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Uh-Oh: Some GM Dealers Not Liking 60-Day Guarantee

Cadillac: Too good for a money-back guarantee?

Cadillac: Too good for a money-back guarantee?

Here’s a troubling sign:

Some GM dealers are opting out of GM’s just-launched 60-day money- back guarantee program.

According to 24/7 Wall St., 149 of GM’s 4,000 dealers are saying ‘no thanks’ to the program that allows customers to return their cars after 30 days of ownership. Reasons cited by those dealers are:

1. They dislike the new ad campaign promoting the 60-day promotion. The campaign TV commercials star new GM Chairman Ed Whitacre, former head of AT&T (T). Whitacre has no experience in the auto industry.

2. Dealers believe that they are running financial risks by taking cars back from customers. Whether this is true or not is hard to tell. Some dealers are worried that once they pay customers it may take time for them to get money from GM.

3. Higher end dealers, particularly those who sell Cadillacs, believe that the marketing program is a sign of desperation that cheapens the brand.

While only about four percent of dealers are opting out (so far), the fact that they are concerned is worthy of our attention. Perhaps those dealers don’t have the same confidence in their cars that corporate GM seems to have, and foresee too many returns.

The promotion is indeed a sign of desperation, but it’s also a sign of a corporate behemoth asking the American public for our trust back.  I for one am glad to see GM humbled  to the point of sticking up for itself and proving its worth, rather than assuming people will buy its cars no matter what.

GM will have to work hard to earn our trust and prove its products are competitive with other brands, but dealers have to be on board for the promotion to work. I hope the majority of dealers stand up behind the General and work just as hard to prove the cars they sell are worthy of our attention.

I say the American public, not GM dealers, should be the ones who decide if General Motors has told the truth this time around.

Should GM dealers opt out of GM’s money-back promotion?

-tgriffith

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GM Was Right to Bet on Cadillac

2010 Cadillac CTS Sport WagonIn a survey just released by the University of Michigan, it appears that new owners just love their Lexies and their Caddies. Both brands tied at 89 on the American Customer Satisfaction Index, and that score was 5 points better than the industry average. That’s pretty good, don’t you think? Especially for a company just emerging from the tremors of bankruptcy.

Customer satisfaction for all Detroit brands grew from just over 81 last year to just below Asian automakers’ score of 84. European companies topped the ranking with 86. This year’s near-parity with Asian companies marks the closest the Detroit-based automakers have come to that group of rivals since outscoring them in 2000.

Cars like the CTS Sport Wagon (above), with lots of favorable reviews, are changing the public’s perceptions and moving the marque’s rankings. With the crossover/SUV/wagon categories more muddled than ever, the CTS-SW should be one of the segment’s coolest offerings (and the first American factory-built wagon for Cadillac).

In Europe, a new small sedan to be called the ATS is slated to replace the slow-selling BLS and is aimed at the BMW 3 Series market. So says Motor Authority. This entry-level Caddy is not just for Europe but for all markets.

More GM news: NPR reported this morning—too early by far for me to be fully compos mentis—that GM was going to recall laid-off workers and reopen plants, since current dealer inventory has dried up owing to Cash-for-Clunkers demand. I think I heard that right. Such news could drive a wealthy fool to fumble for his Blackberry and order up more cheap GM stock. Or, if he were sensible, go back to sleep.

Lordstown (Ohio) and Orion (Michigan) are among those plants slated to reopen. Mark LaNeve, a GM sales guy, reportedly said, “We’re adding 60,000 units to our production schedule.” The Truth About Cars had this comment:

And when Cash for Clunkers plays out and leaves a smoking crater where all those pulled-forward sales used to be? GM will go back to right-sizing, shift-cutting, inventory management, fire sales, channel stuffing and the other depressed-cycle tricks of the trade.

You betcha. And I’ll be back in bed. But that’s really a negative, smarmy view of things. If Cadillac continues its march and Chevy its rebuild, the good old General may yet survive.

Will GM make its mark through Cadillac? What other brands do you think show similar promise?

—jgoods

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G8 Becoming Caprice? Umm… Nevermind

Lose the hype, Bob - just tell us the truth

Lose the hype, Bob - just tell us the truth

For a few days there, I was actually excited about “the new GM.”

Here’s why:

1.  The company came out of bankruptcy after an exceptionally short stay, with promises to take on the world in a brand-new way.

2.  Bob Lutz came back and announced that the Pontiac G8 would become a Chevy Caprice in the United States. Excitement ensued.

