Auto Repair Articles

General Motors Co. is in talks with JPMorgan Chase and Wells Fargo on deals aimed at providing improved access to consumers for auto loans at its U.S. dealerships, two people with knowledge of those talks said.

The sources were not authorized to discuss the still-confidential negotiations and asked not to be named.

Some GM dealers have complained of difficulty securing loans for subprime customers and in financing vehicle leases after GM sold control of Ally Financial Inc, formerly known as GMAC LLC. The sale made GM the only major automaker in the U.S. market without a captive finance company.

Dealers have identified the lack of financing as a potential barrier to GM winning back U.S. market share, now near 19 percent, the sources said. GM’s market share exceeded 48 percent of the U.S. market in 1960 and was around 35 percent in 1990.

The negotiations with JPMorgan and Wells Fargo are intended to broaden the availability of auto financing — particularly to subprime borrowers and for leases. Such a move would remove a potential investor concern around GM ahead of a planned initial public offering, according to the sources.

JPMorgan and Wells Fargo could not be immediately reached for comment.

GM said it was “developing relationships” with banks other than Ally “for specialized financing needs, such as leasing and subprime financing.”

“Access to financing is an important part of the vehicle sales process,” GM spokesman Tom Wilkinson said in a statement. “We believe the auto financing business will continue to evolve and we’ll continue to assess our overall needs.”

As late as May GM had been considering options that would have given it back a captive auto financing company.

But Detroit-based Ally, now 56-percent owned by the U.S. Treasury, balked at proposals to transfer control of the auto finance portion of GMAC. The company provided financing for about 30 percent of GM car buyers in the first quarter.

JPMorgan Chase was the No. 1 U.S. auto lender in the first quarter while Wells Fargo was No. 2, according to data for the first quarter compiled by Experian Automotive.

Hyundai this month will ramp up production of the hot-selling redesigned Sonata at its plant in Montgomery, Ala.

Dealers report severe shortages of the mid-sized car and also the redesigned Tucson crossover. Production of the Tucson, which is built in South Korea, was increased in March.

“We knew Tucson would be a problem because it’s global,” says Hyundai Motor America sales chief Dave Zuchowski. “But if you had told me Sonata would be a problem, I would have told you you’re crazy.”

Dealers sold 18,935 Sonatas in March, and Zuchowski expected sales of at least 18,000 in April, compared with 12,406 in April 2009. The redesigned 2011 model debuted in March.

Tucson sales totaled 3,084 in March, up from 1,346 in March of last year.

“We’re out of cars,” says John Staluppi Sr., owner of four Hyundai stores on Long Island in New York. “No Sonatas, Tucsons — even Elantras are low.” May “could be a tough month if we don’t get product,” Staluppi says.

Zuchowski says the Tucson and Sonata are flying off dealership lots within 20 days.

He says the Alabama plant, which produces both the Sonata and Santa Fe crossover, is now running on 10-hour shifts — up from eight-hour shifts — including some Saturdays. The plant shipped 28,000 vehicles in March, the most in any month since the factory opened in 2005.

The plant was turning out about 1,000 vehicles a day on an 8-hour shift — 70 percent Sonatas. A 10-hour shift gives Hyundai about 200 extra vehicles a day.

In March, Hyundai added 20,000 Tucsons to the 2011 model year production plan.

“I think we’ll be all right,” Zuchowski says.

But dealers are pressing both Zuchowski and Hyundai Motor America CEO John Krafcik.

“I told Krafcik, ‘Brother, your role is to get us more cars or we could be held back,” says Scott Fink, Hyundai dealer council chairman and owner of Hyundai stores in New Port Richey and Wesley Chapel, Fla.

Fink says it’s difficult to buy vehicles from other dealers.

“This is one of the first times that the lion’s share of dealers are selling cars,” Fink says. “Nobody is giving up product. This could be restrictive, moving forward, in terms of meeting our overall sales objective.”

Cherie Watters, general manager of Puente Hills Hyundai near Los Angeles, ordered 150 Sonatas early on. But while her Sonata inventory is in pretty good shape, she has only one Tucson in stock.

“No one was expecting this kind of growth,” Watters says. “Inventory never used to be the problem. Getting customers was the problem.”

Ford Motor Co.’s plan to unveil the redesigned 2011 Explorer online — and not at an auto show — is raising eyebrows among organizers of the Detroit auto show.

