Archive for the ‘Dealer News’ Category
GMAC will finance Chrysler dealers by mid-May (Automotive News)
May 1st, 2009 | 
Author: DAVID SEDGWICK, DONNA HARRIS, BRADFORD WERNLE
AUTOMOTIVE NEWS
APRIL 30, 2009 – 6:52 PM ET
Thousands of Chrysler LLC dealers who face the loss of floorplan financing will have an opportunity to sign up with GMAC.
A senior GMAC executive said today that his company will sign up all Chrysler dealerships that now finance their wholesale vehicle inventories, or floorplans, with Chrysler Financial.
The lender also will provide retail loans to customers of Chrysler dealerships. As of March 31, Chrysler LLC had 3,215 dealers.
During his White House briefing on Chrysler today, President Barack Obama noted that the federal government will not loan Chrysler Financial the money it needs to stay in business.
Instead, the president said the government would give GMAC additional financing to service Chrysler’s dealers. And GMAC is jumping at the opportunity to expand. “We will step in and fill the gap,” said GMAC President Bill Muir. “It involves a few thousand dealers. It’s our expectation we can do that by the middle of May.”
A private brand
During a teleconference today, Chrysler co-President Jim Press told dealers that Chrysler will have its own “private branded” finance organization with GMAC.
Because GMAC has status as a commercial bank, it will give dealers better access to financing, Press said. “We’ve been suffering from insufficient liquidity from Chrysler Financial, he noted. “We’ve been walking tightrope with insufficient conduit of funds available.”
Press told dealers Muir will address them during a Friday conference call.
Speaking on the same conference call, Chrysler sales chief Steven Landry told dealers they will get access to GMAC financing tools almost immediately. “The priority is to get retail set up first,” Landry said. “Next week we will start working on the wholesale.”
Initially, GMAC will offer floorplans to all Chrysler dealers on a temporary basis. As Chrysler emerges from bankruptcy, GMAC will accept or reject dealers’ floorplan applications using the same financial yardsticks that it applies to GM dealers.
“We are working with the government to bring the Chrysler dealers on, sight unseen,” Muir said. “Then we’ll go through a rapid credit underwriting process, which will take a couple of months. And then we’ll take them on as normal customers.”
Government bailout
During the credit crisis, the asset-backed securities market that GMAC and Chrysler Financial relied on for funds dried up. They were unable to bundle loans and leases and sell them to investors, who had become skittish about the auto industry.
As a result, both GMAC and Chrysler Financial turned to the federal government for aid. GMAC Financial Services received $6 billion; Chrysler Financial received $1.5 billion.
Chrysler Financial is burning its cash more quickly than GMAC. And though both Chrysler Financial and GMAC applied with the federal government to become bank holding companies, only GMAC was approved.
So while Chrysler Financial’s cash dwindles, GMAC is tapping its bank’s growing deposits — a relatively inexpensive source of financing.
GMAC also has provided commercial and retail financing for non-GM dealers in the past, and has expressed interest in expanding this business. Through its bank, for example, GMAC recently launched a dealership mortgage program that is open to dealers of all makes.
Cerberus’ role
While Chrysler Financial and GMAC got radically different treatment at the hands of President Obama, they are actually linked by cross ownership.
Cerberus Capital Management LP — which owns Chrysler LLC — also owns Chrysler Financial and had held a 51 percent stake in GMAC. Cerberus is reducing the stake in GMAC as the financier converts its status to a bank holding company.
As GMAC prepares to expand, Chrysler Financial is in crisis. The company will retain its current book of consumer loans. But it has suspended its participation in Chrysler’s subvented interest rate programs for retail car loans.
In a letter to all Chrysler dealers, CEO Thomas Gilman explained that the filing has landed Chrysler Financial in trouble with its creditors. Although Chrysler Financial operates independently of Chrysler LLC, the automaker’s bankruptcy filing has jeopardized Chrysler Financial’s agreements with lenders.
Wrote Gilman: “It does present several operational challenges.”
Chrysler Financial’s difficulties accelerated after the lender was unable to renew all of its $30 billion in conduit financing in August, forcing it to drop out of the leasing business within days.
Source: Automotive News
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Dealers, suppliers poised to benefit as SBA loan effort widens (Automotive News)
NEIL ROLAND
AUTOMOTIVE NEWS
APRIL 30, 2009 – 4:39 PM ET
WASHINGTON — More auto dealers and suppliers will be eligible for federal loans under the expansion of a Small Business Administration program to be announced tomorrow, President Barack Obama said today.
