July 22nd, 2010 at 12:10pm
GM is moving back into the financial business by purchasing AmeriCredit for $3.5 billion. Next month Chrysler will announce an operating profit for the second quarter of the year. A 17 year old taps into the power of craigslist and trades his cell phone for a Porsche. All that and more, plus a look at how automakers could really boost their sales by improving the dealership experience for customers.
Transcript and Story Links after the jump . . .
This is Autoline Daily for July 22, 2010. You guessed it, McElroy’s out of the office again. Murray Feldman here from Fox 2 News, Detroit, taking the wheel from John for the rest of this week. Here’s what’s going on in the automotive industry.
GM BUYS AMERICREDIT
General Motors is moving full-steam ahead to turn itself around. They announced this morning they’ll buy AmeriCredit – a financing company. GM will pay $3.5 billion, that’s about 24 percent more than AmeriCredit’s recent stock value.
This does two things for GM. It helps them become more competitive in financing vehicles – they’ve been taking a hit in that area from other car makers especially Ford – and it gives them an advantage when they issue their IPO and begin selling stock.
Look for this deal to close in the fourth quarter, paving the way for that IPO before the end of this year. By the way, did I mention AmeriCredit is a Texas company? GM’s boss Ed Whitacre loves to surround himself with fellow Texans, from his inner circle, to some of his ad people, to his finance arm.
CHRYSLER WILL POST Q2 PROFIT
Things are really starting to look up for Chrysler. The Detroit News reports that company CEO Sergio Marchionne said the automaker will report a second-quarter operating profit next month. This would be the second-consecutive uptick for the company which suffered a $3.8 billion loss in 2009. The news follows Fiat’s recent announcement that it turned a net profit in the second quarter of $116 million. On the bright side, the situation will likely improve even more in the fourth quarter as some of Chrysler’s new and refreshed vehicles go on sale.
HYUNDAI AVOIDS STRIKE
Hyundai and its labor union in South Korea reached a tentative agreement to avoid a strike. According to Bloomberg, the company agreed to give workers a 5 percent pay increase, a bonus equal to three month’s pay and 30 shares of stock. The workers vote tomorrow on the proposal. If they agree to the changes it will be the second consecutive year the automaker has avoided a strike, which would be the first time this has happened since the union formed in 1987.
LINCOLN MKZ HYBRID PRICING
One of the drawbacks of hybrids is the premium you have to pay for the technology, which can often be several thousand dollars more than a gas-powered version. But that won’t be the case with the Lincoln MKZ. Ford announced that it will cost the same as the regular version of the vehicle. Both models will start at just over $35,000. The company says the hybrid version gets 41 miles to the gallon in the city, six more than the Lexus HS 250h. Look for the MKZ in showrooms this fall.
A few milestones to report. Honda announced that its plant in Marysville, Ohio, produced its 10-millionth vehicle, the first plant outside of Japan to do so. The plant began production in 1982 and currently produces the Accord sedan and coupe as well as the Acura TL and RDX. Moving to the luxury side of the market, Audi announced that it has sold its 2 millionth vehicle in the American market (login required) with the sale of an A3 TDI. The brand began selling vehicles in the U.S. 40 years ago. With plans to grow its line-up over the next few years it shouldn’t take them nearly as long to hit the 3 million mark.
CARS, COMPUTERS CONVERGE
It seems like cars and computers are becoming one in the same as automakers cram more and more technology into vehicles. Expanding connectivity even further, GM announced that drivers of most 2011 Cadillac, Buick, Chevrolet and GMC models will be able to control important functions from their smartphones. Thanks to brand-specific mobile applications, and OnStar, owners will be able to remotely start their vehicle, sound the horn, and lock or unlock the doors. They also have access to diagnostic information like fuel level or tire pressure. Think of it as a super long-range key fob that works anywhere there’s a cell signal. Currently the apps are available on the iPhone and Android platforms.
THE POWER OF CRAIGSLIST
Here’s a story about the power of craigslist. KABC-TV in Los Angeles, California, reports that a 17 year old traded his cell phone … for a Porsche! No, no, he didn’t do it all at once, he worked his way up. Two years ago Steven Ortiz started wheeling and dealing on the popular website, swapping the phone for an iPod. Eventually he ended up with a dirt bike, then a few cars, an SUV, and finally a 2000 Porsche convertible. He says a lot of his friends are jealous, heck, I’m jealous!
Coming up after the break, a few of my thoughts on how automakers could really improve their sales.
There are plenty of predictions as to how many cars will be sold in North America this year. I’ve heard everything from 11 million to 14-and a half million, but the question is … who will get the biggest piece of the pie?
Car companies will talk about their style, their fuel effiencies, their comfort, their technology.
I rarely hear them talk about one of the most important aspects of the sale, the dealership. Do the car companies ever send in their own secret shoppers?
I went to one dealer in suburban Detroit. I had to ask for a salesman. He came over, never introduced himself, never gave me a card, never offered a test drive, and let me walkout when I said I was looking for something a little less expensive. Read between the lines bud— you had a guy who wanted a car, but at a different price, and you let him walk.
I called the owner of another dealership who I knew. Didn’t get a call back. A week later I called again. Receptionist wouldn’t’ put me through.
Then I e-mailed my request. The only response I got was four weeks later. It was a questioner about how I liked the service. I told them it was terrible, and why. No response.
I finally did get a new ‘made in Michigan’ car through a relative of a friend at another dealership. And you know what? The car he found that I wanted actually came from the dealership that never returned a call or e-mail.
No wonder a recent J.D. Power study found that more than one in five shoppers who leave a dealership without purchasing a vehicle do so because they experienced poor treatment or dealer performance. More than half of these disgruntled buyers ended up with a different brand altogether.
So carmakers, keep up the styling, performance, comfort and technology, just help those of us who want to support you buy the damn things!
Well, that’s it for today’s top news in the global automotive industry, but before I sign off, tune in to Autoline After Hours tonight starting at 7:00 p.m. Eastern Time. With McElroy out of town, Peter De Lorenzo is in the driver’s seat. Joining him in-studio will be Frank Markus of Motor Trend magazine and Scott Burgess of The Detroit News. A couple of the topics up for discussion include Ford. Can the blue oval keep its sales momentum with so many similar vehicles in its lineup? And, will “green” vehicles be enough to save Honda or is there another way for it to get its mojo back? You’ll have to tune in to find out. That’s tonight at 7:00 p.m. Eastern on our website, AutolineDetroit.tv. — I’m Murray Feldman, Fox 2 News Detroit, thanks for watching, have a great day and I’ll see you back here tomorrow.