Rick Case, one of South Florida’s most recognized automotive and motorcycle groups and smart USA dealer, opened the first smart car dealership in the United States - Rick Case’s Smart Center Weston – January 19. The smart cars arrived early that morning and the first owner received their car that afternoon.
“I am so excited that Smart Center Weston is the first smart dealership to open in the country,” said Rick Case, smart USA dealer. “Smart vehicles have been around in Europe for many years, and it’s a privilege to be the first to introduce these fuel efficient cars to the United States market.”
James McDonnell was the proud owner of the first ever smart car in the United States. smart vehicles are known not only for their high gas mileage but also for their safety. Smart fortwos also allow ample room within the vehicle – during the opening weekend, a 6’5”, 350 pound customer sat comfortably in the car with a passenger. Forty smart fortwos were delivered to Rick Case’s Smart Center Weston, kicking off what is sure to be the new craze in the automotive industry.
More than 500 people visited Smart Center Weston during its opening weekend, including two individuals who flew in from Long Island, NY specifically to test drive the smart fortwo. Of those 500 curious individuals, 125 people took the unique vehicle for a test drive.
Rick Case was given the exclusive rights to open smart dealerships in Broward County, one of only 68 United States dealers to sell the fuel efficient vehicles. The brand news smart dealership to open in the United States, Smart Center Weston, is located on I-75 next to the Cleveland Clinic and just North of the Rick Case Hyundai dealership in Weston at 3500 Weston Road. Three models of the smart fortwo, a two-seater 8.8 ft long vehicle available in either coupe or convertible, will be available. The entry-level pure coupe starts at $11,590 MSRP. The passion coupe starts at $13,590 MSRP and the passion cabrio starts at $ 16,590 MSRP.
Rita and Rick Case were chosen to open the new dealerships because of their friendly customer handling process and unique customer benefits such as rewards, free car washes, discount gas, in dealership Broward County Clerk of the Court office with wedding chapel, South Florida’s largest collision center and express service center servicing all makes and models.
Smart vehicles, which have been manufactured by Mercedes Benz for over 10 years, are known for their high gas mileage (more than 40 miles per gallon), compactness (two smart cars can fit in one traditional parking spot), performance (top speed is 90 miles-per-hour) and safety (reinforced steel safety cage like those on NASCAR race cars). Characterized as a “fun” and economical car, smart vehicles can be found on the streets of 36 countries including England, France, Italy, Spain and Canada. Smart fortwos are affordable as well as a solution to current driving challenges.
The cars are available in six body panel colors including: deep black, silver metallic, red metallic, light yellow, crystal white and blue metallic with a choice of black or silver tridion cell accents. Additionally, the smart fortwo offers five interior color choices including: black leather, design beige, design black, plain grey and design red.
Tuesday, January 29, 2008
Rick Case opens first smart dealership
Chrysler offers buyouts to 13,000 in Detroit area
January 29, 2008
BY TIM HIGGINS
FREE PRESS BUSINESS WRITER
Chrysler LLC offered buyout and early retirement packages Monday to about 13,000 Detroit-area hourly UAW members as the automaker works to cut its overall hourly workforce by as many as 10,000 people.
Monday's effort aims primarily to reduce workers at support facilities that are seeing the domino effect of recent production cuts at the automaker's assembly plants.
Packages offering lump-sum payments as high as $100,000 were offered to UAW workers at the Sterling Heights and Warren stamping plants, the Trenton and Mack Avenue engine plants, Conner Avenue Assembly Plant, Detroit Axle, Mt. Elliott Tool and Die, and the Sterling Heights Vehicle Test Center, Chrysler spokeswoman Michele Tinson said.
In addition, she said, the 1,140-person second shift at Sterling Heights Assembly Plant was offered packages, and 770 hourly workers at Warren Truck Plant, which is idle this week, are expected to be offered buyouts, too.
Also, 110 salaried UAW members at the company's Auburn Hills technology center and elsewhere will be able to take early retirement effective Thursday.
About 500 workers at Jefferson North Assembly Plant already had a chance to show interest in a buyout package this month, Tinson said.
Outside the Detroit area, workers at assembly plants in Belvidere, Ill., St. Louis and Toledo already faced deadlines to express interest in buyout packages that were offered.
Chrysler had said it wants to eliminate about 900 jobs at the Jefferson facility in Detroit, 780 jobs at the Toledo North plant and 1,096 jobs at the Belvidere factory.
"That seems to be on plan," Aaron Bragman, an analyst at Global Insight, said of Monday's announcement. "This is reducing headcount so they can get costs down."
Of the packages offered Monday, an estimated 4,600 are early-retirement eligible. The early-retirement package includes a lump sum of $70,000. The $100,000 buyout package is for eligible employees with at least one year of service. The deadline is Feb. 18.