The automaker is gradually releasing snippets about the crossover on Facebook. This summer, Ford will reveal the vehicle on the social media Web site, says Eric Peterson, Ford’s crossover marketing and communications manager.

“We wanted to have the Explorer stand out” from the crowd of unveilings and other events at a big auto show, Peterson says.

Sam Locricchio, a spokesman for the North American International Auto Show here, agrees that Facebook is a great way to draw buzz. But Ford also needs to give customers a hands-on experience, he says.

“When you’re making the second-largest purchase in your life next to your home, you’re going to want to have that close-up experience,” Locricchio says. “You want to know if those lines match up or if it’s just like that on your computer screen.”

Peterson says Ford also plans to show the 2011 Explorer at auto shows starting this year.

Volkswagen still has a long way to go to achieve its aim of selling more cars than world No. 1 Toyota, but the German automaker is already ahead of its Japanese rival when it comes to bringing technical innovations into production, an academic study shows.
VW group, including its luxury Audi subsidiary, topped a survey that graded carmakers’ technological advances according to whether they have appeared in production models.
With 64 innovations that made it into cars last year, VW was ahead of second-place Toyota, which introduced 56 innovations that customers can order, according to the study by the Center of Automotive Management at the Bergish Gladbach University of Applied Sciences in Germany. Ford was No. 3 in the center’s ranking, followed by Daimler, BMW and General Motors.
VW, like all the 19 global automakers studied, is concentrating its research and development on making cars more fuel efficient. Powertrain innovations helped the automaker win a high score in the study. An example cited by the center is the advances that brought to market an Audi A3 with CO2 emissions of 99 grams per kilometer and fuel economy of 3.8 liters of diesel per 100km (62 U.S. mpg).
Center director Stefan Bratzel believes the contest between VW and Toyota for global leadership will largely be fought on a technological level and green technologies will be decisive.
“Automakers, even premium brands, have learned that they can’t sell cars with poor fuel economy and a bad environmental image,” Bratzel told me.
He said VW has an advantage because it has greater flexibility, although Toyota is catching up because it is improving the fuel efficiency of its conventional gasoline and diesel powertrains and not just relying on hybrids to boost its green image.
Said Bratzel: “Carmakers strove for faster, bigger and more comfortable cars in the past — now the mantra is to build cost-effective and environmentally friendly vehicles.”

Hyundai Motor Co. said today that it had no plans to bring a pickup truck to the U.S. market for “the foreseeable future.”

The statement was issued in response to a Reuters report on Tuesday that quoted three people with knowledge of the plans as saying that Hyundai had floated plans to enter the U.S. pickup truck market and proposed a partnership with Chrysler.

As one option, Hyundai made a proposal to Chrysler earlier this year under which the U.S. automaker would build a truck for Hyundai based on Chrysler’s Ram truck platform, two of the sources told Reuters.

Chrysler CEO Sergio Marchionne rebuffed Hyundai’s initial approach in February, the sources said.

Hyundai said in its statement that it was not currently in discussions about selling a rebadged Chrysler vehicle in the U.S. market.

“Hyundai Motor Co. denies that there are any current plans to bring a pickup truck of any type into the U.S. now or in the foreseeable future,” the company said in its statement.

“Hyundai is not in discussion with Chrysler in regard to a selling a rebadged Chrysler Corp pickup truck, or any other vehicle, in the U.S,” the statement said.

Saab will decide within the next few months whether to build an entry-premium car to compete with similarly sized premium models from Audi and BMW, said the chief of Dutch carmaker Spyker Cars NV, which bought the Swedish company this year.

Victor Muller, the CEO of Spyker, said he is deep in talks with potential partners about procuring a platform to make a new version of the tear-drop-shaped Saab 92 model from 60 years ago.

The decision whether to go forward with the new model, which would be introduced in 2013 at the earliest and be the first car fully designed under Spyker’s stewardship, would depend on economic conditions, partners and financing, Muller said.

“That is my job for the next 100 days,” Muller said on Wednesday at a launch event for Saab’s new 9-5 flagship, the first since Spyker took over Saab in January in an $400 million deal with General Motors Co.

Muller wants to restore buzz and sales to the Swedish brand, which struggled under GM and saw sales plummet to about 40,000 cars last year from about 130,000 five years ago.

