Episode 440 – GM Buys AmeriCredit, Chrysler Profits in Q2, A Porsche For A Cell Phone?
July 22nd, 2010 at 12:10pm
Runtime 7:29
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.
»Subscribe to Podcast | 
| 
| 
| Listen on Phone 
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.
IMPORTANT MILESTONES
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.
DEALERSHIP DEBACLE
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.
Thanks to our Partners for embedding Autoline Daily on their websites: Autoblog, The Auto Channel, Car Chat, WardsAuto.com and WWJ Newsradio 950
Share 
Embed
Permalink
Comments (25)
July 22nd, 2010 at 12:25 pm
I find it interesting that GM needs to buy another bank when they previously owned GMAC… which was purchased by the government and renamed Ally Financial. Since the US Government also owns the majority stake (67%) in both General Motors, as well as the old GMAC (Ally Financial), why wouldn’t they simply want to reconnect them? They certainly already have a cynergy together and are best suited to eachother.
What I think this is, is nothing more than the US government using GM as a guise to nationalize yet another bank. Where does GM get that 3.5 billion dollars from to buy AmeriCredit? The US taxpayers of course.
July 22nd, 2010 at 12:28 pm
Based on a recent car purchasing odyssey, I have to agree with Murray 100%. Even the so-called internet sales are bs, when you come in thinking you’ll be dealing with the internet manager or rep, they throw you to some salesman and there goes the price you thought you were gonna get. In a couple of dealers, we were never approached and ended up walking out.
July 22nd, 2010 at 12:34 pm
Mr. Feldman,
I am sorry you had a bad experience. The reasons could be many but the majority of Sales People are tested graded and monitored till the cows come home. Automakers, JD Powers, Dealerrater.com and many more.
Last year alone I had to take and pass a total of 56 different courses and exams on new models, equipment and technologies. Along with 10 Ride and Drives held at offsite locations.
While I understand it is part of the business and want to keep up with all the information available on the internet The other side of the story is that no matter how much I know and how well I can present the technology a majority of the consumers will go to the salesman that will save him $50.00 (FIFTY DOLLARS) even if he knows NOTHING about the car.
Integrity and Honesty is a TWO WAY STREET I am not saying you were deceptive but where and when did it become OK for a customer to lie, withhold needed information and be as deceptive as possible.
If you want a professional experience make sure you treat your sales person as a professional and not the back lot used car salesman.
July 22nd, 2010 at 12:37 pm
Great Job Murray!
I agree with you, the salespersons at some dealerships are more interested in texting their friends then selling you a car. I hate when the slaesperson knowns little or nothing about the vehicles in the showroom. I just yesterday when into the Hyundai Dealership in White Plains NY and was greeted by a lovely Receptionist who introduced me to a Sales Associate. When I asked for a booklet on the 2011 Sonata, I was told they did not have any.
The Sales Associate took me to a large 40 plus inch monitor where I inputed my name and email address. I checked my email this morning and I had received a personalized email from the Hyundai Dealership thanking me for visiting and enclosed were hyperlinks so that I could watch a detailed video and download a PDF booklet on the 2011 Sonata. Before leaving the Dearlership the Sales Accoiate aske if I had any question that he could answer and that when I was ready for a test drive I could call and a vehicle would be waiting. I strolled the dealers lot and was happy with the low pressure and attentive experience I received at this dealership.
This is great salesmenship! The Dealership now has a record of my visit and email address where I except to receive updates on sales and promotional sales at the dealership.
July 22nd, 2010 at 12:39 pm
BINGO!, we have a winner; Murray, your editorial on car sales counldn’t have been any better.
Also Murray, great job in filling John’s shoes, thanks.
July 22nd, 2010 at 12:42 pm
Pedro, with respect to internet sales, I’ve recently purchased two cars on-line from eBay auctions that were created by dealerships. In both cases, my experiences were great.
The first one I traded in my 2006 Pontiac Solstice to buy outright a very low mileage (32k) 2002 Ford Explorer Sport. I told the internet manager over the phone what I was looking to get for my Solstice, and what I was willing to pay for the Explorer Sport. We came to an agreement, and with the understanding that both cars would be in teh condition as stated, the deal would be honored. I drove there to Kuhn Volkswagen / Honda in Tampa and the service was great. The deal was made, everything was as planned, and I am still THRILLED a full year later.
The other car was my wife’s 2004 VW Beetle Convertible. Since we now had a child, we needed more responsible cars, so I negotiated with a Nissan dealer in Daytona. I told them what I wanted for my Beetle, and what we wanted to pay for the low mileage 2008 Jeep Patriot they had. When we got there, the deal that we made over the phone was still valid, and everything went through as planned.