Chrysler negotiated the packages with the UAW, which did not want to make a comment Monday. Tinson said the job cuts are related to volume reductions.
Monday's offers seemed to focus on facilities that do so-called noncore work. Under the new UAW contracts with Chrysler, non-assembly workers can be replaced by new hires whose pay and benefits cost half as much as those for current assembly workers. But Chrysler has indicated that the current cuts are solely related to cutting capacity to meet falling consumer demand.
Chrysler is not alone in Detroit in its efforts to reduce its workforce. Ford Motor Co. has started rolling out buyout offers. GM has only begun the first phase of its program and aims to offer packages to the rest of its UAW workforce next month.
Some analysts wonder whether Chrysler will have a greater challenge getting workers to take buyouts because its workforce is younger than GM's.
The average age of Chrysler's UAW hourly workers is 46 with 30% of workforce eligible for retirement within five years, according to research by Sean McAlinden, vice president of research at the Center for Automotive Research in Ann Arbor.
Meanwhile, 64% of GM's workforce is within five years of being eligible to retire; the workforce's average age is 49.
"They're young and looking around going, 'There's nothing else in this market. I can't necessarily leave because the housing market is so awful,' " Bragman said of Chrysler workers. "It is still a difficult decision to actually leave the company -- $100,000 notwithstanding."
The UAW told its members in October that Chrysler plans to close the Conner Avenue Assembly Plant in Detroit some time over the next four years. The Detroit Axle plant is slated to close after the new Marysville axle facility comes online; the union has said UAW members will have the right to transfer to the new facility.
In November, Chrysler announced plans to eliminate as many as 10,000 hourly jobs on top of the 11,000 hourly jobs planned for elimination as part of the February 2007 turnaround plan.
Friday, January 25, 2008
G.M. sees improved outlook, but says economy could hurt
GM Details Its Turnaround Progress and Outlines 2008 Priorities
Next phase of special attrition program to be launched in February U.S. labor agreement to yield additional savings of $5 billion by 2011 New automotive structural cost target of 23% of revenue by 2012 GM expects continued growth in emerging markets
DETROIT, Jan. 17 /PRNewswire/ -- General Motors Corp. (NYSE: GM) Chairman and CEO Rick Wagoner and Vice Chairman and CFO Fritz Henderson spoke to automotive analysts at a GM conference today, giving detailed reviews of the company's turnaround progress, outlining the automaker's priorities for the year and providing a preview of improvement opportunities for 2010 and beyond.
"We're delivering on the turnaround plan we established in 2005, and have exceeded expectations on virtually all counts," Wagoner said. "We've set a strong foundation that we can truly build on. We're encouraged by our progress in revitalizing our product portfolio, strengthening our brands, reducing structural cost and growing the business globally. At the same time, it's clear that we'll face some challenging headwinds in 2008.
"To continue driving the company's transformation, we'll remain steadfast in our efforts to introduce great cars and trucks and new advanced propulsion technologies, take full advantage of growth markets around the world, and accelerate our efforts to reduce structural costs to even more competitive levels in North America," Wagoner added.
Turnaround Progress
Since introducing its North America turnaround plan in 2005, GM has delivered significant progress in its massive restructuring, including:
-- Product excellence -- Dramatically improved vehicle design and performance is gaining broad recognition, demonstrated by robust sales of recently launched vehicles and numerous industry awards, including 2008 North America Car of the Year for the Chevrolet Malibu, 2008 Motor Trend Car of the Year for the Cadillac CTS, and 2007 North America Car and Truck of the Year awards for the Saturn Aura and Chevrolet Silverado;
-- Revitalize the sales and marketing strategy -- The company has fundamentally changed its "go to market" approach, resulting in stronger brands, re-alignment of its brand distribution channels, stabilized retail market share, significant reductions in daily rental sales and higher average transaction prices;
-- Intensify the focus on cost and quality -- GM reduced annual structural cost in North America from 2005 to 2007 by $9 billion, driven by the 2005 hourly healthcare agreement, revisions to U.S. salaried healthcare and pension programs, capacity reduction actions, special attrition programs for 34,000 hourly employees, and efficiencies achieved in other activities. Significant improvements also continue to be made in vehicle quality, as measured by both internal and industry metrics;
-- Address healthcare/legacy cost burden -- Reflecting the impact of historical agreements with the United Auto Workers union (UAW) and several other key initiatives, GM anticipates that its spending on U.S. hourly and salaried pension and healthcare will be reduced from an average of $7 billion per year over the last 15 years, to approximately $1 billion per year beginning in 2010.
Despite continued pressures in the German market, GM has also made significant progress in its Europe (GME) operations, driven by strong new products, successful implementation of its multi-brand strategy, especially the rapid growth of the Chevrolet brand, which contributed to record GME unit sales of over 2 million in 2007. Rapid expansion in Russia and Eastern Europe, and further structural cost reductions have also contributed to the improvements.
