be restored and escalated in March at GM’s Flint and Arlington truck plants, meaning there will be more Silverado, Sierra, Tahoe, Yukon and Escalade models. So, uh, why? “As far as our 2008 and 2009 mix goes, we’re significantly down on 2008 models, where most of our competitors have a lot of 2008 to get rid of. So anticipating a spring selling season, we’d like to increase our 2009 inventory,” GM’s Pete Ternes tells Automotive News [sub]. GM’s truck inventory has dropped noticeably, from a 122-day supply on December 1. But with 90 days of light truck supply, there’s still no real reason to increase production. Most industry-watchers consider a 60-day supply ideal. So what’s up?

Following the Scottsdale auction season, dealers at the top end of the collector car market breathed a collective sigh of relief. As the the New York Times headline put it, the auction action proved that prices “ Soften but Don’t Crash.” Maybe so, but there’s a hidden dynamic involved. “People tend to forget that the auction houses work just as hard at reducing the sellers’ price as they do on getting the buyers to pay it,” says Mike Nicholl, proprietor of Las Vegas’ Classic and Collectible Cars. In other words, the results simply reaffirm that car sellers’ willingness to take a hit currently matches buyers’ bargain-hunting budgets. The General Manager of Lamborghini Bergen County (NJ) agrees. He says pre-owned inventory levels are up, but the deals are still going down. “More people are hurting, looking to get out of their cars,” Alan Greenfield says. “But the lower prices are attracting new buyers.” Despite the market’s recent diet of anti-gravity pills, or at least away from the people dispensing same, there are signs that the high end market is headed for collapse.

• We expect the annualized light vehicle selling rate (SAAR) to run in a range of 10.0 – 10.3 million units in January, the midpoint of which would be about 34% below the year-ago pace of 15.4 million, and a little softer than last month’s pace of 10.3 million.

• Unit volume (selling day adjusted) should be down in a range of 35% – 37% versus January 2008, compared to a decline of about 35% in 4Q08. The seasonal factors are favorable this month, which explains how unit volume could be down more than the annualized selling rate.

• The industry faces significant sequential and year-over-year sales headwinds from lower daily rental deliveries in January. Demand from rental car companies is weak; but the decline in deliveries will be exacerbated by severe production declines in January as daily rent vehicles typically turn quickly from production to delivery.

• By maker, we see GM sales down in a range of 40% – 42% year-to-year, with market share dipping to around 22% or less, compared to share of 24.4% in December, and versus 23.9% in the year-ago month. We see the sequential decline in share as partly driven by fewer daily rent deliveries.

A great selection here.

As America’s car dealers gather in N’orlins– an ironic enough venue given that some 80 percent of U.S. car loans are “under water”– the talk of the town is culling. Where once there were too many domestic car dealers, now there are too many car dealers full stop. Now you might think that a process of natural selection would have untied the Oldsmobile-shaped Gordian knot (i.e. 50 states’ worth of franchise laws say they can’t simply pull the plug and be done with it). Nope. In a story that somehow got culled from The Wall Street Journal website, Sharon Terlep provides a reality check. “NADA in December predicted about 900 dealerships — including small numbers of foreign-based auto makers — would go out of business in 2008. But Detroit’s auto makers alone lost more than that, company executives said this weekend. About 300 Ford dealers closed last year, while 401 GM dealers and 287 Chrysler dealers went out of business. Consulting firm Grant Thornton estimates about 2,500 of the nation’s 25,000 new vehicle dealerships will close in 2009. However, 5,000 would need to close to have a healthy level for this year’s anticipated level of auto sales, the firm said this week.”

At the moment, Chrysler reimburses a dealer for the cost of topping-up the gas tank on a car the dealer sells to a customer. No mas. That little tidbit was buried deep in the Detroit News story about Chrysler’s incipient “traveling roadshow”– a corporate effort to “convince” dealers to order more cars despite the fact that no one’s buying them and it costs money for the dealers to have vehicles sitting on their lots. We also learn that Chrysler has frozen the labor rate for warranty work, scheduled to rise in ’09. “‘I think they understand the place we are in and understand the need for all parties to put some skin in the game,’ said [former Toyota Prez and current Chrysler Co-Prez Jim] Press, who received a standing ovation during the meeting with about 400 dealers.” Somehow I don’t think it was that particular statement that earned Mr. Press the standing O. Perhaps it was his pledge to work for $1 until Chrysler paid back its four soon-to-be seven billion dollar loan. Just kidding. Unfortunately. Anyway, Chrysler’s set a target for channel stuffing– I mean, dealer orders…

As Robert wrote earlier, GM is piling on the incentives to move metal in a January market that seems to be moving like molasses. And though GM and its finance units are benefiting from the largess of the federal bailout bonanza, their decision to delay incentive payments in December is putting the squeeze on its dealer network. Especially as they’re forcing dealers to buy more inventory in order to qualify for incentive cash. Automotive News [sub] reports that GM’s $4b loan “provided a short-term relief,” but “it didn’t fix the issue,” according to GM’s Mark LaNeve. La Neve tells AN that he isn’t planning on altering the incentive schedule. So, although payments have resumed, they are now two weeks behind schedule. And he doesn’t know when they’ll return to the normal schedule; it all depends on when tranche deux of the federal sugar shows up. Meanwhile…