I should’ve known, though, that GM wouldn’t actually come through. Why was I such a moron to believe Mr. Lutz was telling the truth? Mostly because I’m optimistic about the company, even though I probably shouldn’t be.

I’m disgruntled because GM CEO Fritz Henderson told our friends at Autoblog that Lutz was lying.

Okay, he didn’t actually say that. But he did say this to Autoblog about the G8 rumor:

We’ve been looking at it for police applications. As for whether or not it’s broader than police applications, I am not a believer in re-branding and re-badging. We’ve been talking about in terms of potential police applications and we’ll leave it at that.

Does anyone else thing GM needs to get its communication in order, especially from top execs, if it hopes to succeed? One exec telling the world one story only to be discredited a few days later by the CEO is not good business.

I had hope that I could rebuild my trust in General Motors. I should trust my instincts, though, and admit that it’ll be the same old company, deception and all.

Are you ready to trust General Motors and buy their products?

-tgriffith





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Blackberries, iPods, Mobile Devices - Whatever Happened to the Car?

It's not a car - it's a mobile device.

It's not a car - it's a mobile device.

As a teenager, there were exactly two things on my mind: girls and cars. I probably should have made room for homework and committed myself harder to a part-time job, but those things were just obstacles in the way of getting girls and cars.

I had a job only so I could save up for a car. Then once I bought it, I kept the job only to pay for accessories for the car.

That’s just the way I was, and the way most other guys in my high school were, too. Car culture was embedded in us. Cars were a symbol of freedom and independence, even an extension of our very personalities.

A funny thing is happening, though, to teens of today. Symbols of freedom and independence are no longer being driven - they’re being carried. Emotion is being squeezed out of cars, and the juice is dripping into Blackberries and Palm Pilots.

An article at Boston.com gives the example of a young woman who’s perfectly happy with a hand-me-down Toyota Camry. Her new Blackberry is what she’s really excited about.

Then there’s a 22-year-old guy who spends his money on iPods, laptops, and video games, much to the dismay of his truck-obsessed father.

Teens and kids today just don’t have the same priorities I did. Heck, 10 years ago I was 22, and the biggest love of my life was my pickup. And I was married! Teens just don’t care about muscle, horsepower, or 7-inch lift kits. They want practicality and reliability. But where’s the fun in that?

Automakers are trying to reach young people with vehicles such as the Kia Soul, Nissan Cube, and Ford Fiesta. Nissan may have the best shot, showing they understand the market by not calling the Cube a car, but a “mobile device.” This move could be quite brilliant. But while teens might appreciate the effort, there’s still the challenge of getting them to part with $15,000.

That’ll buy a lot of iPhone apps.

Will America’s car culture die off as today’s young people grow up?

-tgriffith





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Money and Cars, Drinking in Bars

Yesterday I watched Fritz Henderson, GM’s new CEO, on “Meet the Press.” Nice guy who skirted the tough questions and dropped no bombshells. But he made some news when he said that while bankruptcy wasn’t inevitable, “it would only be prudent” to prepare for it.

Here’s the nub of the problem:

GM must shrink $27.5 billion in debt that bondholders have been reluctant to exchange for equity, and $20.4 billion in obligations to a union-run health-care fund [VEBA]. Henderson also has said GM needs to cut more deeply than its planned 22 percent reduction in so-called structural costs in North America to $26.3 billion from 2007’s level.

That is a helluva lot of money, and the company has yet to present a viable business model for how they will operate in a new, restructured mode. Like Lehman Brothers, GM “is woven into a complex international web of suppliers and subsidiaries.”

From what I read, the bondholders are holding back, thinking they might get a better shake in bankruptcy (which is doubtful), and the union is at the table, reluctantly making more concessions. Even if the balance sheet gets cleaned up, what kind of restructuring will emerge?

Autos SurvivalUndoubtedly, we’ll see fewer brands—possibly only Cadillac and Chevrolet—fewer dealers (as tgriffith mentioned), a leaner, more focused supply chain, and lots of former employees spending more time in Detroit bars.

We’ll also see, perhaps, pressure on Ford to lean down to meet its new GM competition. It isn’t enough to sell off assets, as Ford has done. Remaking the auto industry in a new mode is not just a matter of balance sheets; it is giving birth to a new order of cars that people will want and confidently buy.

This means getting over most of the negative perceptions that have been created about GM over the years. It means honoring warranties (thus the Obama team’s proposal to backstop them). It also means, as Henderson indicated, a step-by-step approach to redeveloping public confidence in the brand(s), which can be achieved only by making desirable, quality cars.