GM's total automotive results have demonstrated strong progress since 2005, marked by significant improvements in both adjusted net income and adjusted operating cash flow through the first three quarters of 2007. GM continues to have strong liquidity, with 2007 year-end gross liquidity estimated to be more than $27 billion, up from $20.4 billion at year-end 2005.
2008 Outlook
Acknowledging headwinds facing the industry, including weak U.S. auto industry sales volumes, high fuel prices, high commodity and steel prices, and mounting regulatory requirements, Wagoner outlined the following focus areas for 2008 designed to continue the momentum and achieve improved financial results:
-- Continue to execute great products
-- Build strong brands and distribution channels
-- Execute additional cost reduction initiatives
-- Take full advantage of growth in emerging markets
-- Build GM's advanced propulsion leadership position
-- Maximize the benefits of running the business globally
For 2008, GM projects global industry volume to reach a record high of approximately 73 million units, up from about 71 million in 2007, with growth in Asia Pacific, Latin America, Africa and the Middle East and Europe. GM anticipates U.S. industry sales will likely be in the low 16-million range, reflecting continuing high fuel prices and sub-par consumer confidence. Despite industry pressures, GM expects to increase revenues in all of its regions, particularly in emerging markets.
Building on notable product successes including the Cadillac CTS, Chevrolet Malibu, GMC Acadia, Saturn Outlook and Buick Enclave in the U.S. and the Opel Corsa in Europe, GM will continue to introduce a host of new products including the Pontiac G8 and Chevrolet Traverse in the U.S. and Opel Insignia in Europe. Capital spending is projected to be up slightly from 2007 levels to about $8 billion in 2008.
On the sales and marketing front, GM will continue its efforts -- most clearly demonstrated in the recent launch of the Chevy Malibu in the U.S. -- to more effectively integrate product and brand marketing strategies. GM will accelerate the alignment of its seven U.S. brands into four distinct dealer channels: Chevrolet, Saturn, Buick/Pontiac/GMC and Cadillac/Hummer/SAAB. By doing this, the company expects to enhance dealer profitability and over time facilitate more highly differentiated products and brands.
With regard to cost competitiveness, GM has made major strides toward achieving its global target of reducing automotive structural costs to benchmark levels of 25% of revenue by 2010. Structural costs are already below 30 percent, compared to 34% in 2005, despite weaker than expected U.S. industry volumes. In light of the progress already made, the company fully expects structural costs as a percentage of revenue to be further reduced beyond 2010, with a target of 23% by 2012.
In support of those goals, the company plans to reduce annual U.S. labor costs by an additional estimated $5 billion by 2011.
A significant portion of those reductions will be driven by the implementation of the 2007 GM-UAW contract, including the independent healthcare VEBA scheduled to begin in 2010, and in the shorter term by taking full advantage of the workforce restructuring opportunities included in the contract, including a "non-core" wage and benefit structure which will result in the re-classification of a significant number of jobs over time.
To facilitate these changes, GM launched, in cooperation with the UAW, the first phase of a voluntary special attrition program for hourly workers in January 2008. This phase applies to those at select job banks, Service Parts Operations (SPO), and other key sites. Employees participating in this phase will begin to exit in March. GM announced today that Phase 2 of the program, under active discussion with the UAW, will be launched in February in all other plants. Participating employees will begin exiting in April. For both phases of the program, 46,000 existing employees are eligible for retirement.
During the conference, GM also reiterated its strategy to achieve manufacturing capacity utilization of 100 percent, or greater, in countries with higher labor costs. Based on current U.S. industry volume levels, additional capacity actions would be required in vehicle assembly, stamping and powertrain facilities. The company will continue to assess U.S. industry and product mix trends, and what potential actions may be required over the coming months.
GM will continue its aggressive plans to grow in emerging markets such as China, Brazil, Russia and India. To strengthen its position in China, where it was the first automaker to sell 1 million units in a single year, GM intends to continue to build its corporate reputation, expand its product portfolio with fuel-efficient products, drive full implementation of its multi-brand strategy, expand capacity, and develop our local supply base and technology capability.
At GMAC Financial Services, while its mortgage business faces continued challenges relating to weaknesses in the housing and credit markets, its auto financing business remains profitable and its insurance operations continue to perform well. GMAC expects Residential Capital, LLC (ResCap) to meet its year-end 2007 financial covenants, and GM believes GMAC remains adequately capitalized.
In addition, GMAC's liquidity position is at relatively high historical levels and GMAC expects to be profitable in 2008, with substantially reduced losses at ResCap due to risk mitigation actions undertaken by the company.
Looking Ahead to 2010
Looking ahead, GM expects continued cost savings and improved automotive pre-tax earnings by 2010, compared to 2007 levels, driven by a number of factors.
