Tag Archives: GM

Motor Industry Still Feeling Effects from Japan Tsunami

Toyota Motor Corp. and Honda Motor Co. are speeding returns to normal production after the March 11 earthquake and tsunami idled factories and created shortages of parts. The slowdown in May sales came about because limited supply of fuel-efficient cars like Toyota’s Prius lifted prices and curbed purchases.

“Consumers were being told so dramatically after Japan that there’s going to be a shortage of cars, but this is going to be a temporary situation and so many of them will just wait,” said Alan Baum, principal of industry consultant Baum & Associates, who predicts 13 million auto sales in the U.S. for 2011. “To the extent May is a reasonably poor month, I’m not going to get carried away and say that’s going to transcend through the rest of the year.”

U.S. sales of cars and light trucks may rise to 13 million this year, the average of 16 analysts’ estimates compiled by Bloomberg. That would be the most since 13.2 million in 2008.

Average U.S. gasoline prices dropped for 14 straight days since May 11 to $3.80 a gallon for regular unleaded, according to AAA. Prices earlier in May were at the highest level since 2008, reducing demand as the country’s vacation season started.

The earthquake in Japan may result in 3 million to 3.5 million units of global production that will be lost or deferred into next year, according to researcher IHS Automotive. Worldwide light-vehicle production may rise to 73.7 million units this year from 71.9 million in 2010, according to IHS.

Toyota, which built 45 percent of its cars in Japan last year, may lead declines among major automakers with a 27 percent drop in May deliveries, the average of three estimates. Honda Motor Co., the second-largest Japanese automaker by U.S. sales, may say sales fell 25 percent, the average of three estimates. Nissan Motor Co. deliveries may decrease 7.3 percent, the average of three estimates.

“Predominantly this is a supply issue,” George Magliano, a New York-based senior economist for IHS Automotive, said in a telephone interview. “The auto market was developing considerable momentum coming into this month before issues related to Japan.”

Automakers benefiting from their Japan-based rivals’ supply constraints may be led by Hyundai Motor Co. and Kia Motors Corp. Their combined U.S. sales may pass Toyota for the first time, according to Santa Monica, California-based TrueCar.com. Deliveries for Hyundai and Kia may surge 43 percent in May to 115,434, behind only General Motors Co. and Ford Motor Co., according to the auto pricing website.

Toyota, the world’s largest automaker, has said it expects production in North America to return to about 70 percent of normal levels beginning in June, from about 30 percent in May. Honda forecast last week that North American production will return to 100 percent in August for all models except Civic small cars, and said May 17 that global production will return to normal before the end of the year.

 

Ford to add 7,000 U.S. jobs; hiring plans signal accelerated turnaround of Detroit’s auto industry

Ford to add 7,000 U.S. jobs

Ford Motor Co., announced today it is adding more than 7,000 jobs in the United States over the next two years.

That includes 4,000 blue-collar jobs and 750 salaried positions in 2011, plus another 2,500 factory jobs in 2012. Mark Fields, Ford’s president of the Americas, will make the announcement at the North American International Auto Show in Detroit, which opens to automotive journalists today.

The hiring plans signal an accelerating turnaround of Detroit’s auto industry after its worst downturn in decades. Following years of cutting staff and closing plants, Detroit’s Big Three are hiring amid a fledgling recovery in U.S. auto sales and growing demand for their products.

General Motors Co. and Chrysler Group LLC have announced plans to add thousands of workers and engineers, bringing hope to hard-hit southeast Michigan, which has one of the country’s highest jobless rates.

Ford and GM were solidly profitable last year, and Chrysler made money on an operating basis. Ford’s stock is rising, as is GM’s after a successful initial public offering in November, just over a year after the company emerged from bankruptcy.

Ford, GM and Chrysler said in October that they would invest a combined $2 billion in their Michigan operations, adding as many as 2,250 jobs and retaining thousands more over the next couple of years.

A month later, GM and Chrysler each said they also planned to add 2,000 engineering jobs over the next two years, most in Metro Detroit.

GM says that since its emergence from bankruptcy in July 2009, it has outlined more than $3.8 billion in investments in the United States and Canada that will create or restore more than 11,500 jobs. Just over 8,000 will be in the United States.

Auto suppliers, too, are adding research and development staff after making deep cuts in their work force during the economic downturn.

Automakers stronger

The new factory jobs will make up for only a fraction of the tens of thousands of auto jobs lost in recent years. And they won’t be as highly paid. New plant workers will come in at “second-tier” wages of $14-$15 per hour.

The UAW, to help U.S. automakers become more competitive with foreign rivals on labor costs, agreed that new workers would be paid half as much as veteran employees.

The jobs announcement comes on the heels of a strong 2010 for Ford. Its U.S. sales rose 19.5 percent to give the automaker a 16.7 percent market share, up from 15.5 percent in 2009.

Ford, which has posted six straight quarterly profits, is expected to report strong results for last year’s fourth quarter, helped by rising sales and vehicle prices.