You just have to be very specific in your negotiations before you head to the dealership.
Small time shops might be different, but used car lots on actual dealerships are very trustworthy.
July 22nd, 2010 at 12:43 pm
For that kind of service, just eliminate all salesmen, just have a kiosk type set up where after you test drive the car, you can order the model and options you want then it locates the car, you arrange payment and take delivery and that’s it. You should also be able to do it from home online, if the dealership is far away
July 22nd, 2010 at 12:44 pm
Todd: in my experience I contacted the dealer internet dept and when we got there, the internet manager sent us to a sales rep. Just as if we had walked of the street.
July 22nd, 2010 at 12:53 pm
General Motors made a very poor business decision by loosing controlling interest in GMAC. How do you expect to sell huge volumes of vehicles if you can not offer competitive finacing. There are customers who are looking for the best price and lowest monthly payment as the basis for acquiring a means of transportation (Automotive Appliance Mentality). GM needs to be able to expand it’s financing offerings and promote it’s GM Card Products to generate additional income for all of GM. The real problem was when GMAC started going into the home mortgage and subprime markets. GMAC should have focused on Automotive financing and insurance. I hope GM has learned from it’s previous experiences with GMAC. What will they rename AmeriCredit to General Motors AmeriCredit = GMAC2 or GMCredit? LOL.
July 22nd, 2010 at 12:54 pm
Hey Murry,ya hit it right on the head about dealerships.Ignorance,arrogance,or is it just plain laziness,apathy? I don’t know.I have a friend of mine who is in new cars sales and does a bang up business.You know why? Because he is totally informed on what he sells,and is willing to sell more vehicles for less,he goes the extra mile on everything he does there for the customers.He makes friends out of his customers and does a hell of a repeat business.He also uses the internet and joins forums that deal with the vehicles he specializes in.In other words,he isn’t lazy at all.He never expects customers to come into the dealers and beg to buy one of their Jeeps.He is a good old fashioned customer oriented salesman.
July 22nd, 2010 at 1:00 pm
Murray,
Like a lot of other viewers and other people I know, the dealers are a major contributor to automaker’s woes. When you manage to get some help, the difficulties are just starting. The worst part is how long it takes to “negotiate” the deal when you just want to take advantage of current incentives. Every time I experience an amazing amount of obfuscation of the cost breakdown. After hours of wrangling, you end up with a bottom line that makes sense, but the itemized bill looks nothing like the incentives advertized.
I have had similar experiences in the service departments when trying to make a warranty claim.
When I worked for one of the Detroit 3, my colleagues and I agreed the dealers were killing us.
July 22nd, 2010 at 1:01 pm
Nice show Murray,
I wish Murray had said for which car company those dealers are part of, anywho; it makes me wonder how bad the dealers that got close down for underperformance by the goverment were.
July 22nd, 2010 at 1:18 pm
Hey LEX, are you talking about the Hyundai dealership across from the Container Store and The Westchester? Didn’t it used to be a Cadillac dealer?
When I shopped for a new car a few years ago, one of the entertainments was doing my own intel on just how differently dealerships operate. The local Honda dealer showroom felt like a shark tank, a Chrysler dealer my three visits to talk to a salesman or get a test drive, the Mini dealer at the BMW shop was 10/10, the Pontiac showroom was like something out of the 60s but the salesman did get me to cross shop a different car than I came in to see(despite my Sunday beard), the Nissan and Toyota guys practically let me rape their cars on the test drive, but the most memorable was the Jeep guy who asked me right off if I was going to stiff him by buying from his competition. That’s a keeper.
July 22nd, 2010 at 1:19 pm
I like Pedro Fernandez’s suggestion that it might be advantageous to basically eliminating salesmen and the entire showroom experience. You would order your vehicle over the internet, negotiate price, arrange financing and receive delivery at a GM Delivery Dealership where upon your inspection and approval you would accept deliver, sign and drive off.
I would prefer a internet or kiosk based experience linked to a vehicle test drive center. Most people do there new car research on the internet anyway. I believe GM attempted this type of sales model in California a couple of years ago but withdrew it almost overnight due to dealership protests.
If OEM’s could sell directly to consumers without the middleman costs associated with franchised dealerships life would be a whole lot simplier. The Dealers could then concentrate of service, maintenance and warranty & Non warranty repair activiates while growing their Used Vehicle business.
Whenever you speak with a car salesman they always say that they are making no money selling new cars. The Dealership makes money at the service counter or from pre-owned sales. As a New Vehicle Delivery Center the Dealership would receive a set processing fee for each vehicle delivered.