A retro version of the new 92, if built, would be aimed at a fast-growing car segment for premium small cars, which includes BMW’s Mini and the new Audi A1, which launches in Europe this summer.

“The 92 has to be the most stunning looking, the most ingenious and the most premium car. It has to undeniably be a Saab,” Muller said.

Low volume

Saab would choose a chassis platform from a bigger carmaker rather than make the investment for a car that would have a projected yearly production run of 30,000 to 60,000.

Asked whether Saab was in talks with Volkswagen or Hyundai Motor Co., likely platform partners, Muller said there were no talks with the Korean automaker and declined to comment further.

Muller said a new Saab 92 would be priced “about 10 percent more than a Mini,” which starts at 16,600 euros in Germany.

Saab needs about $300 million to develop each new model and would have to secure financing as its current funds are already earmarked for planned models and upgrades.

Muller did not link plans for a listing in Stockholm to the 92, but said that once the group announces half-year results on Aug. 28, he and Saab CEO Jan Ake Jonsson would set off for a investor roadshow to drum up institutional interest in Spyker.

“We’re not planning to offer shares any time soon,” he said.

He had indicated earlier this year that Spyker would also seek a London listing and possibly delist from Amsterdam’s stock exchange but said that an Amsterdam-Stockholm dual listing was the most likely scenario for now.

Putting Saabs and Spykers together

Muller also said that Spyker will almost double the number of dealers selling its high-end sports cars this year by offering them through Saab outlets.

“We are signing up Spyker dealerships left, right and center,” Muller said.

Spyker intends to boost its dealer network to 60 from 35 in 2010, and to about 90 by the end next year, as Saab dealers open their doors to models such as the C8 Aileron, which can reach 300kph (186 mph) and sells for $214,990 in the United States, he said.

The new dealerships will help Spyker, which sold 36 cars last year and has been a money-loser since it went public in 2004, to become profitable, Muller said.

The Dutch supercar maker has also started benefiting from lower prices for “generic” parts such as windshield wiper motors that Saab gets through its higher volumes, Muller said, adding that Spyker plans to tap Saab’s engineering resources.

“Spyker will be profitable in its own right, very much helped by its sister Saab,” Muller said. “It’s wonderful that the company that saved Saab is also benefiting from having done that in its own business.”

Fiat S.p.A. will assemble two models for Chrysler in Italy, including the next-generation Sebring mid-sized sedan, Fiat sources revealed yesterday.

Under the Italian automaker’s five-year plan, Fiat and Chrysler will manufacture more vehicles for each other than previously revealed. The manufacturing plan is part of a larger effort to weave together the companies’ product development, purchasing and other operations for maximum efficiencies of scale.

According to either announcements by Fiat and Chrysler CEO Sergio Marchionne or information from company sources:

• In 2013, Fiat will build in Turin a mid-sized sedan “that will be primarily produced and distributed for Chrysler in the U.S.,” Marchionne said. A person familiar with the matter said the car will replace the Sebring.

• In 2012, Fiat will build in Italy a new compact sedan, which will be distributed in North America under the Chrysler or Dodge brand.

• Alfa is planning a rear-drive roadster for 2013. The car could be built in Canada or Italy.

• Chrysler will build in the United States two Alfa Romeo SUVs for global sales — a compact model in 2012 and a larger model in 2014.

• Chrysler could import from Serbia new, Fiat-built subcompacts in 2013 for both the Chrysler and Dodge brands.

Marchionne wants to use existing factories as efficiently as possible.

“The allocation of production between Fiat Group Automobiles and Chrysler will be based on rationalization and efficiency so that maximum capacity utilization is achieved for both organizations and the need to establish new plants avoided,” he said.

To maximize capacity use, company sources say:

• Chrysler will build in the United States the compact SUV for Alfa along with the vehicle that will replace the Jeep Patriot and Compass crossovers.

• The large Alfa SUV and Jeep Cherokee replacement, sold as the Liberty in the United States, will share the same U.S. plant.

• The Chrysler Sebring sedan will be built in the Mirafiori plant in Turin, along with the Alfa Romeo Giulia mid-sized sedan and wagon.

• The new compact Chrysler or Dodge model will be built in Fiat’s Cassino plant in central Italy. By 2014, Cassino will build 400,000 units on the same platform, including the Alfa Romeo Giulietta, the Fiat Bravo replacement and the Lancia Delta.