All this is a very tall order, and now the government’s entry as majority owner further complicates matters…. Think I’ll go out for a drink.

Assuming that a “controlled” bankruptcy will occur, do you think a new GM can emerge?

—jgoods



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Fear this, Prius! Here comes America…

2010-ford-fusion-hybrid

Ask anyone what the best hybrid car is and you’ll likely hear “Prius” nine times out of 10.

Toyota has had a stranglehold on the hybrid market since introducing the Prius in Japan in 1997. Nothing short of world domination has ensued in the years since. Not to say there hasn’t been any competition; Honda has tried with their Insight, Civic and Accord hybrids. Nissan has given it a half-hearted go with the Altima hybrid. GM stumbled into the game with the meaningless Cadillac Escalade hybrid. And Ford? Hardly worth mentioning as their Escape hybrid has been simply mediocre.

By hey, what do you know - leave it to Ford to come up with a game changer and topple King Prius from the top of Media Mountain. And it’s not the Escape that made the lofty climb to the top; it’s the 2010 Ford Fusion Hybrid.

USA Today and Car & Driver recently raved about the Fusion Hybrid. In fact, in both of their tests, the Ford smacked the Toyota from its perch at the top, sent it tumbling into the ocean below, and then blew it out of the water.

Here’s what USA Today said:

OK, let’s just get it out there: The 2010 Ford Fusion hybrid is the best gasoline-electric hybrid yet. What makes it best is a top-drawer blend of an already very good midsize sedan with the industry’s smoothest, best-integrated gas-electric power system. It’s so well-done that you have to look to the $107,000 Lexus LS 600h hybrid to come close.

Dude. You have to spend $107K just to get CLOSE to the Fusion! Who would’ve ever thought the automotive press would say that about a Ford, especially in our current U.S. automaker crisis? Talk about a welcome breath of fresh air.

And to keep the clean breathing going, check out Car & Driver’s take:

Ford has pulled off a game changer with this 2010 model, creating a high-mpg family hauler that’s fun to drive. Nothing about the leather-lined test car, optioned up from its $27,995 base price to $32,555, seemed economy minded except for the mileage readings. On that score, the Fusion topped the others, turning in a 34-mpg score card for the overall 300-mile test run.

I don’t know about you, but I’ve needed to hear something positive about the U.S. automakers for a long time now. Ford, I congratulate you on a job well done and I’m excited to see what you come out with next.

What do you think about these reviews of the 2010 Fusion Hybrid?

-tgriffith



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Hyundai Didn’t Win, a Couple of Potatoes Did!

Mr. Potato Head

Mrs. Potato Head

Now with all due respect to my companion blogger tgriffith, I want to take issue with his glorification of the Hyundai Genesis ad.

Yeah, it was funny, but in fact the ad bombed with the public. According to USA Today’s ad meter, it finished fourth from the bottom (47th) in measured responses from 268 volunteers. Hyundai’s Assurance ad, offering a turn-back-the-car program, finished 49th.

Other car companies didn’t do so hot, either: The best ranking came for the Audi ad, finishing 12th. But Bridgestone Tires made it to 4th with Mr. and Mrs. Potato Head driving into a bunch of sheep. It came in 1st on the ADBOWL vote-in site. The creative and the execution, as they say in the ad biz, were terrific.

First place went to Doritos for the two dorks and a “crystal ball” ad, which was outstanding. Created by two unknown guys from Indiana, this one beat out all the offerings of big-time ad shops. And they beat Budweiser, which has won everything for years.

So Hyundai’s big-budget ads got totally swamped by a silly Potato Head couple that’s been around for years. Bridgestone also did well last year, as we reported, with its screaming squirrel.

The bottom line, according to USA Today, is that “Even in a downtrodden economy, what delights Super Bowl viewers hasn’t changed at all. Folks simply want to laugh.” And the guys with the most laughs won.

Are this year’s Super Bowl ads going to influence your car buying this year—or your feelings about the car companies?

—jgoods



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Ayer European Auto Surgeons Ain’t No Jiffy Lube

They do repairs mostly on German cars and the occasional Ferrari, but they are far from snooty, being located in Gardiner, Maine, about 50 miles from Portland. I live there, too, and take my auto-surgeons-lineup2GTI in for occasional service and to shoot the breeze with owner-manager Amy Rees. She and partner Aaron Murphy, who runs the shop, have recently built a nice repair business by doing good, fairly priced work on cars people love to dote on.