GM and Chrysler also are recovering after shedding debt, slashing costs and eliminating dealers in bankruptcy.

For the first time in seven years, Detroit’s automakers collectively gained market share in 2010, claiming 45.1 percent of U.S. car and truck sales, up from 44.2 percent in 2009.

2011 FORD EXPLORER : Consumer consideration across several segments and a wide variety of competitors

Ford Explorer sales sunk during the past several years. Ford touched 450,000 Explorer sales in 2000 and was one of the market’s best-sellers, but the numbers plummeted from there, to barely more than 50,000 sales last year.

Now, early data from Edmunds.com indicates Ford has a shot at once again establishing the Explorer as a major player. Consumer consideration on Edmunds’ car-shopping Web site for the reconstituted SUV is hitting across several segments and going against a wide variety of competitors.

 

Ford marketers have a tough assignment in successfully altering the Explorer – which almost single-handedly established the “family SUV” template in the mid-1990s – from its well-established and trend-setting image of a rough-and-tumble SUV to that of a more contemporary and environmentally-friendly crossover.

But it seems potential buyers may be along for the ride, forgetting the original Explorer’s off-road slant, accepting their lifestyles and likely usage probably are more realistically aligned with the new, 2011 Explorer, with its passenger-car platform, better economy and reduced emphasis on brawny stuff.

In November, for instance, the vehicle most cross-shopped — that is vehicle that Ford Explorer shoppers also considered — against the 7-passenger 2011 Explorer was Toyota Motor Corp.’s Highlander crossover, according to data from Edmunds.com. The Highlander always has been more of a minivan-alternative than an SUV wannabe.

Ford’s own Edge and Escape crossovers (which seat only five) were the vehicles second and ninth most cross-shopped against the new-generation Explorer (reviewed this week by Edmunds’Inside Line), but in another promising development for the company, the two were the only Fords in the top 10 vehicles most cross-shopped against the Explorer in November.

Meanwhile, a high proportion of those considering competitor Chrysler Group LLC’s new Jeep Grand Cherokee at Edmunds.com cross-shopped the Grand Cherokee against the 2011 Explorer, a vehicle that only now is reaching showrooms. A significant and consistent 12 percent of those considering the Grand Cherokee have cross-shopped the new-generation Explorer in the past three months, making the revitalized Grand Cherokee the third most cross-shopped vehicle against the Explorer.

The Explorer also is being cross-shopped against some fairly-upscale iron, perhaps to some degree because of its standard 7-passenger seating capability: Honda Motor Co. Ltd.’s Acura MDX and General Motors Co.’s Buick Enclave and GMC Acadia also are among the top 10 vehicles most cross-shopped against the Explorer.

Top Vehicles Cross-Shopped Against Ford Explorer 12-10.JPGTough Enough

Potential buyers seem to be saying the new-age 2011 Explorer – with no V8 power and a reduced towing capacity – still is enough of an “SUV” for their lifestyles. Edmunds.com data on reverse cross-shopping — shoppers who were looking at other vehicles and also considered the Explorer — indicate fewer of Ford’s traditional truck-based models are being considered by Explorer intenders as they instead cross-shop more competitor models that might be considered more SUV than crossover.

That set includes the Grand Cherokee (cross-shopped by 10 percent of Explorer intenders) and the Dodge Durango and Ford Expedition, both reverse cross-shopped by 14 percent of Explorer shoppers. The reverse cross-shopping numbers are up significantly from a year ago, when just 8 percent and 9 percent, respectively, of those considering the Explorer were cross-shopping Durango and Expedition.

Body-on-frame SUVs such as Nissan Pathfinder and Toyota 4Runner also now are significantly higher on the Explorer cross-shopping list than they were a year ago.

Ford also surely is hoping to improve on its ability to get current Explorer owners to trade for a new Explorer. Edmunds.com data indicate that the number of those trading in an Explorer for another Explorer has plunged from 19.1 percent in 2005 to just 7.4 percent last year and 8.5 percent so far in 2010.

Midsize SUV sales - dec. 2010.JPG

Edmunds

 

2010′s Worst-Selling Cars

2010′s Worst-Selling Cars

After bottoming out in 2009, auto industry sales are slowly recovering. The U.S. will sell about 11.5 million cars and light trucks this year, up from 10.4 million in 2009. And the news only gets better: IHS Automotive forecasts sales of 12.8 million vehicles in 2011, and 17.1 million by 2015.

Total light vehicle sales are up 11.1% through November, with many brands beating the trend and gaining market share: Buick is up 53.5%, Cadillac is up 38%, Infiniti is up 26% and Ford, Hyundai and Jeep are each up 23%.

But while most carmakers are enjoying gains from last year’s dismal sales levels, the bounce is not universal. Some models are just languishing on dealer lots, victims of outdated designs, lack of marketing support and intense competition.

Forbes studied industry sales figures through November to cull a list of the year’s worst-selling vehicles. We tossed out brands like Saturn, Pontiac and Hummer that are being killed, and didn’t count vehicles that are being discontinued like the Chrysler PT Cruiser or Kia Rondo. We also excluded cars that we know are in the midst of a model life cycle change because sales typically fall as automakers are trying to clear out the old design before ramping up production of the new one.