Chrysler also will export seven other vehicles from North America to Europe, where they will be sold under a different brand:

• Next year, the Mexico-built Dodge Journey crossover will become a Fiat model in Europe.

• Beginning next year, five Chrysler North American-built vehicles will be sold in continental Europe with the Lancia badge. But in the United Kingdom and Ireland, the Chrysler badge will be used on all Lancias and Chryslers. Lancia withdrew from those right-hand-drive markets in 1991 because of poor sales.

• The Ram truck brand’s unibody pickup, due in 2012, will be sold in Europe under the Fiat Professional brand of light commercial vehicles.

The North American range of the Fiat brand will include four models: three variations of the 500 minicar built in Mexico — a hatchback, convertible and Abarth sporty version — and a four-door high-roof hatchback built in Turin.

Meanwhile, dealers in Europe will get Lancia versions of the following Chrysler models:

• A Canada-built new 300C large sedan in 2011.

• A Canada-built restyled Voyager large minivan in 2011. The van is sold as the Town & Country in the United States.

• A U.S.-built new compact sedan in 2012.

• A U.S.-built compact hatchback/station wagon in 2012.

• A U.S.-built large crossover, 2013.

• An Italy-built Sebring mid-sized sedan successor, 2013.

Opel/Vauxhall is considering expanding its product offerings in China and launching in new markets such as South America, Australia South Africa, CEO Nick Reilly said.

General Motors Co.’s European unit is seeking to expand globally to offset a big decline in sales in the weak European market where Reilly expects Opel’s new car sales to fall to 1 million this year from 1.2 million last year.

Reilly ruled out exporting Opels to the United States because the brand’s cars have too much overlap with other GM cars sold in the U.S., such as the Opel Insignia-based Buick Regal.

Speaking in an interview with the Berlin Tagesspiegel daily newspaper, Reilly said: “We are considering introducing or re-introducing Opel in a series of markets.”

Dealers in South America and South Africa are asking for Opel products, Reilly said. Australia, “where Opel has a strong image,” is another possibility.

China appeal

In China, Opel could appeal to different buyers than GM’s Chevrolet and Buick brands that are already sold in the world’s largest auto market, Reilly said.

“We wouldn’t suddenly sell 200,000 cars in China,” he said, adding that the brand would have to remain a non-volume seller because it could not match the low prices that China’s buyers generally pay.

“Opel’s image in China is strong but our product range is too small,” said Reilly, who headed GM’s Asian operations before he became Opel CEO in November.

Opel would like to launch its Astra compact sedan and Insignia large sedan in China where it already sells the Corsa subcompact and and Zafira minivans. Opel sold 3,000 cars in China last year.

GM has in the past shied away from aggressively selling Opel cars in markets outside Europe because of fears that they could cannibalize sales of its other brands such as Chevrolet, Buick and Australia’s Holden, which use Opel technology.

But Reilly said that apart from the U.S., there is very little overlap in most global markets.

“Opel is not a direct rival to other GM brands, For German brands with German technology, there’s an especially high regard throughout the world,” Reilly said.

Opel has not decided whether it would use GM existing dealer channels or independent dealers if it expands more aggressively globally, he said.

Thirteen of Buick-GMC dealer Kim Borcherding’s customers had Pontiac leases that ended in March, but none of them bought or leased another new vehicle from her.

Six of them bought an import. Three bought a Chevrolet, which Borcherding’s Cincinnati store doesn’t sell. One bought a used vehicle from her, and three bought out their leases.

Those were their only options if they wanted to stay her customers, Borcherding says. Her current inventory is “just nothing that is in their league,” she says, since the lowest priced new vehicle she has costs nearly $25,000.

Like most Pontiac owners, Borcherding’s customers need moderately priced sedans not found in the current Buick-GMC showroom.

As a result, General Motors Co.’s retention efforts are shifting most of its former Pontiac owners to Chevrolet.

“They have nowhere else to turn because we don’t have anything else to offer,” Borcherding says. “They’re not going to wait forever.”

In the year leading up to GM’s April 27, 2009, announcement that it would kill Pontiac, 37 percent of owners trading in a Pontiac bought a GM product, according to data from Edmunds.com. That percentage has stayed nearly flat at 36 percent.