The most significant savings is the estimated $4-5 billion GM expects to gain in 2010 once it realizes the full-impact of the 2007 GM-UAW labor agreement related to the shift of U.S. hourly health care to an independent VEBA, and takes advantage of favorable labor demographics to adjust workforce levels and transition a portion of the workforce to the new non-core wage structure.
In addition, GM will reduce the cost premiums it has historically paid to Delphi for systems, components and parts by approximately $1 billion by 2010. Those savings will be offset by various labor and transitional subsidies of $400-500 million under Delphi's proposed reorganization, resulting in net savings of approximately $500 million.
GM also sees the probability of a stronger U.S. industry in 2009 and beyond, as compared to the relatively low 16.5 million total industry in 2007. All indications are that 16.5 million units are approximately 1 million units below trend. It is estimated that a move of the industry back to trend levels by 2010 would generate additional pre-tax income to GM in the range of approximately $1 billion to $1.5 billion annually.
Beyond these factors, there are a number of additional opportunities to further improve GM earnings and cash flow by 2010, though they are more difficult to predict with specificity. These include: additional material cost reductions due to continued leveraging of global vehicle architectures, improved pricing driven by compelling designs and stronger brands, continued explosive growth in revenue and profitability in emerging markets, and improved performance at GMAC.
At the same time, continued U.S. industry product mix deterioration, regulatory cost increases and the ongoing competitiveness of the marketplace pose potential risks to GM's profitability.
Considering the foregoing, GM management expects to significantly improve operating results, including earnings and cash flow, over the next two to three years.
Source: General Motors Corp via PR Newswire .
Sunday, January 13, 2008
Tuesday, January 8, 2008
Downturn nearing an end, auto report says
Automotive Industry Ramps up Production of Fuel Efficient Cars and Races to Find Alternative Fuel Sources, KPMG Survey Finds
DETROIT, Jan. 8 /PRNewswire/ -- Automotive industry executives have identified finding alternative fuel sources as the number one trend facing the industry and are focused on producing low cost cars and hybrids to meet consumer demand, according to an annual global survey by KPMG LLP, the U.S. audit, tax and advisory firm.
In the KPMG survey, based on interviews with 113 senior executives at vehicle manufacturers and suppliers worldwide, auto execs said quality (86 percent) and fuel efficiency (84 percent) are the two key factors for consumers in making a purchase in the next five years. Other top consumer criteria are safety (70 percent) and affordability (69 percent). The execs also feel that car buyers will want vehicles using alternative fuel sources, which has jumped considerably in importance from KPMG's survey a year ago (65 percent versus 53 percent).
"The industry knows where it is and knows where it needs to be," said Daron Gifford, National Automotive Leader for KPMG LLP. "It needs to produce quality vehicles that are fuel efficient, especially in this economic cycle, and it needs to invest heavily in developing alternative sources of power. We found the execs in our survey more optimistic than past years, and that's largely because the landscape before them is clearer on the direction they need to go."
To meet demand, auto execs in the KPMG survey said that in the next five years, in terms of global market share and units sold, 81 percent expect major increases in low cost/introduction cars and an equal percentage expect increases in hybrids. This was followed by cars, at 67 percent, and crossovers at 58 percent. Categories of vehicles expected to fall are SUVs and large pick-ups, with 47 percent projecting a decrease in SUVs and 50 percent projecting a decrease in large pickups.
Asked to rate the importance of automotive product innovations over the next five years, 79 percent cited hybrid systems and 78 percent fuel cell technology, with safety innovations trailing at 67 percent.
The auto industry projected alternative fuel/hybrid vehicles sales to be in the 500,000 to 600,000 range by the end of 2007. Thirty-two percent of execs in the KPMG survey felt that we will see an equal number sold in 2008, while 25 percent saw a modest increase to 600,000 to 700,000 vehicles. Sixteen percent expect sales in the 700,000 to 800,000 range, with 27 percent expecting sales to top 800,000. The execs surveyed last year under projected sales of alternative/hybrid vehicles for 2007; only 17 percent expected sales to top 500,000.
"The auto execs expect heavy investment in new models/products and new technologies in the next two years as well as building capacity in Asia," said KPMG's Gifford. "Not investing puts manufacturers at risk in terms of market and product differentiation, resulting in market share decline."
Investment in China has been so strong that the number of cars sold in China could equal that of the United States in the next five years, the execs said. In addition, they feel that China will sell a significant number of cars in the U.S. in 6-10 years. What also may result, however, are problems with overcapacity, with 45 percent of the execs saying that overcapacity in China will become an issue in the next five years.
In the KPMG survey, the executives interviewed represented vehicle manufacturers and suppliers in Canada, United States, England, France, Germany, Sweden, India, China, South Korea, Japan and Australia. KPMG has released an annual survey of automotive executives expressing their views on the state of the industry since 1999.
Monday, January 7, 2008
Where's that Small-Car Shift?