In these precarious times, I wondered whether the Auto Surgeons still had a good roster of patients. I knew Amy wasn’t shy about expressing her views, and I also wanted to get some background on the business. So, on a recent cold morning, we sat down to talk.

How in the world did you get involved in this male-oriented business?

I grew up in a family that always had European cars, and so I developed a fondness for them. My father had a 2002 and a bunch of other cars over the years—I just loved driving them and had that enthusiasm carry over into my later years.

You know, I have always liked working with men much better than women, and my guys are terrific. They look at me as kind of a Den Mother, and that’s fine because we all work well together. We have four in the shop now, all with excellent backgrounds in foreign car service. We provide 100% healthcare coverage because it’s the right thing to do.

amy-and-benz2Which reminds me of your recent bout with cancer.

I got diagnosed with breast cancer in the spring of last year, just after we bought the place, and was out much of the summer with chemotherapy and trying to recover. Not fun, but the guys filled in and ran things perfectly, and I’m enormously grateful.

We’ve been here for about 18 months, and it’s going really well. Aaron and I have one other silent partner with more financial wherewithal. We run the business, he’s the money guy, and it works out well.

And you got started here after working in Portland?

I was in a Portland ad agency doing radio commercials, then quit my job to take a little time off at home and do some soul searching: “What do I really want to do? Well, I’ve always really liked cars.” I had an older BMW and wanted to restore it, and I found this guy, Voit Ritch, here in Gardiner that would work on it.

And I thought, he has so much potential here, specializing in these cars, but I think he needs a business partner. Well, Voit said, “No, I don’t really want a business partner, but I’ll hire you, and we can teach each other.” So I went to work for him, and in two years we doubled his business.

After a time he decided to open his own shop in Freeport [near Portland]. Well, I had sold my house in southern Maine, moved to Gardiner to avoid the 50-mile commute, and I wasn’t about to reverse that and go to Freeport every day. It was time for me to leave anyway. When his mechanics found out, they weren’t crazy about going, either, so we just decided we’d all stay here and start our own business. Ray Ayer sells foreign cars next door, leases us the space and still does restorations, though that part of his business seems to have fallen on some hard times.

But you’ve got a steady customer base?

Our customers for the most part are pretty financially solid—mostly professionals, lawyers, doctors, and their jobs aren’t in danger. But everybody’s trying to be cautious, economically. People I know who make very good money are saying, “Well, I think we’ll just hang on to this car for another year,” instead of trading up as they usually do every couple of years.

We used to have customers, if they were faced with a bill of $1,500-2,000, who would say, “I’ve been thinking about trading it anyway. I’ll just buy a new car.” Now they want to hang on, especially if it’s paid for and running well. My car’s paid for and I’ll keep it till it has 300,000 miles on it. I love my car.

What is it?

A BMW 330xi - 6-cylinder, 3-liter engine and all-wheel drive, and it’s just perfect… 5-speed, handles great in the snow.

How are your suppliers doing in this financial climate?

We have two or three major parts suppliers but keep a fair inventory here of commonly needed stuff—switches, bulbs, things like that—plus a good supply of liquids. Our suppliers give us good service and haven’t complained too much about the economy, though some are scared.

So what is your outlook for the business?

This past fourth quarter we’ve had a 26% increase in business. We’re projecting for next year a 12% increase, and I think that’s pretty conservative, pretty doable. I’m hoping it will be closer to 20%. We’re not making oodles of money, but we’re in the black. And I’m making about a third of what I did working in radio.

And what are your thoughts on the auto industry bailout?

Well, I’m a liberal, certainly on social issues, but there’s a conservative side of me that thinks these companies should not be kept from failing. I mean, I run the risk of bankruptcy like most any other business. They ought to take their lumps like everyone else. But then the issue gets complicated: many people thrown out of work, what happens to our industrial base, the need for a domestic auto industry. But they really drove themselves into a ditch, and I don’t much feel like pulling them out.

You know, I have to agree with you. Thanks, Amy.

Is this kind of repair business dying as a result of the Jiffy Lube approach? Leave us your comment.

—jgoods



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News from GM’s Hospital Ward

With Toyota’s report today that it will close its Japanese factories for 11 days (beyond the traditional 3-day closing), U.S. auto industry fans—if there are any left—still don’t have much to cheer about. Chrysler’s December sales dropped 53% from last year; GM’s, 31%; Ford’s, 32%. Toyota’s U.S. deliveries were down 37%.