July 22nd, 2010 at 1:30 pm
@HtG
Bingo! My Uncle has owned Toyota, Honda, Ford, Chrysler, etc. over his life time but now highly recommends the Hyundai’s based on his ease of ownership and personal driving experience. He is a repeat customer to Hyundai and he lives in Scarsdale so he can afford any car he wants. I think his next vehicle will be a fully loaded Genesis sedan after he gives his current Hyundai to his youngest son.
July 22nd, 2010 at 3:25 pm
Folks, except for the luxury brands, most brands suffer from bad dealer experiences. The reliable Toyota has been the worst for years and they’ve spent millions trying to remedy this, perhaps it’s the sales personnel attitude because they know people who go there will end up buying a Toyota regardless, while Hyundai has to convince folks that their cars are now as good as the Japanese.
July 22nd, 2010 at 4:24 pm
Dealerships are independant franchisees. GM or Ford Or Chrysler or any car company that I know of, is not the dealership, anymore than Green Giant is a part of Krogers, Safeway, or whoever. So if you have a bad dealership experience, call the car company and they will help you out. Or if you want the car you went to that dealer for, go to another dealer. If you already own the car, and have service problems, look in your owners manual for the OEM’s 800 number and tell them about it. They want your business and will do what they can.
July 22nd, 2010 at 6:38 pm
Pedro, but Japanese cars arent all that good anymore. They may have the rep, but for those who have been reading the tea leaves (Or not Japanese diehards, or blind sheep who think the car market is the same as it was 10-15 years ago) for years now know that American and Korean= the best you can get right now.
Pedro the Hyundai Brand is not going to sell 1 Million cars in America a year, never. They will never sell 750,000 cars in America, EVER. There’s no need to put a bunch of effort into marketing to convince their cars are as good as the Japanese from 10 years ago. They are rigging it to be such. Hyundai wants Mid Volume. Hyundai is about there already. All they need is 100-150K more sales a year and that’s good enough for them They are mostly focusing on changing brand image and diversifying their customer base. Image change-Think Dirt Cheap to Somewhat Classy for now. Once that Happens then Hyundai will change from Somewhat Classy to Very Classy. Id say its going to be a 20-30 year process. Notice how everybody in those Hyundai Uncensored Commercials looks under 45 except for the one little old lady? Yeah, they arent going to try to change the mind of the Baby Boomer in the Under Genesis Equus Cars. Its a HUGE waste of money.
I feel bad for GM as they still dont understand that Baby Boomers think Japanese Cars are GOD. What a waste of time, and money.
KIA will be the Cash cow that will have to convince buyers that their cars are as good as the Japanese USED to be. I can see 1 Million KIAs being sold in America anually.
Anyway,
That Kid with the car said he is looking to trade the Porsche for a Cadillac Escalade. So this story is not over. This was reported on Bloomberg yesterday.
July 22nd, 2010 at 6:58 pm
If Koreans and Americans just did their own thing and built the best cars EVER then they dont need to worry about the Germans and the Japanese.
If you build it they will come.
German and Japanese cars are obviously on the decline. That New Jetta is Horribly Cheap from what I understand. Boy did VW Sell out for America. Their customer base will leave them, and they will be now forced to attract only new customers now.
Their usual customer base will find the cheapness of that New Jetta TOTALLY Unacceptable. They were a patient bunch waiting for V-Dub to bring those JD Power scores up. They bought the cars for the interior and driving dynamics. With those 2 things gone now they have no selling point for the usual VW Customer.
The way I see, a bunch of new Hyundai/KIA customers to me. In a way I think its a tragedy, but in another way I say thanks VW for selling out. You want to go cheap, while the Koreans want to become more classy. They picked the worst possible time to do such a thing.
Some of the same Demographic who buys VW also buys KIAs. If youre going to have a KIA interior at a much higher price, then whats the point of getting the VW. Especially when KIA has a better reliability record.
Whats the point of a VW when you have new Buick patroling around for anybody they can get, or a new Hyundai that wants to become classy?
Lets face it Folks Europe’s Car Company has become the new OLD GM.
July 22nd, 2010 at 8:29 pm
What I find disturbing is when I go to a dealership and know more about THEIR cars then they do. I mean if your selling a product ,you should know the product as much as possible. If a salesman can’t be interested enough to care about what he’s selling why should I be bothered to want to buy it.