We found that practically the entire SuzukiSZKMF.PKnewspeople ) lineup is in the doldrums, lost amid tougher competition. Sales are down 42% for the year overall, with vehicles like the compact SX4, Grand Vitara SUV and Equator pickup dying on the vine for lack of resources. But there’s reason to hope: The new Kazashi mid-sized sedan has been well-received, and Suzuki plans to launch a new advertising campaign on Christmas. It’s working to refresh its lineup, too. After ending its long-term relationship with General Motors, the Japanese carmaker is now in talks with Volkswagen (VLKAF.PKnews people ) about co-developing new vehicles.

Other poor performers include the fuel-sipping Smart ForTwo, which was all the rage in 2008, when gas was $4 a gallon, but has endured a two-year sales collapse. The quirky two-seater from Germany’s Daimler AG is down 60% this year, on top of a 41% decline in 2009. Penske Automotive GroupPAG -news people ), which distributes the vehicle in the U.S., is now testing Car2Go, a car-sharing concept for Smart, and plans to market an electric Smart soon.

Small cars in general aren’t selling as well now that gas prices have fallen and pickups and larger vehicles are making a comeback. It doesn’t help if your company has taken a beating on quality issues, either. Toyota (TMnews people )’s Yaris subcompact, for instance, is down 37.6% and its Scion xD is down 31%. Both are about two years old, and face stiff competition in a newly crowded market segment. They’ve been tarnished, too, by Toyota’s widely publicized quality recalls. Overall, Toyota sales are down 0.8% so far this year.

Also struggling to stand out from the crowd is the Mazda (MZDAF.PKnews people ) Tribute, a poor stepchild in Mazda’s lineup of snappy coupes and sports cars. It’s based on the Ford Escape crossover, but pales in comparison because it hasn’t been updated with some of Ford’s appealing high-tech features. Consumers have figured out they might as well buy the Escape.

In this economy, nobody really needs a sports car. Thus, the sports car segment is suffering. The Mazda RX 8 is down 50% from a year ago, and the PorschePSEPF.PKnews -people ) Cayman is down 31%. Porsche hopes the newly introduced Cayman R, featuring Porsche’s most-powerful mid-engine, will add a little excitement to boost sales

GM Advertising False Claim That Bailout Was Paid Back “in Full”

Ad agency McCann Erickson’s historic motto is “Truth Well Told,” which is unfortunate because its latest ad for General Motors — one that claims that “we have repaid our government loan, in full, with interest” — isturning out not to be true.

It’s the oldest PR mistake in the book: Don’t make a public statement if a rudimentary fact-check demonstrates that your claim is false. And certainly don’t have your CEO say it — which is what this ad does (video below).

The commercial accompanied a press release last week that saidGM had repaid $5.8 billion to the U.S. and Candian treasuries — a rare piece of good news for the automaker, hooked to the public’s dislike of the bailout. You can see why they were keen to make it into an ad. The spot starred GM CEO Ed Whitacre, who has fronted McCann’s corporate image work for GM before.

According to a letter sent by Sen. Charles Grassley, R-Iowa, to U.S Treasury Secretary Tim Geithner, $17.4 billion was made available to GM in an escrow account at the Treasury. After $6.7 billion was paid back, a further $5.6 billion was to be released to GM:

Therefore, it is unclear how GM and the Administration could have accurately announced yesterday that GM repaid its TARP loans in any meaningful way. In reality, it looks like GM merely used one source of TARP funds to repay another.

The Houston Chronicle’s Loren Steffy notes that $5.8 billion is merely a fraction of what the U.S. actually invested in GM:

For starters, the Obama administration bigfooted the bankruptcy process last year, benefiting autoworkers at the expense of investors. Bondholders wound up with a smaller stake in the new company than retirees, who were owed less. As I wrote at the time, almost one-fourth of the GM bondholders were small investors, many of whom held the bonds in retirement accounts.

Meanwhile, taxpayers in the U.S. and Canada invested about $50 billion to buy a 61 percent stake in GM. Neither the cost of the bondholders’ haircut nor the current value of taxpayers’ investment is known because GM’s stock isn’t publicly traded.

Worse, a GM exec later admitted the claim in the commercial is literally false. Grassley quoted a TV interview in his letter in which GM vice chairman Stephen Girsky was asked:

Question: Are you just paying the government back with government money?

Mr. Girsky: Well listen, that is in effect true, but a year ago nobody thought we’d
be able to pay this back.

The most astonishing part of all this is that Whitacre himself made the claim and appeared in the ad. He must have known, in broad terms, what GM’s true financial position with the government was. McCann has more of an excuse: If the client approved the spot, so be it. But the agency is running a risk here: If it was a smart strategic partner — instead of a vendor hoping to secure the account by making Whitacre feel like a TV star –  it would have checked the script and advised against airing the spot.