The SBA will double or even triple the number of dealers eligible for federally guaranteed loans for working capital, said Bailey Wood, legislative director of the National Automobile Dealers Association. Each loan can range up to a maximum of $2 million.
Currently, only dealers with less than $29 million in annual revenue, or about 25 percent of all U.S. dealers, are eligible for this assistance.
The new SBA requirements will expand this eligibility to well over 50 percent and perhaps as many as 75 percent of the nation’s 19,000 dealers, said Wood, who has been briefed on the new assistance.
“This is a very big deal,” Wood said in an interview with Automotive News. “This will not only have a significant impact on the auto industry but on the larger economy as well.”
But the administration will not offer SBA loans to finance dealership floorplans. Dealers use those loans to finance the purchase of new vehicles for their showrooms.
The typical floorplan loan is for $5 million. “Two million dollars is extremely helpful, but it’s not large enough to help a dealer’s floorplan,” Wood said.
NADA is lobbying the federal government for more floorplan financing, he said.
The SBA loan expansion to be announced tomorrow will affect all small businesses, not just auto dealers and suppliers. The loans for working capital typically are provided by small regional banks and guaranteed by the federal government.
Wood said he did not know the cost of the expansion. SBA and White House spokespeople declined to comment. A spokesman for the Original Equipment Suppliers Association did not respond to a request for comment.
Automotive suppliers currently are eligible for SBA assistance only if they have fewer than 500, 750, or 1,000 employees, depending on their sector.
Under other guidelines announced several weeks ago, Obama expanded the percentage of a working-capital loan that can be guaranteed by the government to 90 percent from 75 percent. That means that as much as $1.8 million of a maximum $2 million loan extended by the bank now can be guaranteed.
Source: Automotive News
Autos task force to consider SBA loans for dealers (Crain’s Detroit Bussiness)
By Kimberly Johnson
AP Auto Writer
(AP) — A national auto dealers group said Thursday that President Obama’s auto task force is considering extending loans usually reserved for small businesses to dealers, making it easier for them to borrow money to acquire showroom vehicles.
According to the National Automobile Dealers Association, which met with the task force Thursday morning, the government is considering ways to help dealers access money to buy cars to stock their lots. Frozen credit markets have yet to thaw since banks received TARP aid, said NADA chairman John McEleney, causing dealers continued difficulty in acquiring loans and staying afloat.
“There are a lot of departments of government involved, but the task force agrees with dealers that credit is a significant problem,” he said. “They wanted to know if we were seeing improvement in credit and dealer financing. We’re seeing some on the retail side but we still need help with floor plan loans.”
Most dealerships do not qualify for the typical loans from the Small Business Administration, because they have gross receipts of more than $29 million, including sales of cars, service and parts.
“One of suggestions we made to the task force was to go to an employee-based size standard,” said Andrew Koblenz, vice president of legal and regulatory affairs for NADA. “The mechanism they choose doesn’t account for the fact that cars have gotten more expensive over time, but the returns don’t get larger.”
SBA spokesman Mike Stamler said administrator Karen G. Mills indicated during her confirmation hearing earlier this month that the agency would look “seriously” at expanding SBA lending to cover auto dealers. Stamler said there was no timetable yet for implementing such a plan and no details were available, but noted that the SBA used a similar temporary program to help dealers in the late 1970s.
The task force also wanted to know how employees would be affected should one of the automakers file for bankruptcy, NADA VP Koblenz said. Nearly 500,000 are employed at GM and Chrysler dealerships nationwide. A government accountability report on the auto restructuring plans released Thursday said that more than 900 dealers closed in the past year and that dealer employment was down.
A typical dealership employs about 55 people, including technicians. Under current rules, only about 15 percent of dealers, with fewer than 30 workers, would be eligible for a loan, McEleney noted.
“While they wouldn’t all be out of jobs, a lot of them would be,” McEleney said. “They asked if it would have a devastating effect on employment across the country.”
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10 Best Places For Car Dealers to Engage Car Buyers Online
- Image by Daniele Muscetta via Flickr
10. Edmunds Carspace – “The Car Enthusiasts Automotive Lifestyle Social Networking Site”. Edmunds Carspace is one of the most popular forums on the web. As such, finding what you want can be a bit daunting and the conversations can be long. However, there’s a lot of great advice to be had and a wealth of information in archive. The interface is clean, but there are a lot of ads.
9. AutoMedia – “Car Advice You Can Trust”. Whereas Edmunds does forums by car, AutoMedia does it by topics. From car care to automotive performance, AutoMedia displays all sorts of information about making the car you already have, better. There’s lists on proper driving techniques, restoring tired cars, how to get better gas mileage, amateur motorsports and hundreds of other topics in addition to a simple buying guide for new cars.