But the preferred GM brand for repeat buyers has shifted. Before GM decided to eliminate Pontiac, the brand competed evenly with Chevrolet for Pontiac owners’ next purchases, with each brand averaging 15 percent. And Pontiac won that battle in the months immediately following the death sentence.

But from Jan. 1 — when GM’s supply of Pontiacs had dwindled to 800 — through March, one-fourth of Pontiac owners chose Chevrolet for their next purchase. To compare, Buick-GMC sales from Pontiac trade-ins have only increased to 10 percent this year, from 6 percent the year before the Pontiac verdict.

That’s fine with some Buick-GMC dealers who either own Chevrolet stores down the street or never depended much on Pontiac sales. But for others, the loss of Pontiac and the shift to Buick-GMC’s premium image has meant a drop in revenue. Their wait for less expensive sedans continues while Pontiac owners slowly slip away to the local Chevrolet dealer.

“None of them are buying a Buick-GMC because there’s nothing really comparable in the Buick-GMC line,” says Mark Frost, general manager of Jim Ellis Buick-GMC outside Atlanta.

The GMC Terrain small crossover, starting at $24,995, including shipping, has the lowest starting sticker price in the brands’ lineups, not counting pickups. The least-expensive car, the Buick LaCrosse, starts at $26,995, including shipping.

Dealers will have to wait until the 2012 model year to sell a less expensive sedan: the base version of the new Buick Regal. A premium-trim-level Regal is on its way to dealerships with a $26,995 price tag, and the base level will cost less than that.

Frost also manages a Chevrolet store, and 10 of the 14 Pontiac trade-ins he has seen since November have been for Chevrolets. His dealership group took over the Buick-Pontiac-GMC franchise a year ago, so it has never really depended on Pontiac sales. But he still advertises service to Pontiac owners through the updated “free agent” lists GM provides to all its dealers.

GM has also offered Pontiac owners four free oil changes and $1,000 off a new GM vehicle.

“The loyalty rates of Pontiac owners are in line with our expectations,” GM spokesman Tom Henderson says. He declined to give data on retention rates or efforts to keep Pontiac customers in the GM fold.

One dealer sees used cars as a way to retain Pontiac owners. New York dealer Mike Mullaney’s Buick-GMC store doesn’t have inexpensive new products for his Pontiac customers, so he’s trying to put them in late-model used Pontiacs. That way, he hopes he can keep from losing his customers to the local Chevrolet dealer and maybe be able to offer them a smaller, less expensive Buick in a year or two.

Says Mullaney: “If we can maintain that customer for one more product cycle, we’ll be in good shape.”

Volkswagen AG’s Audi luxury division maintained its goal of posting higher sales and earnings this year after first-quarter profit rose by a third.

Operating profit gained 32 percent to 478 million euros ($632 million) in the first quarter, the carmaker said today in a statement. Sales climbed 23 percent to 8.3 billion euros.

“First-quarter results provide a sound basis for our goal to exceed last year’s sales and operating-profit levels,” Audi Chief Financial Officer Axel Strotbek said in the statement.

Audi has a goal of dethroning BMW AG as the world’s largest maker of luxury cars by 2015. Audi CEO Rupert Stadler reiterated a goal on March 9 of restoring deliveries this year to 1 million cars and SUVs, a 5.3 percent increase from 2009. BMW is targeting a “single-digit percentage” sales gain while Daimler AG’s Mercedes-Benz division, the No. 2 luxury-car manufacturer, aims to outpace auto-market growth of 4 percent.

The VW unit aims to introduce a dozen new models this year as part of its goal to bring the lineup to 42 vehicles by 2015. Audi will invest 7.3 billion euros on car development and plant upgrades through 2012. Audi’s deliveries in 2009 declined 5.4 percent to 949,729 cars and SUVs from 1 million in 2008.

Audi’s first-quarter operating margin increased to 5.8 percent from 5.4 percent a year earlier, Strotbek said, He reiterated the carmaker’s goal to increase sales to more than 1 million vehicles this year.

Profit at Wolfsburg-based Volkswagen, which aims to overtake Toyota Motor Corp. in deliveries and profitability by 2018, almost doubled in the first three months to 473 million euros, helped by gains at Audi and the VW namesake brand. VW group sales climbed 19 percent to 28.6 billion euros.