Price War: Honda and Toyota Get Down and Dirty, helping to boost March auto sales

Price wars and discounting used to be the province of beleaguered companies from Detroit. Now Honda (HMC) and Toyota (TM) are down in the bargain mud, too — and helping to boost March auto sales.

Forecasts for annual U.S. auto sales for the month are around 12.5 million range for theSeasonally Adjusted Annual Rate. That’s a sharp improvement from a 10.8 million SAAR in January 2010 and 10.4 million in February.

“The shape of the U.S. SAAR over the rest of the year will largely depend on how long the industry’s pricing battle goes on,” saidBrian Johnson, auto industry analyst for Barclays Capital.

Toyota kicked off the discounting this month with offers of zero-percent loans, to boost demand in light of the unintended acceleration disaster. Honda responded with cheap, no-money-down lease deals.

Such steep discounts are unusual for the Japanese carmakers, because their cars have typically been in higher demand than U.S. brands. Last month, before the current round of price-cutting kicked in, Edmunds.com said Honda’s incentives averaged about $1,400, less than half the level of Chrysler, Ford and GM. Toyota incentives averaged about $1,800, according to the shopping and research web site.

Meanwhile, ChryslerFord (F) and General Motors are bending over backwards to cut production and try and reduce the need for deep discounts, especially since Chrysler and GM went bankrupt last year. The results have been mixed.

Edmunds.com CEO Jeremy Anwyl said in a written statement the Toyota deals are unlikely to last, because Toyota’s inventories of unsold cars aren’t that high. The Toyota deals are set to expire April 5.

“Although this SAAR sounds promising,”Anwyl concluded, “it’s too early to wave the flag and say that the economy has turned the corner.”

Toyota Sales Surge, Despite Wave of Bad News

Toyota showed a dramatic U.S. sales recovery in the first two weeks of March. Of course, so did the rest of the industry, which is on track to sell 12 million cars in 2010, compared to just over 10 million in  2009.

But it was Toyota’s performance that stood out, given the endless bad publicity it has been enduring. My theory is that people’s personal experience with Toyotas trumps the second-hand bad news. They worry somewhat about sudden acceleration, but they’re reassured by statistics that suggest it’s very unlikely to happen to them.

Part of my evidence for this is anecdotal, since no less than three people (including my mother) told me, unsolicited, of their loyalty to the Toyota brand in the last few days. They’d buy Toyotas again.

Toyota’s reliability is not in question. In a J.D. Power survey released March 18, the Lexus brand was third overall, and the Toyota brand fifth. Four Toyotas (the Highlander, Prius, Sequoia and Tundra) were first in their segments, more than any other manufacturer. (Here’s a summary of 2010 Toyota ratings by J.D. Power.)

A warning sign for Toyota, though, is that the latest report fromKelley Blue Book shows Toyota falling from the top spot in brand loyalty. Hyundai was number three, but now Toyota occupies that spot and Hyundai is number one, and Honda second. Given the circumstances, being third is still a very good showing.

Incredible incentives are also helping Toyota. I’ve heard from many friends who say they’re attracted by Toyota’s great deals, especially because (unlike FordGM and Chrysler) the Japanese automaker has rarely discounted before.

As the Wall Street Journal noted, “The Japanese auto makerusually refrains from big incentive campaigns, but began offering zero-percent financing, cash rebates and subsidized leases to halt a slide in its U.S. market share in the past two months.”

Jeff Schuster of J.D. Power’s global forecasting unit warned that Toyota could spark an “incentive war” among major carmakers, andJeremy Anwyl, chief executive of Edmunds.com, cautioned that the sales bounce we’re seeing is largely due to the incentives—take those away, and the bounce goes away, too.

Despite its many missteps on sudden acceleration, Toyota has built very good cars for a very long time. Don’t bet against it coming out of its crisis and regaining its status as America’s favorite car company.

U.S. auto market continues its recent strengthening trend with sales of almost 700,000 in January, up nearly 7 percent compared with 654,757 vehicles in January ’09. Seasonally adjusted light-vehicle sales rate up to 10.76 million units versus last year’s 9.59 million

Jan._'10_Big_7_graphic_r1_550 - final.jpgThe U.S. auto market in January continued its recent strengthening trend, with overall sales just shy of 700,000 vehicles (698,456 vehicles) for the month rising by nearly 7 percent compared with 654,757 vehicles in a very weak January 2009. The seasonally adjusted light-vehicle sales rate ticked up to about 10.76 million units versus last year’s 9.59 million - and roughly in line with the firming picture of recent months.

Toyota was clearly the biggest loser in January due to its recalls and stop-sales order on eight of its bestsellers. Yet, January’s results varied widely for its top competitors that may have tried to take advantage of Toyota’s problems with special incentives meant to lure disaffected Toyota customers in particular.

Toyota’s January sales “were 23 percent below our internal target,” Robert Carter, Toyota Motor Sales U.S.A.’s group vice president and general manager of the Toyota division, said in a conference call Tuesday. That number insinuated that more than 20,000 lost sales were attributable to the recall and sales stoppage in just the last few days of January.