GM Provides Global Business Update at Auto Analyst Event
Mark LaNeve, Vice President, GM North American Vehicle Sales, Service and Marketing
01/15/2009

To All General Motors Dealers:

General Motors provided an update to financial analysts today on the company’s restructuring efforts included in the viability plan that was submitted to the federal government last month. Rick Wagoner and Fritz Henderson told the group that GM is on track and making progress toward meeting its goals. Given the ongoing weakness in the automotive markets, they also explained that GM has adopted a more conservative U.S. industry volume assumption of 10.5 million units for 2009. The original baseline projections for 2009 were for a 12 million unit U.S. market. Rick and Fritz also said that we would continue to refine the plan in response to changing market conditions.

Regarding General Motors’ brands and dealers, the plans have not changed from the original submission. Hummer and Saab are under external review, while Saturn is being reviewed internally by a team that includes dealer representatives via the Franchise Operating Team. Product discussion in the plan focuses primarily on GM’s core brands: Chevrolet, Cadillac, Buick and GMC, with Pontiac as a specialty, focused brand. Also unchanged from the original submission is the projection that GM will have 4,700 dealers in the year 2012. As we have in the past, we will continue to work together with you personally as we move through this difficult, yet necessary dealer network re-sizing. Today’s update also provided the analysts information on the progress being made by GMAC and its ability to return to sub-vented financing.

GM Card Q1 2009 Top Off Incentive Offer

PROGRAM EXPLANATION

TO: All RDMMs, ARDMMs, ZMs, ASMs and GM Dealers

FROM: GM Cardmember Services – Detroit, MI

SUBJECT: 2009 Q1 GMCS Top-Off Earnings Retail Program

PROGRAM OVERVIEW:

GM Cardmember Services (GMCS) is sending select GM Card and GM Flexible Earnings Card Cardmembers a direct mail piece that includes a special Bonus Earnings “Top-Off” offer toward the purchase/ lease of an eligible, new GM vehicle between 1/6/09 and 2/2/09.

OFFER OVERVIEW:

GMCS will add Bonus Earnings to select Cardmembers’ Accounts so that they total either $2,000 or $3,000 in Topped off Earnings.

“Yes, you can use the word free in your advertising,” writes Jim Boldebook in Dealer Magazine. “No, you probably can’t use it with reference to the sale of a car, as in free options or extras as most states have now ruled there is no such thing as free anything in a car deal, but you can use the word free in a number of ways to capture the attention of your intended audience.” Oh, do tell. “The word free can be used in copy such as ‘Set yourself free from high payments with our lower lease rates.’ Or, ‘Free yourself from maintenance worries with our all inclusive maintenance program included on most of our new models.’ You can even use the word free in disassociating it’s use in your ad copy, such as: ‘While we are not allowed to say this GPS system is free, we can you say won’t pay one penny extra for it with the purchase of any new X or Y model.'” And that’s why Jim’s agency, Creative Broadcast Concepts, gets the big bucks. If you’ve already taken your blood pressure meds, Boldebook provides his dealer readers– and you!– with a specific example after the jump.

There’s an eerie thread of optimism weaving through a number of post-bailout, post-December bloodbath stories lately. Sure, hope dies last and all that, but as Studs Terkel put it, “hope has never trickled down, it has always sprung up.” And most of this fresh-faced optimism seems to have trickled down directly from GM PR. Take the headline “‘Happy Days’ Return For Domestic Car Dealers” over at Dealersedge.com, for example. If the use of scare quotes in the headline isn’t enough to set your PR-friendly hackery alarm ringing, well, that’s why we’re here. The entire piece is based on quotes from employees and owners of three dealerships, two in New Hampshire, one in Michigan. These ecstatic, old-timey song-referencing folks spout anecdotal evidence of a new influx of floor traffic, offering no dissent from the opinion that “happy days” are indeed here again. And why wouldn’t they say that zero percent terms on Trailblazers and Saabs have Americans flooding the showrooms?

An eye-watering death scent surrounds Chrysler going into this week. With a last-ditch bailout likely to focus on GM, and even the hometown cheerleaders kicking around the idea of throwing ChryCo in the volcano, Auburn Hills has all but given up on trying to staunch the flow of bad news. Of all the Chrysler-related bad news, nothing jumps out like the persistent rumors of Pentastar dealers offering two-for-one deals on Auburn Hills Iron. We first heard of this happening in the UK with overstock Avengers, but the phenomenon is spreading to the states. Automotive News [sub] reports that If you buy a 2008 Dakota for $27,590 at Bettenhausen Dodge in Tinley Park, Ill, Mr Bettenhausen will throw in a lightly-used 08 PT Cruiser for your trouble. “The automotive business is no longer about how much money you can make,” says the Bettenhausen. “It’s about minimizing losses. We need to get ourselves to a breakeven point in this challenging market.” Especially when Chrysler’s right there to twist the knife. Automotive News [sub] reveals that the Chrysler Sales Bank is back to plague dealers with yet more inventory they can’t sell and don’t want.