8. Yahoo! Answers - A specific section for questions about buying and selling vehicles. Yahoo Answers gives you the opportunity to ask questions to an entire community at once through their main page. Not only will members of their community answer your question, other members will rate the answers to give you a “best answer”. The incentive to give the best possible answer means there’s a lot less “noise” in Yahoo’s forums.
7. Ask.Cars - “Our Experts Answer Your Questions” Ask.Cars has one of the best interfaces of any forum out there. A simple “Question of the Day” takes up a majority of the homepage and subsequent answers are at the bottom of the page as “Recent Questions”. The unfortunate problem is that most questions only have a few answers. The questions jump between tax issues, new cars, problems with cars and hundreds of other things.
6. CarGurus – “Got a question about your car? Ask the CarGurus community and get a response within hours!” CarGurus is a sort of car rating site. It’s not so much a way to ask and answer questions as it is a “raves” vs. “rants” site. If you’re looking for what people who actually own cars think of them, this is a good place to go. Though, there is a very large gap in the models actually reviewed and those still awaiting reviews.
5. DealerRater – Allows dealers to promote their quality customer service. When searching for a new car, that moment comes when you finally say, “Yes. That’s the car I want.” Who are you going to buy from? DealerRater helps you decide by letting users comment on the quality of service they receive. Consumer Reports has noted that new car shoppers rate quality second only to safety as the aspect of owning a car most important to them. DealerRater helps you make sure you get quality service.
4. Easy Auto Sales – The first and only social classifieds for cars. EasyAutoSales ties community to car classified listings with Facebook Connect. This allows questions asked, comments to be broadcast and interesting cars and topics to be shared with your network of friends on Facebook and beyond. EasyAutoSales’ free platform connects car buyers, car sellers and car experts to create one of the most exciting and fastest growing car communities.
3. MySpace – 62,192 automotive related groups. Most people know MySpace as merely a social network for communicating with friends, but MySpace also has one of the largest car communities too! With over 126 million users, MySpace can be a huge ally in discussing cars and, if utilized properly, selling cars.
2. Twitter – People talking and asking questions about cars in 140 characters or less. Twitter allows you to talk about cars in a very real-time, open forum with people who you know or associate with. As opinions on a car, where to get the best deal or what’s popular. Twitter is a great place to discuss cars as well as taking advantage of ancillary sites like TwitPic, where you can share pictures from your cell phone real-time.
1. Facebook – With over 500 groups related to “car buying” alone and 175 million users, Facebook is the final frontier in social networking. The combination of fan pages, applications, media sharing and a simple way to interface with all your friends and family on a daily basis, Facebook is a powerful marketing tool. Whether is be via Facebook Connect and sites like EasyAutoSales that use their technology or simply sharing a story or a picture, Facebook has the power to make your car buying or selling experience much easier and more fulfilling.
Remember, be helpful, be transparent, and be authentic. Good luck engaging!
Wei Yang is a serial entrepreneur who co-found EasyAutoSales to help private sellers and dealerships sell cars online for free, and help car buyers find their ideal car by tapping into their own social graph of friends on Facebook. Find or sell new and used cars online today at EasyAutoSales.
Article Source: http://EzineArticles.com/?expert=Wei_Yang
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Posted in Dealer News | 
Tags: CarGurus, Facebook, Facebook Connect, MySpace, Social network, Social network service, TwitPic, Yahoo | 
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GMAC reverses policy on inventory repayment (Automotive News)
Lender also restores retail financing to subprime customers
Donna Harris
Automotive News
April 1, 2009 – 10:16 am ET
UPDATED: 4/1/09 12:39 p.m. ET
In a sharp reversal, GMAC Financial Services said today that it has backed off a tough new inventory repayment policy on aging new vehicles and has agreed to resume subprime lending.
GMAC also said it is pumping $5 billion more into consumer auto loans over the next 60 days.
The initiatives are designed to boost auto sales and help keep struggling dealers afloat, said GMAC President Bill Muir.
“Dealers have told us that cash flow is critical right now,” Muir said in a statement. “We want to do everything possible to help dealers sell their inventory of cars and trucks, while preserving their working capital during the next couple of months.”
Eliminating dealer curtailments
GMAC said it immediately will eliminate all dealer curtailment payments for older new-vehicle inventory during April. Curtailment is a standard industry practice accelerating the payoff of inventory in stock for an extended period.