Toyota only escaped greater damage in January because it didn’t halt sales until January 26, when only four sales days were left in the month. And the toll on the Toyota brand, especially, has been heavy nonetheless: Sales were down more than 47 percent compared with December, and January sales ranked as the worst month for Toyota since January 1999.

“Toyota was clearly the biggest loser of the month,” said Jessica Caldwell, director of U.S. sales analysis for Edmunds.com. As long as the sales suspension continues, predicted Edmunds.com Senior Analyst Ray Zhou, Toyota-brand sales will drop by about 75 percent overall as long as the stop-selling order remains in affect.

As for Toyota’s competitors, results were mixed.

Ford continued its surge of recent months by reporting a 24-percent sales increase for January. The company credited its increasingly robust product portfolio, but Ford also dangled $1,000 rebates to current owners of Toyota models and of products by Honda, which is facing its own significant safety recall.

Hyundai, which launched a similar incentive program, saw its January sales rise by 24 percent over last year as well. Recently, Ford and Hyundai  clearly have been the two hottest companies of the Big Seven of U.S. auto sales.

Meanwhile, General Motors – which first introduced a Toyota-targeting incentive – reported a 14-percent sales increase in January compared with a year earlier.

“What we responded to last week was feedback from our dealers who were hearing from Toyota owners who wanted to get into a new vehicle,” explained Susan Docherty, GM’s North American vice president of sales and marketing. “Our January go-to-market plan had been to focus on our loyal owners. So we needed to adjust our incentives” after Toyota’s troubles deepened, opening an opportunity for rivals.

Honda’s January sales, however, dropped 5 percent. It did nothing special to target Toyota owners. Meantime, Honda also had to cope with the fallout from its own announcement of a recall of 646,000 Fit/Jazz and City models, including 140,000 in the United States, because of a faulty window switch.

Overall, Edmunds.com’s Caldwell said, January was a rather tepid month. Strong incentive campaigns in December had “pulled forward quite a few” retail sales from January, she said. And the return of a relatively normal market for fleet sales in January helped comparisons of this year versus January 2009, when overall fleet sales were abysmal.

“The next big shopping weekend,” Caldwell said, “will be Presidents’ Day” in mid-February. “We should see month-to-month sales growth” for February from January, she said.

GM paragraph up.jpgGM: Regaining Its Footing

Robust fleet business helped GM post a 14-percent overall sales increase in January compared with a year ago, to 146,316 units. Such is GM’s rising confidence that the company firmed up its official forecast of total U.S. light-vehicle sales for 2010, to a range of 11.2 million to 11.7 million units from the previous range of 10.7 million to 11.7 million units.

2010 GMC Terrain - 200.JPG“The economic news continues to be mixed in the U.S., but there are increasingly positive signs of recovery,” said Michael DiGiovanni, GM’s executive director of global industry and market analysis.

But GM’s retail sales fell by 10 percent during the month as the company continued to cope with the nearly complete disappearance, by now, of its Pontiac, Hummer, Saturn and Saab brands from the marketplace.

“We were only selling four brands” in January versus eight a year ago, Docherty noted. The abandoned brands represented less than 2 percent of January sales and now account for less than 1 percent of dealer vehicle inventories. “We’re 10 months ahead of schedule on the wind-down of Pontiac and Saturn brands,” she said.

Meanwhile, fleet sales burgeoned in January. A year ago, GM sold only 13,000 vehicles to fleets; in part that was because the nation’s economy was in crisis, in part it was because the company had chosen to pull ahead about 25,000 fleet sales to December 2008 that had been scheduled for completion in January.

This January, fleet sales rebounded to about 42,000 units, comprising about 29 percent of GM’s overall sales for the month. That was above the 26 percent of sales that has been the average for the company over the last three years.

Still, the GM executives touted the relative progress they’ve been making in retail sales over the last several months, in large part due to strong consumer response to all-new or completely revamped models including the Chevrolet Equinox, Buick LaCrosse, Cadillac CTS Sport Wagon, Cadillac SRX and GMC Terrain.

“Our conquest rates are up” overall, Docherty said, “particularly in large products.” Moreover, she said, GM’s average incentive spending continues to decline while the industry’s continues to rise.

Ford paragraph up.jpgFord: Sales Jump – Thanks To Fleets

January’s overall sales hike of 24.1 percent for Ford Motor Co. looks sensational, but an outsized increase in fleet sales ran interference for stunted retail sales, which dipped about 5 percent, Ford officials said.

Nonetheless, sales were up for all Ford brands (including a hefty 41-percent spike at Volvo) – and every Ford model posted a sales gain in January. The Lincoln division hiked sales by 16 percent and even the Mercury unit improved sales by 6 percent.
And Ford sales officials crowed that market share improved to 16 percent for the month, perhaps as much as 2.5 points better than January 2009′s figure.

But one has to look no further down the sales sheet than to the pre-Cambrian Ford Crown Victoria’s 91-percent sales jump, or the Ranger’s 47.3-percent climb, to know fleet buyers are back in the game after delaying purchases throughout a shaky 2009.

