The US Supreme court rejected appeals filed by three Indiana pension funds, a coalition of consumer groups, and a few individuals, to block Chrysler's sale on June 9.
The U.S. General Services Administration is one step closer to fulfilling its responsibilities outlined in President Obama’s economic recovery legislation. On June 1, 2009, the agency ordered 14,105 fuel efficient vehicles for the Federal fleet using $210 million of funds from the American Recovery and Reinvestment Act (ARRA).
GM is near agreements to sell its Saturn division and to help finance the buyout of bankrupt auto-parts supplier Delphi Corp., according to reports Friday in The Wall Street Journal. Reports say GM has inked a preliminary deal to sell off Saturn to major auto dealer and racing icon Roger Penske.
Automakers Make Case for Closings
The U.S. Senate Committee on Commerce, Science and Transportation held a hearing to review “GM and Chrysler Closures: Protecting Dealers and Consumers.” Sen. Jay Rockefeller, D-W.Va., chairman, opened the hearing defending automobile dealers against the dealership closures by automakers.
The top executives of GM and Chrysler have said that dealership closings are justified, as they try to overcome bankruptcy and survive. The executives acknowledged that cutting dealerships was causing pain around the country in front of the Senate Commerce committee on June 3.
THE PRESIDENT: Good morning, everybody. Just over two months ago, I spoke with you in this same spot about the challenges facing our auto industry, and I laid out what needed to be done to save two of America's most storied automakers -- General Motors and Chrysler. These companies were facing a crisis decades in the making, and having relied on loans from the previous administration, were asking for more.
Eight Chrysler plants now seem likely to be closed down entirely. In addition to plants in south St. Louis, Missouri and Newark, Deleware that are already idle, the following 6 North American plants are in danger:
About 300 dealers from 45 states announced on May 18 that they have formed an alliance called the 'Committee of Chrysler Affected Dealers' to protest "old Chrysler's" plan to cancel 789 franchises. The group is asking U.S. bankruptcy Judge Arthur Gonzalez to delay hearings on Chrysler's reorganization plan.
"In the past, an agreement such as this would have been considered impossible," said President Obama, announcing an unprecedented increase in mileage and emissions standards on May 19, bringing new cars and trucks sold in the United States to an average of 35.5 miles per gallon, about 10 mpg more than today's standards. The rules will begin to take effect in 2012 and are to be achieved by 2016.
Ralph Nader, in a letter to Senator Chris Dodd and Congressman Barney Frank, called on the Senate and House banking committees to hold thorough hearings to protect taxpayers' investments and seek answers to several questions such as:
The National Automobile Dealers Association estimates that as many as 80 percent of its member dealers -- including Chrysler LLC, General Motors Corp. and Nissan franchises -- have personally guaranteed credit lines, requirements that became more common as the credit crunch took hold last fall.
GM announced that it has started notifying about 1,100 underperforming and very small sales volume US dealers that it would not retain them on a long-term basis. Unlike Chrysler,s more definitive announcement, GM will allow appeals and will repurchase inventory from at least some of the dealers.
Ford Customer Service Division (FCSD) has launched its fourth-consecutive national wholesale rebate program. the 2009 Summer of Savings national rebate program for qualified auto shops.
The announcement by Chrysler that it is rejecting 789 of its Chrysler, Dodge and Jeep dealers marks a very sad day in retail automotive history.
TREASURY DEPARTMENT STATEMENT ON CHRYSLER DEALER CONSOLIDATION
Chrysler announced the specifics of its planned dealer consolidation [on May 14]. This announcement, which has been part of Chrysler's plan for some time, is one of several steps the Company is taking to restructure to achieve financial viability.
Chrysler announced May 14 that 789 dealerships would be officially off the books as of June 9, 2009, but over 100 of them have already recruited counsel to oppose their franchise's termination. One attorney was quoted as saying a grass roots opposition campaign would work, and was being pursued by the terminated dealers.
Lear Corporation, a leading global supplier of automotive seating systems, electrical distribution systems and electronic products, announced May 13 that it has reached an agreement with its lenders to extend the waiver under its primary credit facility.
Using robots to ram shopping cars and bicycle wheels into car doors, and blasting water cannons to force vehicle into skids, Ford engineers are using extreme tests to fine tune new, industry-leading safety technologies for its vehicles. Used to test technologies like the Collision Warning with Brake Support crash-avoidance system, these tests are part of Ford's efforts to accelerate new collision protection and avoidance technologies. Ford's safety leadership is built on having more Insurance Institute-rated "Top Safety Pick" vehicles than any other automaker and the most U.S. government 5-star test ratings of any brand.