By James M. Amend
Ward's Dealer Business
Detroit — With U.S. gasoline prices currently at $3 a gallon and growing consumer awareness of environmental issues, small cars should be the U.S. auto industry's hottest segment.
Not quite yet, says GM Chairman and CEO Rick Wagoner.
“It's been sort of surprising,” Wagoner says during an interview at the auto maker's headquarters here. “We haven't seen a radical shift.”
Sales of small cars in the U.S. through November were relatively flat, up 0.7%, or 16,403 units, to 2.3 million compared with year-ago, according to Ward's data. The segment accounted for 15.9% of the total light-vehicle market in the U.S., up from 15.4% in like-2006 but still fourth behind midsize cars, cross/utility vehicles and pickup trucks.
The lower small-car sub-segment, however, has been doing well. U.S. sales through November jumped 35.4% to 338,675 units from prior year's 250,072, Ward's data shows. But that was due mostly to an influx of new product such as the Honda Fit, experts suggest, and only accounts for 2.3% of total industry light-vehicle sales.
Meanwhile, the volume-leading upper small sub-segment, which includes vehicles such as the Toyota Matrix and Mazda3 5-door, saw deliveries fall 3.7% to 1.8 million units in the period from year ago's 1.9 million units.
Wagoner blames a weak economy, which has caused lower-income families to postpone new-vehicle purchases.
“You lose more sales at the bottom of the market because the people buying the smaller category of vehicle are buying it because that's what they can afford,” he says.
Should gasoline prices remain elevated for an extended period of time, the long-anticipated shift to small cars could occur, Wagoner admits.
Auto makers should begin building more compelling vehicles for the segment, says Brett Hoselton, an analyst with KeyBanc Capital Markets.
He points to Europe, where small cars draw buyers for their value and fuel economy but don't sacrifice features.
“In Europe, buyers don't have to sacrifice content,” he says. “In the U.S., as the euphemism goes, you're not going to get the heated seats.”
Wagoner says GM's options for building a premium small car for sale globally are becoming greater and more cost-effective than ever before.
The Saturn Astra is one example. GM will import the car from its Adam Opel GmbH subsidiary for sale in the U.S. next year as a test of how American drivers take to cars with a decidedly European flavor.
It also will demonstrate whether Saturn can compete with brands such as Volkswagen and Honda, rather than “more modestly positioned” names, Wagoner says. “It's an important step in that direction.”
New Year Brings Harsh Realities
By Drew Winter
WardsAuto.com
CommentaryIt started out innocently enough as a conversation about Christmas gifts. “People my age value experiences over material things,” my 21-year-old told me.
I assumed he was just politely asking for cash and didn’t think much of it.
Then, during a recent meeting with Ward’s editors, Ford sales analyst George Pipas used almost exactly the same words to explain the entire Millennial generation, people born between the late 1970s and late 1990s, feel the same way my son does.
In other words, the children of Baby Boomers do not aspire to vehicle ownership like we did.
Instead of daydreaming about buying a Ford Expedition they can use for camping trips with friends and family, many Millenials may want to rent the big SUV for just the camping trip, Pipas explained. The vehicle is just another element of the experience, not the foundation for it.
The next weekend they might rent a canoe.
That sent a chill down my spine.
Millenials, otherwise known as Gen Y, or Echo Boomers because they are the children of Baby Boomers, are the linchpin of most optimistic long-term automotive growth forecast.
Numbering about 75 million in the U.S., alone, they are the largest and most influential demographic since their parents.
They have been the apple of every mass-marketer’s eye for the past 10 years and are predicted to be a major driver of new-vehicle sales.
Based on the assumption that Millenials and even younger generations would exhibit the same buying patterns as their parents, Jim Press, then president of Toyota Motor Sales U.S.A., used to predict the U.S. eventually would see 20 million annual sales, far exceeding 2000’s 17.4 million record.
In 2005, Press told attendees at the Management Briefing Seminars in Traverse City that he loved to visit hospital maternity wards. “Every one of those little baskets is 20 purchase cycles,” he said.
Toyota still is doing well. It is battling GM for global dominance, and Ward’s forecasts it will eclipse Ford for the No.2 spot on the full-year U.S. sales chart.
But there has been little talk of 20 million-unit years lately. Ward’s is expecting 2007 sales to end up at a little over 16 million units.
The housing crisis, tough new fuel-economy legislation and sagging consumer confidence have most forecasters predicting 2008 will be an even weaker sales year.
And now wrong assumptions about future buying behavior may pull the rug out from under rosier long-term forecasts.
According to most recent studies, the average college student now owes about $20,000 in student loans at graduation, virtually assuring that a new-vehicle purchase will not top many recent grads’ to-do lists. Now some forecasters such as Ford’s Pipas are suggesting these future consumers may not even want a new vehicle, even if they can afford one.
It all points to a very sobering beginning for the New Year.