Fleet sales accounted for a hefty 37 percent of Ford’s 116,277 total sales in January – a figure double last year’s 18 percent but a ratio more closely aligning to what chief of U.S. industry analysis George Pipas says will be a “pretty normal” industry-wide fleet-mix average of around 22 to 24 percent in 2010.

Ford’s fleet-heavy sales mix did not go unacknowledged by Ken Czubay, vice president, U.S. marketing, sales and service, underscoring the industry’s relatively meek month that seems to have palpably deflated hopes of putting together a consumer-rallying streak.

“January retail sales to (individual) customers were below our expectations,” Czubay said flatly. The current consumer mindset is all about the perception of there being good deals in the market, he added. In an unexpectedly strong December, Czubay said, buyers responded to what they believed were showrooms rich with attractive deals.

But January’s incentives were lower – at Ford and across the industry – so perhaps consumer perception about dissipating deals was “fueled a little bit by reality,” Pipas conceded. According to Edmunds.com’s proprietary True Cost of Incentives metric, Ford’s average incentive of $3,095 in January was up $55 compared with December, but the industry’s January TCI of $2,382 was notably lower than December’s $2,542, meaning an average of almost $200 less going to consumers.

2008 Ford Ranger - 200.JPGIn addition to the Crown Victoria and the Ranger, Ford’s top performers in January included the Fusion, gaining 49.3 percent, the Mustang, with a 61.2-percent improvement (possibly also fleet-driven) and the Focus, which climbed 33.7 percent.

Ford’s crossovers and trucks all gained, too, led by the Escape’s 28.6-percent increase, a 25.5-percent hike for the Edge and a 9.5-percent gain for the F-Series pickup. The old-school Explorer and Expedition even generated increases, 15.2 percent and 9.3 percent, respectively.

Although the Lincoln unit’s overall sales improved compared with January, 2009, the MKS and MKZ sedans were off by a troubling 16.6 percent and 14.2 percent, with the flagship MKS finding just 1,280 buyers. The MKX crossover rose 26.7 percent, though, and the Navigator somehow improved by 9.7 percent to 726 sales.

Mercury’s gain was driven by the 111.9-percent boost for the Grand Marquis (yes, grandma Mable, they still make it), a 12.1-percent improvement from the Milan sedan and 0.3-percent increase for the Mariner compact crossover. The rest of Mercury’s lineup consists of the Sable (nine units sold in Jan.) and the Mountaineer (-44.3 percent)

Toyota paragraph down.jpgToyota’s Not-So-Excellent January Adventure

Everyone knows the bad news for Toyota. The good news: it probably could have been worse.

Thanks, perhaps, to how late in the month the company’s recall of eight high-volume models came, Toyota’s January sales decline of 15.8 percent seems practically tolerable. Still, it was the company’s single worst sales month in 11 years.

Robert Carter, Toyota Motor Sales USA Inc.’s group vice president and general manager, Toyota division, said the final tally of 98,796 sales was about “23 percent below our internal target.”

Since he also added that sales of the other 11 Toyota-badged model lines not affected by the recall tracked roughly as the company projected, almost all of the decline from last January’s 117,287 sales total seemingly can be attributed to customers turning away from the Camry, Corolla, RAV4, Tundra, Matrix, Avalon, Highlander and Sequoia.

2009 Toyota RAV4 - 200.JPGThe recall didn’t stop the RAV4 from posting a 6.4-percent increase for the month, but it was the only recalled model to break for positive ground. The Camry, 2009′s best-selling model, dropped 17.7 percent, the Corolla, along with RAV4 also in the U.S.’s top-10 best-selling models, declined 3.6 percent; the Matrix, based on the Corolla, already is out of production. Avalon plunged 51.7 percent to a mere 944 sales.

Of the recalled truck models, the usually consistent Highlander slid 15.7 percent in January, Sequoia dove 56.2 percent and the Tundra was off 40.2 percent.

Other trouble spots included the Scion unit, with each of the brand’s three models dropping by double digits, and the small-car swoon was augmented by a 10.3-percent decline for the Yaris.

Toyota’s bright spot for the month was the Lexus premium division: sales were up 14.2 percent, bucking a lengthy slide for the luxury unit. The improvement was fueled by the addition of the HS hybrid, which contributed an incremental 1,247 units to the Lexus’ 15,517 January sales. The ES midsize sedan (+6.6 percent) and the LS flagship’s 30.9-percent turnaround performance made the two the only Lexus passenger cars to post a gain, however.

On the truck side, Lexus’ GX stepped out with an enormous 163.8-percent increase, countered by a 5.5-percent drop from the always-strong RX crossover.

It all added to a market share of 14.1 percent, according to analysts at Edmunds.com, Toyota’s lowest share inat least four years.

Carter insisted that, for now, Toyota’s not concerned with the sales charts. Fixing the 2.3 million recalled vehicles is the company’s first and only concern at the moment, he said.