One of the worst experiences I had was when I ent to a Buick dealership looking at a Regal GNX to have the salesman blow me off and say “you can’t afford this car ” This is without ever looking at my finacial situation, based shearly on my appearance. Pissed me off so bad I bought a Mustang GT for near the same money drove by the dealership and honked to the 2 sales guys talking to a more typical Buick buyer. They looked at each other and I laughed and saluted as I went on my way . By the way that dealership has been closed now for about 15 years so I guess I wasn’t the only one who they dissed.
July 23rd, 2010 at 4:52 am
WILL ANYBODY FINE THE CLOWNS IN WASHINGTON FOR WITHOLDING TOYOTA EXONERATING EVIDENCE???
Remember how Toyota was slapped with a $16.4m fine for allegedly withholding information and delaying recalls? Remember how Toyota was served again with a subpoena for information, what many read as the prelude for another $16.4m fine? (If anyone again says that $16,4m is pocket change, please send me the pocket change.) Well, there are some people in Washington who claim that it’s the U.S. government that might be withholding information.
According to Dow Jones Newswire (via The Nikkei [sub] ) “the Obama administration came under pressure to disclose more information about its investigation of Toyota Motor Corp. with congressional Republicans questioning whether officials are withholding data that could favor Toyota in some crashes.”
Rep. Joe Barton of Texas, the senior Republican on the House Energy and Commerce Committee, sent a letter to NHTSA, asking them to fork over crash data that, according to articles in the Wall Street Journal and TTAC article published last week, proves that in many crashes, the driver had his or her foot on the gas instead of the brake.
The Journal said they had it from “people familiar with the crash-data test results” and Joe Barton thinks thos people might be at the NHTSA. As far as the NHTSA or the DOT are concerned, mum’s the word. ..
Barton sent a strongly worded letter to NHTSA boss David Strickland, The letterwas also signed by Energy and Commerce Committee members Reps. Ed Whitfield (R., Ky.) and Michael Burgess (R., Texas). The letter says that “it is important for us to know whether NHTSA has EDR data showing that some incidents of reported sudden unintended acceleration were the result of pedal misapplication.”
The Republicans wave a big stick: They point out in the letter that the House is expected to vote soon on a far-reaching vehicle-safety bill that would up the financial ante considerably, and could even land car executive in jail.
Subliminal message: If you want that law to pass anytime soon, hand over the information. Too bad there is no clause in any law that the fine gets refunded if the government withholds information. That’s not the way it works.
July 23rd, 2010 at 4:54 am
Murray and everybody else that reported news yesterday sound like they ALL bleat the Ford-Lincoln party line like dumb sheep
It is GROSSLY MISLEADING, MURRAY, to parrot ford’s claim that the MKZ hybrid costs just as much as the MKZ non-hybrid. THEY ARE NOT THE SAME VEHICLES!!!!! The Hybrid is a lousy 4 cylinder while the regular is a V-6!!!!!!
Got it? PLEASE CORRECT YOURSELF IN TODAY’s BROADCAST. If you TV clowns paid less attention to what stupid TIE you wear and more to lEARN ABOUT CARS, you’d do much better.
July 23rd, 2010 at 5:00 am
“# LEX Says:
July 22nd, 2010 at 1:30 pm
@HtG
Bingo! My Uncle… He is a repeat customer to Hyundai and he lives in Scarsdale so he can afford any car he wants. I think his next vehicle will be a fully loaded Genesis sedan after he gives his current Hyundai to his youngest son.”
NObody with any $ should bother with Huyndai-Kias just because the dealer experience is better. In that case, you might as well buy Saturns. For people with $ there is a huge range of far better alternatives to the Genesis, from the Ueber-reliable LS460 and its predecessors (NOT all Lexuses, only the LS460), the E and S class, the new 5 and 7 series (OF COURSE!!!!) even the new XJ Jag, if you want to take a risk.
If you are happy with the Genesis (esp. the V6) you’d be far happier with a Toyota Avalon (especially reliability and resale value wise)
July 23rd, 2010 at 2:33 pm
“It is GROSSLY MISLEADING, MURRAY, to parrot ford’s claim that the MKZ hybrid costs just as much as the MKZ non-hybrid. THEY ARE NOT THE SAME VEHICLES!!!!! The Hybrid is a lousy 4 cylinder while the regular is a V-6!!!!!!”
Nick, what you are missing is that the Fusion Hybrid upon which the MKZ Hybrid is based is priced much higher than its V6 counterpart, as is, I belive, the Camry Hybrid.
July 23rd, 2010 at 8:56 pm
Several years ago I had to go to TACOM in Warren, MI on business. The guys there said that the dealerships in the Detroit area were terrible because so many of the customers had employee pricing that the profit margins were low and that they really had no incentive to compete.
If this is true your experience might be different in other parts of the country.