Then again, many Boomers will remind that they started out rebelling against the materialism of their parents, and then 20 years later became card-carrying members of the Me Generation, the most conspicuously consumptive generation ever.
But the credibility of the source is, unfortunately, suspect. Remember, you can’t trust anyone over 30.
Sunday, January 6, 2008
Late Payments on Consumer Loans Rise
By JEANNINE AVERSA
WASHINGTON (AP) — Late payments on a cluster of consumer loans, including those for autos, home improvement and certain home equity loans, climbed in the summer to their highest point since the country's last recession in 2001.
The American Bankers Association reported Thursday that the delinquency rate on a composite of consumer loans increased to 2.44 percent in the July-to-September quarter. That was up sharply from 2.27 percent in the previous quarter and was the highest late-payment rate since the second quarter of 2001, when the economy was suffering through a recession.
Payments are considered delinquent if they are 30 or more days past due. The survey is based on information supplied by more than 300 banks nationwide.
Late payments on credit cards, meanwhile, dipped during summer.
The delinquency rate on credit cards dropped to 4.18 percent in the third quarter, down from 4.39 percent in the second quarter.
The association's quarterly survey of consumer loans painted a mixed picture of how people are managing their debt. It suggested that some people feel more squeezed than others.
A severe housing slump and weaker home values have clobbered some homeowners — making it difficult, or even impossible for some to pay their monthly mortgages. Foreclosures surged to record highs and more homeowners fell behind on their payments during the third quarter of last year, the Mortgage Bankers Association reported last month.
A drop in home prices left some people stuck with balances on their home mortgages that eclipsed the worth of their home. Others got burned when low introductory rates on their mortgages jumped to much higher rates, which they couldn't afford.
"Consumer loans directly related to the housing market were hit the hardest," said James Chessen, chief economist at the American Bankers Association. "We anticipate delinquency rates will continue to rise on these types of loans in the fourth quarter of 2007, reflecting continued weakness in the housing sector."
Late payments on home equity lines of credit jumped to 0.84 percent in the third quarter. That was up from 0.77 percent in the second quarter and was the highest since the final quarter of 1997. The delinquency rate on home-equity loans in the third quarter rose to 2.28 percent, a two-year high.
Meanwhile, the delinquency rate on "indirect" auto loans — which are arranged through dealerships — jumped in the third quarter to 2.86 percent, a 16-year high.
Saturday, January 5, 2008
Kbb.com: Car shoppers cut spending due to gas prices
Kbb.com: Car shoppers cut spending due to gas prices
New-vehicle shoppers plan to adjust their shopping habits due to high gas prices, spending less money on themselves so they can still give to others during this holiday season, according to the latest Kelley Blue Book Marketing Research study (www.kbb.com). The December 2007 results reveal that 44 percent of in-market new-vehicle shoppers are looking at cars they normally would not have considered due to the pain at the pump. An example of this is a notable shift in vehicle segment consideration from just two months ago, with increased interest in less expensive and more fuel-efficient transportation including crossovers, sedans and hatchbacks, and declines in SUV interest.
With a gallon of unleaded gasoline currently hovering at more than $3 in most parts of the country, 67 percent of those in the market for a new vehicle indicate they will not spend less on holiday gifts this year due to the rising cost of gas. However, more than 40 percent of consumers do say they are eating out less often and nearly 50 percent of consumers say they are doing less shopping of non-essential retail items such as clothes and shoes; further examples of consumers cutting back on self-spending. According to new-car shoppers, the largest shift in personal spending includes delaying the purchase of a new home, which more than doubled from October to December.
“While gas prices are clearly influencing the way consumers plan to spend money on themselves, such as going out to eat and delaying the purchase of a new home, it appears most people will not let the price of gas affect their holiday spirit and giving to others,” said Jack R. Nerad, executive editorial director and executive market analyst for Kelley Blue Book and kbb.com. “Based on our monthly study, shoppers are willing to sacrifice in order to still give to others, and it even extends to their next new-vehicle purchase. We are seeing more and more new-vehicle shoppers looking at smaller and more fuel-efficient cars than in the past. ”
When asked how gas prices have affected which vehicles they are considering, more than half of consumers say they would seriously consider a vehicle with higher fuel efficiency if gas prices were to increase as little as 50 cents per gallon. Among those looking to buy a new hybrid vehicle, shoppers say they are most interested in the Toyota Camry hybrid and the Honda Civic hybrid.
“Determining how gas prices affect consumer shopping provides tremendous insight into shifts in the economy, and tracking their opinions of alternative fuel solutions sheds light on the possible adoption and acceptance rates of alternate fuel systems in the future,” said Rick Wainschel, vice president of marketing research and brand communications for Kelley Blue Book. “Timely, in-market vehicle shopper feedback can provide invaluable information to automotive manufacturers and marketers, allowing them to tailor their messages and strategies more toward what car shoppers actually think and how they plan to spend their money.”