First, Toyota’s taking care of the customers who own the affected vehicles, “then we’ll get back in the sales business,” Carter said. “We have the best dealers in the country, and they’re going to prove it,” by doing the best job possible to attend to the recall, he added.

Honda paragraph down.jpgHonda Hangs In

Regardless of economic conditions, Honda Motor Co. Ltd. rarely has had to struggle to connect with customers, but the market seems to be insistent on making Honda work harder to monetize its historically enviable brand image.

January was another month that left Honda essentially treading water. Not that many automakers wouldn’t happily take Honda’s 67,479 sales, but the total left Honda down 5 percent compared with last January. And with a few exceptions, performance from individual models was underwhelming.

Sure, the Accord broke out to a fine 35.6-percent gain that amounted to 20,759 units sold. The Civic held its ground with a 12.1-percent improvement, too.

2009 Honda Fit - 225.JPGBut Honda has to be wondering what’s going on with the once-hot Fit subcompact, sales of which have waned in recent months and dipped a fearsome 38.4 percent in January. The month is not known as one of the industry’s strongest, but even in that context, the Fit’s decline must be causing furrowed brows from Ohio to California to Tokyo.

The same can be inferred for the Insight hybrid; in January Honda moved just 1,307 of a vehicle initially projected to easily sell in the 7,500-per-month range. Unless gasoline prices balloon again sometime this year, the unloved Insight may have trouble hitting a quarter of the sales volume Honda envisioned.

The truck side of the business did not begin the year auspiciously, either. Every Honda-brand light truck was down for the month, led by the 33.4-percent slide for the Ridgeline, to a barely-breathing 738 units. The hoary Element trailed Ridgeline by two sales in January, a 30.8-percent slide. And even the dependable CR-V dropped a meddlesome 20.3 percent, while the blocky Pilot dropped 21.1 percent to sales of 4,865.

At the Acura upscale division, each of the brand’s three cars declined in January, led by the RL’s drop of 42.7 percent to an infinitesimal 110 units. Worryingly, perhaps, the midsize TL’s 1,986 sales outpaced Acura’s usual best-seller, the entry-level TSX, with just 1,806 sold in January, a drop of 18.7 percent compared with last year.

Acura’s MDX crossover was January’s saving grace, pushing to a 20.3-percent gain, while the RDX also had one of its better recent months, declining just 5.3 percent. Meanwhile, the all-new ZDX cross-whatever’s contribution of 172 sales can’t have too many Honda executives wondering what they’ll do with all the bonus money tied to Acura volume increases.

Nissan paragraph up.jpgNissan: Nose to the Grindstone

Nissan posted a 16-percent increase in sales in January, to 62,572 units compared with 53,884 units a year earlier. The results continued recent monthly gains for Nissan and moved the company at least temporarily into sixth place in overall U.S. auto sales, ahead of fast-dropping Chrysler Nissan Versa - 210.JPG.

At the same time, Nissan’s spending on incentives in January rose by an average of 14 percent per vehicle, according to Edmunds.com’s proprietary True Cost of Incentives formula. It rose about $200 to $2,455 from December 2009 to January, meaning that the company was still trying hard to “buy” sales in an overall January market that saw incentive spending ease.

“Nissan had a true sales increase,” noted Edmunds.com’s Caldwell, “but they had high incentive spending.”

The company’s gains were led by a 19-percent increase in sales of its Nissan brand. Sales of the Versa subcompact, for example, rose by 18 percent compared with a year earlier, to 5,914 units – setting a record for the month of January.

Other Nissan vehicles recording double-digit sales increases in January compared with a year ago were Armada, Maxima, Sentra, Altima and Frontier.

The Infiniti luxury marque struggled, however, with overall sales for January down by about 6 percent compared with a year ago in a U.S. luxury market that remains depressed. Sales of Infiniti’s M, EX and FX models plunged by high double-digit percentages compared with a year earlier.

Chrysler paragraph down.jpgChrysler: Searching for a Platform

Chrysler is going to advertise its poor-selling Dodge Charger during the Super Bowl telecast on Sunday, the first time in several years that any of the company’s products or brands have made an appearance. But the modest buzz around Chrysler’s re-entry into the Big Game is about the only thing the company is doing these days that could be construed as good news.

January sales brought more dismal results. Chrysler Group reported total U.S. sales for the month of 57,143 units, a decline of 8 percent compared with a year earlier. For a month in which other major competitors posted sales increases, Chrysler’s poor showing plunged it to sixth place overall among the U.S. auto market’s Big Seven – now, behind Nissan and ahead of only Hyundai.

2009 Dodge Journey - 210.JPG What’s more, Chrysler only tread water with the help of a big boost in fleet sales in January. “Chrysler is not getting a lot of retail interest in its vehicles right now, period,” said Edmunds.com’s Caldwell. “So until they get their new products out, or something to talk about, we can’t expect to see any positive results coming out of Chrysler – even with heavy incentives on their vehicles.”