It’s a 16-year low for the industry, with GM’s share the smallest in its home market since 1959. And this year looks to be worse, according to one analyst: “It’s a consumer confidence problem, and it’s worldwide.”

There was sporadic cheering, however, as the government granted aid to the company’s financing arm, GMAC. Hopes for loosening of credit for GM vehicles were somewhat undercut by the terms of the deal. GMAC loses its exclusive right to finance all of GM’s cars and trucks and must conclude all lease financing, too. So the cozy relationship ends, and both companies will have to find some of their business elsewhere. That may be a good thing.

Meanwhile, labor negotiations with the UAW got underway, with the union claiming President Bush was “demanding steeper and faster concessions from the UAW than from any other part of the industry.” Maybe so, but analysts think there is still more blood to be gotten from that stone.
2010_cadillac_srx_image0042010_cadillac_srx_interior
Okay, now some good news: The new Cadillac SRX crossover was announced before the opening of the Detroit Auto Show, January 17. We think it looks pretty good, if a bit fussy on the exterior and a little too bezel-ish in the cockpit. Along with all kinds of electronic goodies, the SRX will be powered by a 3.0-liter V6 (260 hp/221 lb-ft, 6-speed), or a 2.8-liter turbo V6 (300 hp/295 lb-ft, 6-speed automatic). You’ll also find when you open the door that it has illuminating sill plates. It’s nice to know that GM never gives up on this kind of stuff.

What do you think about the new Cadillac SRX?

—jgoods



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Maybe you shouldn’t complain so much about the price of fuel as you have ...

The U.S. really can't complain about fuel prices

The U.S. really can't complain

I want to respond to a comment left about a recent blog.

In that blog, I said that since U.S. gas prices are going down so much, I’m second-guessing my commitment to breaking our addiction to oil. Here’s the comment I want to address:

“Feel lucky that you are not paying the prices around Britain, as you wouldn’t be able to run your car. Based on your 11 gallon car, you would have to pay approx $71 at the current price of fuel over here to fill your car. Maybe you shouldn’t complain so much about the price of fuel as you have it a lot better than most other western countries around the world, and we are all struggling too.”

OK, point taken. I understand that fuel prices in Britain are MUCH higher than in the U.S., even when U.S. prices were near $5 per gallon. We’ve been spoiled on this side of the Atlantic for years, and I’m sure those in Britian and across Europe were thrilled to watch us go into panic mode as our prices skyrocketed. Now that our prices are headed south again, I’d imagine there’s a little jealousy that their prices remain high.

To the person who wrote the comment, and to everyone in Europe: Yes, our fuel prices are lower than yours. But at least your prices have fueled a stable and even enviable auto industry, while our prices have led to the likely demise of ours. You have Porsche, Audi, Mercedes, BMW, Ferrari… should I keep going? We have Chrysler.

What do you have to say about that?

-tgriffith



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The credit crunch and gas prices are the reasons Bill Heard Enterprises ...

You won't be seeing signs like this anymore!

You won't be seeing signs like this anymore!

The news that Bill Heard Enterprises has closed shop is more surprising than it should be.

It’s no secret that dealer consolidation has been a much needed action, and that fuel prices have left a major dent in the sales of high-profit trucks and SUVs.

But the fact that the world’s largest seller of Chevrolet couldn’t even keep ONE of it’s 13 stores open is surreal. Something more must be going on.

That ‘something more’ is a massive lawsuit against Bill Heard Enterprises, accusing the dealer of signature forgery and deceptive marketing; charges that could bring up to $50 million in fines.

So the credit crunch is likely a cause of failure, not THE cause of failure.

The credit crunch and gas prices are the reasons Bill Heard Enterprises is citing though, and that’s enough for me to sound the alarm for massive changes ahead in the auto dealer industry.

What kind of changes could we see as dealers begin to jump ship?

Consolidation for one. Perhaps even to the extreme: Imagine shopping for Ford, Chevy, Chrysler, Nissan and Toyota under one roof.

Imagine the current rows and rows of auto dealers lined up on main drags across America, relegated to just one or two city blocks.

Of course consolidation would not bode well for the automakers, who count on exclusivity and high volume sales from their dealers. They’d have to cut production dramatically and quickly adapt to a much leaner way of building and distributing their vehicles.

For you and me though, it means more power in how we buy our cars and eventually could lead to a shift away from the current high-pressure model of car sales.

I’d love to see going to the car dealer akin to going to grocery store… just pick out what I want, pay and leave.

I ask you: is that day coming? Would you want it to?

-tgriffith



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