In January, GMAC said it would increase the amount it charged dealers to keep some aging new vehicles on their lots. The accelerated payment schedule began in March and applied to new vehicles with model years of 2007 or older and new 2008 vehicles financed before Sept. 1, 2007.
GMAC also is waiving fees it charged dealers to post older vehicles on SmartAuction, GMAC’s online remarketing site, through June. The waiver is designed to help dealers clear their lots of older vehicles.
And the company is letting some dealers postpone interest charges on inventory financing for two 30-day periods over the next 120 days. Dealers can start the deferral program beginning with their interest bill for March. The payment for deferred interest will be due 90 days after the month the charges are postponed.
The program “can be a significant temporary boost to cash flow,” Muir said. “Our goal is to ease the burden on dealers over the next few months as they work hard to lower costs, reduce inventory and protect their financial stability.”
Return to subprime
GMAC is getting back into subprime lending, agreeing to extend credit to retail customers with credit scores below 620 — on a limited basis. These customers still will need to qualify for financing, GMAC said in its announcement. It did not specify those requirements.
In October, GMAC introduced a minimum credit score of 700. After receiving federal aid in January, the lender lowered the minimum score to 620, the conventional cutoff below which customers are considered to have risky credit. But the company announced it would shut down its subprime subsidiary, Nuvell Financial Services.
GMAC also is increasing advance rates for car loans with terms of 60 months or fewer. The advance rate is the amount lenders are willing to lend, often expressed as a percentage of the vehicle’s sticker price.
The company said nothing about auto leasing in its announcement. Dealers have said GMAC’s withdrawal from leasing has substantially hindered auto sales.
“GMAC now finances a broad spectrum of auto buyers,” Muir said. “Through March, we financed over $2 billion in new and used retail auto contracts. We want to do our part to support the U.S. auto industry and individuals in the market for a car or truck.”
In December GMAC received a $6 billion government bailout that required GM and the private equity firm Cerberus Capital Management LP to slash their stakes in GMAC. GM’s stake was 49 percent and Cerberus’ 51 percent.
GMAC, now a bank holding company with operations in North America, South America, Europe and the Asia-Pacific region, had $189 billion in assets on Dec. 31.
Reuters contributed to this report
All I can Add, It’s about time…
Posted in Dealer News, Dealership Financing, Floorplan Financing |
Tags: floor plan financing, Floorplan Financing, GMAC, Inventory Financing |
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Indiana Auto Dealer Listed As Oldest in USA
During the recent months of the current economic crisis, many car dealers have had to close their doors. One dealership that has weathered this and several other difficult financial markets is also the country’s longest-lived family-owned vehicle retailer, W. Hare & Son. From the age of Conestoga wagons to the present and hybrid cars, this Indiana-based dealership has survived more than one and a half centuries of the ups and downs of continuous operation.
The saga began in 1847 when Wesley Hare started building wagons, carriages and buggies out of his log cabin in Noblesville, Indiana. His primary market was the steady stream of Americans heading west to California to pan for gold. All his vehicles came with a one-year warranty on his axles, wheels, and springs.
Hare’s business was booming. Within a short time, he added 45 employees and accumulated a small fortune.
Shortly after the Civil War ended in 1865, Hare’s son E.M. took over the business, and the company officially became W. Hare & Son. Operations moved into a four-story building complete with an elevator, a rare commodity for the time. Eventually the business churned out about 700 buggies annually.
Near the turn of the century, however, E.M. realized that the “horseless carriage” might have a future. Against the advice of his employees, Hare signed contracts with Hupmobile, Studebaker and Cadillac to sell a few of these motorized buggies. By 1912, these automobiles comprised most of his business.
Eventually six generations of Hares would manage the dealership. Each manager had his or her own unique challenges of business. For example, during the Great Depression, the dealer had to rely on its towing service to plump up the bottom line. When manufacturers ceased all automobile production during World War II, Hare had no cars to sell for three and a half years. Lube jobs and tune-ups filled in the gap.
Today, visitors to the Hare showroom can view a bit of the company’s history. The walls display a 90-foot long mural depicting the journey. Plus, the showroom also houses two Hare buggies built in the 1870’s.
The current managers, Courtney Cole and Monica Peck, who are the great-great-great granddaughters of Wesley Hare, have to keep up with current marketing trends. Currently Hare offers 50 service stalls, a photo booth for online ads, and about 1000 new Chevrolets in its sales lot. They sell about 300 cars per month and employ 150 people.