The latest Kelley Blue Book Marketing Research study was conducted on Kelley Blue Book’s kbb.com among in-market new-vehicle shoppers during the first week of December 2007.
Friday, January 4, 2008
GMAC Insurance Unveils Innovative Solution
GMAC Insurance Unveils Innovative Solution Targeting 30% Increase to Dealer F&I Revenue
GMAC Insurance Group
SOUTHFIELD, Mich., Jan. 3 — GMAC Insurance today introduced the latest additions to its innovative suite of technology-based solutions for automotive dealers. Combined with ongoing training and support, IntelliMenu(SM) and IntelliTracker(SM) provide a state of the art, custom- designed, menu-selling process with the potential to increase dealership F&I revenue by 30 percent on average.
"During the last several years, dealers' profit margins on new vehicle sales have become increasingly slimmer," said Tom Callahan, executive vice president of GMAC Insurance's Dealer Products & Services group. "Our integrated menu-selling process will help dealers remedy that trend. First, it will provide dealers with unprecedented and complete access to all of the tools and training necessary. And second, by enhancing customer awareness of F&I product offerings, we expect the solution will ultimately result in significantly improved penetration and revenue."
GMAC Insurance is providing this service through a partnership with menu- selling technology leader MenuVantage.
"We are proud to be working with GMAC Insurance on this unique, integrated dealer solution," said Phil Battista, co-chief executive officer of MenuVantage LLC. "On average, dealerships with our system have seen a 30 percent increase in F&I revenue. By combining our technology expertise with GMAC Insurance's complete support package, dealers can expect unparalleled service and results."
By capitalizing on MenuVantage's proven platform, IntelliMenu also will provide dealers with an interface approved for ADP's dealer management system (DMS) and certified for Reynolds and Reynolds' DMS. These interfaces allow MenuVantage access to a dealer's DMS using standard data interfaces and help ensure dealer information security, privacy, confidentiality, integrity and supportability.
The company will also supply GMAC Insurance with technology support and development expertise for future upgrades and improvements.
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IntelliMenu and IntelliTracker are big departures from the industry norm. While the majority of competitors traditionally focus solely on products, GMAC Insurance is redesigning its entire portfolio of offerings around dealer- focused solutions - integrating F&I products with on-going dealership training and best-in-class tools to provide a complete, packaged solution.
"Our business model is built around developing products, services and training that address specific issues raised by our dealer-customers. IntelliMenu and IntelliTracker were both born out of our ongoing conversations with dealers," said Callahan.
By integrating with major DMS providers, web-based IntelliMenu provides a seamless sales transaction, giving dealerships an easy, affordable way to structure multiple deals in the F&I office. IntelliMenu further assists dealerships with disclosure needs, allowing dealers to show every customer a complete listing of product offerings, while providing a record of acceptance or decline.
IntelliTracker integrates with IntelliMenu providing dealers and their GMAC Insurance account executives with up-to-the-minute information on F&I sales results. An individually tailored approach to maximizing sales is then jointly developed based on the needs of the dealer, and any necessary training is immediately set-up.
The entire process will be made available to dealers in mid- to late- January. Dealers interested in more information can contact their GMAC Insurance representative. Additionally, reps will be available to demonstrate these new solutions in GMAC Insurance's booth at the National Automotive Dealers Association (NADA) Annual Convention on Feb. 9-12 in San Francisco.
"I encourage every interested dealer to stop by the GMAC Insurance booth," said Callahan. "While there is no silver bullet to address dealer needs, we believe GMAC Insurance can offer real solutions with the depth and breadth of our products and proven F&I capabilities."
About MenuVantage
MenuVantage, based in Orlando, Fla., provides automotive dealers with best in class F&I tools to ensure compliance and increased per unit profit. The MenuVantage system offers F&I departments the most advanced technology available on the market today to increase F&I sales. It is also capable of the electronic submission of warranty and F&I products to providers, real time service contract rating, and the dynamic printing of documents on regular paper. Founded in 2003, MenuVantage has enjoyed tremendous growth and currently services more than 2,500 users at automotive dealerships in over 42 states nationwide, processing more than 70,000 deals per month. MenuVantage can be reached on the web at http://www.menuvantage.com.
About GMAC Insurance
The GMAC Insurance Group is part of GMAC Financial Services, a global, diversified financial services company that operates in approximately 40 countries in automotive finance, real estate finance, insurance and other commercial businesses. GMAC's insurance operations were first established in 1925, and now offer a wide range of products to meet the needs of retail consumers, dealers and business partners. For more information, please visit www.gmacfs.com.
SOURCE GMAC Insurance Group
Thursday, January 3, 2008
San Fran - greenhouse gas emissions.
State sues EPA to force waiver over greenhouse gas emissions.