GM plans to tell approximately 1,000 dealerships that they are being dropped for not meeting standards for capitalization and profitability. GM will send letters to these "underperforming" dealers for arrival May 15, reported Automotive News.
Sources close to the bankruptcy are reporting that Chrysler will announce cuts to its dealership base on May 14. Between 800-1000 dealers will no longer be "on the list"
Chrysler filed for bankruptcy on April 30. It will tell up to 1,000 of its 3,189 U.S. dealers it is terminating their franchise agreements. Remaing dealers will work with GMAC, not Chrylsel Financial.
Wes Smith, president of E&E Manufacturing, testified May 13 before the House Small Business Committee at a hearing examining the economic impact of the domestic auto crisis on small suppliers throughout the United States.
Purchase intention for Chrysler vehicles has climbed since it declared bankruptcy on April 30, according to Edmunds.com.
For both Communities and Automakers, Dealers are More Valuable than Ever
As General Motors and Chrysler move forward with their respective restructuring plans, I have noticed a growing and unsettling wave of anti-dealer rhetoric in the news. If you believe what you read and hear, you might think dealers are the root of all the auto industry's problems. It's not unions, poor design, mismanagement, or inconsistent government regulation at fault. Oh, no. It is the dealers who have brought America's domestic auto industry to its knees.
Chrysler LLC today announced that, as a result of the comprehensive restructuring plan agreed to by many of its stakeholders, it has reached an agreement in principle to establish a global strategic alliance with Fiat SpA to form a vibrant new company. It will allow Chrysler and Fiat to fully optimize their respective manufacturing footprints and the global supplier base, while providing each with access to additional markets. Fiat powertrains and components will also be produced at Chrysler manufacturing sites.
Allpar is reporting that the Chrysler name will remain at the top of the new company formed out of Chrysler LLC’s “good assets.” While the working names NewCo and OldCo have been used, along with others, Fiat’s press release on the situation noted:
At closing of the transaction, NewCo will assume the corporate name of Chrysler and become the owner of substantially all the Chrysler’s business without certain debts and liabilities.
General Motors will announce an updated survival strategy to the auto task force. GM had been considering phasing out Pontiac instead of sticking with a plan to have it continue as a niche brand. GM said on Feb 17 that Cadillac, Chevrolet, Buick and GMC would be its four core U.S. brands. On March 31, the task force told GM, surviving on $15.4 billion in bailout funds, that its restructuring plan wasn't aggressive enough and denied a request for $16.6 billion in additional aid. GM is expected to tell the government that it will stick with plans to keep GMC, Buick, Chevrolet and Cadillac. Saab, Hummer and Saturn are for sale.
By leveraging its national marketing efforts and consolidating dealerships, Hyundai is not just surviving, but actually thriving in the Sacramento area. While other brands struggle to sell cars and beg for government bailouts, Hyundai’s sales numbers are what analysts have characterized as decent during a year in which carmakers, especially the Big Three, have experienced plummeting sales.
When Shaver Chrysler Dodge closed its doors in San Bernardino, the people at Moss Bros. Dodge recognized a great opportunity for expansion. So, two months ago, the dealership added the Chrysler and Jeep lines vacated by the closure to their repertoire. So far, the results have been extremely positive, according to Moss Bros. Chrysler Jeep Dodge’s Parts Director Dale Melvey.
The U.S. Treasury will provide working capital financing for GM for 60 days while GM completes a more accelerated and aggressive restructuring to put the company on sound long-term financial footing. We understand the historic opportunity this presents, and we are fully committed to successfully completing the reinvention of GM.
The Congressional Clash over Clunkers is not over yet. A revised “cash for clunkers” bill was introduced March 17. Now called the Consumer Assistance to Recycle and Save (CARS) Act, the bill proposes to pay vehicle owners to trade in old models for something newer and more fuel efficient. The broad intent is to stimulate demand for newer vehicles now languishing on dealers’ lots and drive up demand for gas hybrids and future all-electrics.
Advisers to GMs' bondholders said March 16 that they have presented a plan to the federal autos task force and to GM that provides GM's best chance for an out-of-court restructuring.
With the announcement of Chrysler Financial gaining access to $1.5 billion in loans from the Treasury Department, qualified new vehicle customers will be able to apply for zero percent financing for up to 60 months when financing a new Chrysler, Jeep or Dodge vehicle through Chrysler Financial. The affordable financing terms will be available on select 2008 and 2009 MY vehicles, and are effective immediately.