Whatever the future may hold, their place in history is secure. They head a list compiled by the National Automobile Dealers of U.S. dealers who have been in continuous business for 100 years or more. The list’s top ten include:
1847, W. Hare & Son, Inc., Noblesville, Indiana
1852, Schaefer & Bierlein, Inc., Frankenmuth, Michigan
1859, Reynolds’ Garage & Marine, Inc., Lyme, Connecticut
1875, Kemmann Chevrolet, Inc., Lowden, Iowa
1875, Normandin Chrysler/Jeep, San Jose, California
1885, Moser Motor Sales, Inc., Berne, Indiana
1895, Ferman Motor Car Co., Inc., Tampa, Florida
1897, Hill International Trucks, LLC, East Liverpool, Ohio
1898, Eich Motor Co., St. Cloud, Minnesota
1900, Diehl Ford, Inc., Bellingham, Washington
Terri Horvath is a freelance writer and editor and enjoys studying automotive history and traveling the country’s back roads. She is the co-author of Indiana Cars: A history of the automobile in Indiana. More information is available at http://www.cruise-in.com
Article Source: http://EzineArticles.com/?expert=Terri_Horvat
Edmunds.com Report: Consumers Turning to Used Cars in Wake of Downturn
SANTA MONICA, California — Edmunds.com is predicting that March car sales will continue to slide, while consumers turn to the used-vehicle market in response.
Edmunds.com says March new-vehicle sales are expected to be 774,000 units, a 42.7 percent decline from March 2008 and a 12.7 percent increase from February 2009.
“This dire report clouds the more encouraging news that underlying demand for new cars continues to climb from October lows,” said Edmunds.com CEO Jeremy Anwyl. “The conundrum for automakers is that currently almost a quarter of the demand is being met with the sale of a used vehicle.”
Edmunds.com says that more than 20 percent of car shoppers who researched new vehicles actually bought a used vehicle. That trend was expected to accelerate in March.
Inside Line says: The auto industry has yet to come out of its swoon, but used-car salespeople are smiling. — Anita Lienert, Correspondent
Jaguar points dealers toward floorplan providers (Automotive News)
Diana Kurylko
Automotive News Europe
March 23, 2009 06:01 CET
MAHWAH, New Jersey — Jaguar and Land Rover executives say they are guiding dealers to alternative sources of floorplan financing, but those who are not approved by Chase Auto Finance ultimately are on their own.
Ford Motor Co., which sold Jaguar and Land Rover last June to Tata Motors for $2.3 billion (about €1.5 billion at the time of the sale), will stop inventory lending to the brands through Ford Motor Credit on June 1.
Since January, Chase has been providing retail financing for Jaguar and Land Rover dealers but is handling floorplan financing with dealers on an individual basis.
Sharon Corrigan, vice president of retail operations for Jaguar Land Rover NA LLC, said dealers must “come to terms with and find their sources” of inventory financing.
Jaguar and Land Rover have 174 franchises each. A company spokesman said that only 80 were relying on Ford Motor Credit for credit.
“Of those, 52 have not yet achieved a new source of finance, and they are all working with other sources, including Chase,” the spokesman said in an e-mail. “We know banks that are lending money, and we are providing [the names of] those banks to dealers.”
In interview last week, top Jaguar and Land Rover executives said “virtually all,” dealers will find inventory financing.
Their optimism isn’t shared by the National Automobile Dealers Association. Last month, NADA asked the government to consider loan guarantees for dealer inventory financing.
“Even creditworthy dealers are having trouble finding access to any floorplan financing, or the financing available to them is being offered on terms that are not competitive and not commensurate with the risk,” according to an NADA fact sheet.
NADA says the average floorplan loan is about $4.9 million.
Posted in Dealer News, Dealership Financing, Floorplan Financing, News |
Tags: floor plan financing, Floorplan Financing |
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In Credit drought, U.S. car dealers battle to survive. (Reuters)
By Nick Carey
LANSING, Mich., March 22 (Reuters) – Deep in the last stronghold of the struggling U.S. auto industry, Rosario Criscuolo says he owes the survival of his business to Toyota Motor Corp (7203.T).
“If it weren’t for Toyota, I’d be gone,” said the owner of Spartan Auto Group, which runs three auto dealerships selling Toyota, Lexus, Infiniti, Volkswagen (VOWG.DE) and Mazda brand cars. “Without them I’d be selling papers on the corner.”
To fund the $25 million worth of gleaming new cars at his showrooms, including here in Michigan’s capital, Criscuolo needs floorplan financing, or inventory loans.
Floorplan financing is the lifeblood of U.S. auto dealers because it allows them to pay for vehicles when they take delivery and carry them until they find a buyers. Full Article at Reuters