Thursday, January 3, 2008
California led 15 other states and five environmental groups into federal court Wednesday to challenge the Bush administration's refusal to let the state limit vehicle emissions of gases that contribute to global warming.
In a lawsuit filed in San Francisco, the state accused the Environmental Protection Agency of exceeding its authority when it barred California last month from enforcing limits on cars and trucks starting with the 2009 model year, the first law of its kind in the nation. The state needed the EPA's approval to implement clean-air standards that are stricter than federal rules.
"The EPA has done nothing at the national level to curb greenhouse gases, and now it has wrongfully and illegally blocked California's landmark tailpipe emissions standards," state Attorney General Jerry Brown said at a news conference in San Francisco.
He said EPA Administrator Stephen Johnson had offered no coherent legal explanation for his Dec. 19 refusal to let California act and accused President Bush's appointee of merely "doing the bidding of the auto industry."
The lawsuit was endorsed by Gov. Arnold Schwarzenegger, who said federal regulators were "ignoring the will of millions of people who want their government to take action in the fight against global warming."
The federal veto affected as many as 19 other states that have adopted California's standards or indicated their intention to do so, including the 15 that joined the lawsuit filed Wednesday with the Ninth Circuit Court of Appeals in San Francisco.
Other California political leaders chimed in, including Democratic Sen. Dianne Feinstein, who chairs a Senate subcommittee on the environment. She cited reports in The Chronicle and other news outlets that Johnson had ignored his legal staff's recommendation to grant California the waiver and asked the EPA's inspector general to investigate the decision.
"The thought has occurred that this was a political decision rather than an environmental decision," Feinstein said.
In response, EPA spokesman Jonathan Shradar cited Johnson's position that a national approach to the problem is better than state-by-state regulation. He noted that Bush had just signed legislation that requires makers of cars and trucks to increase fuel economy to an average of 35 miles per gallon by 2020.
"We now have a more beneficial national approach to a national problem, which establishes an aggressive standard for all 50 states as opposed to a lower standard in California and a patchwork of other states," Shradar said.
California's law, passed in 2002, established limits on auto emissions of carbon dioxide and other gases that scientists consider to be among the major causes of global warming. The law was scheduled to take effect with the 2009 models and would require automakers to reduce their 2016 fleets' emissions by 30 percent.
A federal judge in Fresno upheld the law last month, rejecting automakers' arguments that the law would interfere with exclusive federal regulation of fuel economy and would make new cars dangerous and unaffordable. But the state still needed EPA approval to enforce the law.
The federal Clean Air Act allows California, because of its smog problems, to enact air-quality rules more stringent than the national standard if the state gets a waiver from the EPA. The agency had approved about 50 waiver applications without a denial since the law took effect more than 30 years ago.
The greenhouse gas case was different, because California and the states that followed its lead were implicitly challenging Bush's policy of relying on voluntary industry action, rather than mandatory limits, to reduce greenhouse gas emissions.
After considering California's request for two years - finally prompting California to file another lawsuit seeking a prompt ruling - Johnson denied a waiver last month. He cited the newly signed federal fuel-economy law and also said the state didn't qualify for a waiver because greenhouse gases are not unique to California.
But the state and environmental groups said the EPA has regularly granted waivers to California to address air pollution problems that were not unique to the state.
In addition, "no other state can claim the same wide range of severe impacts that California faces: melting of the state's snowpack ... increases in catastrophic wildfires, worsening of dangerous smog levels and other harms," said attorney David Doniger of the Natural Resources Defense Council, one of the five advocacy organizations that went to court along with California and the other states.
California and its allies also disputed the EPA's assertion that the state law is weaker than the new national fuel-economy standards.
The EPA's Shradar said the federal agency estimates that manufacturers could comply with the California law by achieving an average of 33.8 mpg in their new cars and trucks by 2016.
But Mary Nichols, chairwoman of the state Air Resources Board, said studies by board staffers concluded that the California law would require a fleet average of 44 mpg by 2020 and would reduce greenhouse gas emissions in the state by about twice as much as the federal law.
"Frankly, this is not very surprising because California standards start earlier, go faster ... and the end points are more stringent," Nichols said.
Brown's office had said earlier that federal law required the lawsuit to be brought in the U.S. Court of Appeals in Washington, D.C., a more conservative court than the Ninth Circuit. Brown said Wednesday that Johnson's letter rejecting California's waiver did not refer to the controversy as a nationwide issue - which would have sent the suit to Washington - and instead referred only to conditions in California.
Brown said he prefers the Ninth Circuit because its record in environmental cases "has been more closely aligned with how we interpret the law." That may not matter in the long run, he added, because the case could wind up in the U.S. Supreme Court.
Chronicle staff writers Matthew Yi and Zachary Coile contributed to this report. E-mail Bob Egelko at begelko@sfchronicle.com.
This article appeared on page A - 1 of the San Francisco