Sales Agreement Initially Created Confusion As To Whether Consumers Would Receive Protection Under Manufacturers Warranty; Now Revised to Protect All Present and Future Drivers
Attorneys Robert M. Silverman and Amy L. Bennecoff of the Northeast Lemon Law Firm of Kimmel and Silverman have been successful in revising the Master Sales Agreement between Chrysler and Fiat to specifically include a provision that all present and future warranty claims, including lemon law and breach of warranty matters, will be assumed by the New Chrysler when the sales order is scheduled to go into effect on or before Monday, June 15, 2009.
The Economic Policy Institute (EPI) is an independent, nonprofit, nonpartisan research institute – or “think tank." EPI’s vice president Ross Eisenbrey said Dec. 19 on learning of the TARP bailout for Detroit Three, “The auto rescue announcement is good news. Failure to provide the bridge loan would have cratered the economy, which is already in a deep hole. The Big 3 automakers and the United Auto Workers have a tough road ahead, but with support from the Obama administration, they – and the communities they operate in -- can survive and prosper.”
Treasury Department announces new initiative under the Troubled Asset Relief Program (TARP)
Addressing a key request from the National Automobile Dealers Association (NADA), the U.S. Treasury Department announced a new program to increase the availability of auto loans on Dec. 15. NADA represents about 20,000 new-car and -truck dealers holding nearly 43,000 separate franchises, both domestic and international.
The White House announced Dec. 19 that it would extend $13.4 billion in loans from the Troubled Assets Relief Program to the Detroit Three auto makers, with another $4 billion likely available in February, citing the need to avoid "disorderly liquidation" during an already troubled economic period. The loans will be allocated from the $350 billion TARP being managed by the U.S. Treasury Department, subject to approval of bank capital applications.
Amid the greatest financial crisis of our time, President George W. Bush can show leadership and statesmanship by using a small percentage of the U.S. government's financial bailout money to keep the American automobile industry alive.
"Getting the loan is an important first piece of the puzzle, but will not be enough on its own," says Jeremy Anwyl, Edmunds.com's CEO . "There are other actions that need to be taken to preserve taxpayers' investment in the automotive industry." Anwyl said he believes the government should provide some sort of stimulus to move leery consumers back to the marketplace.
On December 4, 2008 the following letter was sent by Rep. Nancy Pelosi, Senator Harry Reid, Rep. Barney Frank and Senator Christopher J. Dodd to President Bush urging immediate action under EESA and TARP to prevent "severe impacts to our economy".
* Reaffirms GM’s commitment to energy-saving vehicles and technologies
* Outlines the need for Federal bridge loans and line of credit
* Requests Federal board to oversee loans, assist with restructuring
* Aggressive plan details GM actions to support long-term success
General Motors Corp. submitted a plan on Dec 2 to use Federal bridge loans to create a leaner, more competitive company, one that is profitable and self-sustaining for the long term.
Countries face massive job losses unless they move quickly to provide financial assistance to their carmakers, Renault-Nissan head Carlos Ghosn warned Dec. 1.
With bankruptcy for all three US automakers not just a possibility but a probability without drastic action, Pres. Elect Obama used his first official news conference on Nov. 8 to offer help for the nation's "backbone of manufacturing."
Volkswagen briefly became the world’s largest company by market capitalization after an extraordinary surge in its share price driven by a near-panic by hedge funds and other traders to stop losses on positions betting on a fall in the stock.
The "Cash for Clunkers" amendment to the United States Senate stimulus package was withdrawn from the bill on Feb. 5. The "Cash for Clunkers" program would have earmarked federal funds for car owners to trade in their sport utility vehicles in exchange for vouchers to be used to obtain newer, more fuel efficient vehicles.
U.S. consumers will buy 13.9 M vehicles in 2008 and Edmunds.com forecasts 13.7 M for 2009. This down due to a 26.6% drop in September sales, the lowest since 1993. U.S. sales are now 2 million units below 2007, as consumers are keeping vehicles about 4 months longer, according to J.D. Power, which sees 2009 sales dropping to 13.2 M vehicles.
Dallas News is reporting that the recession cut deeply into local new car and truck sales last year, which fell a dramatic 29.9 percent – one of the steepest declines in decades. All four major counties in the Dallas-Fort Worth area reported drops of at least 25 percent in new vehicle sales from 2008 levels, according to The Freeman Metroplex Recap of new vehicle sales, released Jan 20.