The best highlight that Chrysler was able to muster was that its Dodge Journey crossover posted year-over-year sales gains in January for the third consecutive month. Also, the Jeep brand saw half of its lineup improve sales year-over-year, Chrysler said. And the Town & Country minivan saw sales jump by 6 percent while its Dodge Caravan counterpart saw sales rise 34 percent.

Meanwhile, sales of Chrysler’s once-stalwart 300 sedan plunged by 26 percent from a weak January 2009, and sales of its Charger and Dodge Challenger muscle cars declined by 47 percent and 39 percent, respectively.

“The company continues to make positive strides each month and that trend continued in January,” said Fred Diaz, president and chief executive officer of the Ram brand and lead executive for Chrysler’s overall sales organization. Diaz also pointed to Chrysler’s plans for “refreshed products and all-new models hitting the marketplace this year.”

Obviously, for Chrysler, they can’t come fast enough.

Hyundai paragraph up.jpgHyundai: Bolts For The Front

With January sales of 52,626, the Hyundai Group (the Hyundai and Kia brands combined) is putting together a run that soon may take it past sputtering Chrysler Group LLC and bring it within sight of Nissan Motor Co. Ltd.

Chrysler – the nation’s No. 6 seller – sold less than 5,000 units more than Hyundai in January. Nissan, despite its own 16.1-percent sales increase, sold less than 10,000 units more than Hyundai last month. Hyundai, with a string of new models in the pipeline, could give both traditionally larger rivals a genuine run this year.

2011 Kia Sorento - 300.JPGAfter all, Hyundai has rarely been shy about incentives, but in January, its incentive levels, measured by Emdunds.com’s True Cost of Incentives index, averaged $2,096 per vehicle -  almost $1,000 less than Chrysler’s ($3,061) and even markedly less than Nissan’s $2,455.

Hyundai’s potential surge is highlighted by the solid January breakout of the all-new 2010 Tucson, which bolted to 2,216 sales in an early-launch month. The number was a 128-percent increase over the old Tucson’s sales last January, Hyundai said.

Meanwhile, the Elantra compact car more than doubled sales, from 3,307 last January to 7,690 this year. The Accent subcompact also gained by a healthy 62 percent. The Genesis flagship improved by 58 percent. On the passenger-car side, only the building-out, current-generation Sonata lost ground, losing 62 percent.

Hyundai’s Santa Fe crossover gained by 43 percent, although the fullsize Veracruz dropped 66 percent to a paltry 401 sales.

In all, Hyundai sold 30,503 vehicles in January, while Kia kicked in with 22,123 sales.
Kia was led by a blistering performance from the new ’11 Sorento crossover, which found 7,398 buyers in January, more than Toyota’s Highlander (4,478), double Nissan’s Murano (3,648), and more than Ford’s Edge (6,243).

Incremental gains for Kia in January’s flat performance include 3,732 sales of the compact Forte and 2,145 units of the Soul hatchback.

VW/Audi: Running a Strong, But Distant No. 8

As the Big 7 automakers jockey for position, Volkswagen-Audi ranks as the No. 8 manufacturer selling vehicles in the U.S., albeit a distant No. 8. Combined, the brands sold 24,529 vehicles in January, up 40 percent from 17,466 in January a year ago. That gives them 3.5 percent market share.

Volkswagen contributed the bulk of those sales: 18,019 vehicles for a 41-percent increase. January 2010 marked Volkswagen’s seventh consecutive sales month of growth.

“We are pleased by the strong start to 2010,” said Mark Barnes, Volkswagen of America chief operating officer. “It’s encouraging to see so many of Volkswagen’s newest models continuing to gain momentum in the marketplace — namely the CC, Tiguan, Golf and GTI.”

Of Volkswagen’s total, Jetta stood as the sales leader with 8,893 vehicles sold. CC sales soared 76 percent to 1,891 units. Tiguan sales skyrocketed 87 percent to 1,424 vehicles. The Routan minivan, made by Chrysler, had a 6 percent increase. Even the old New Beetle had a shopping 173 percent increase in sales that totaled 2,167 vehicles. The new Golf and GTI are just hitting the market. Passat sales, however dropped by a third. Volkswagen sold 2,447 diesels in the month.

2010 Audi A3 - 250.JPGAudi sold 6,510 vehicles for a 38-percent increase over a year ago, giving the Germany luxury brand added momentum after a strong December.

“Having ended 2009 on such a high note, it was important to ensure that our success was substantive and enduring,” said Audi of America President Johan de Nysschen. “January sales figures reinforce the notion that our momentum is the byproduct of relentless innovation years in the making.”

Audi A3 sales jumped 106 percent, largely due to the availability of the A3 TDI clean diesel model. Audi had a strong month for diesels: half of A3 sales were diesels, 48 percent of Q7 sales were TDI. Audi said that level of demand far exceeds original expectations for TDI sales when Audi introduced the two models last year.

Sales of the Audi A4 sedan, the brand’s bestseller, rose 60 percent. Other A4 variants rose 34 percent. Audi A5 sales were up 74 percent to 1,051 vehicles; Q5 sales rose from last year’s 31, when it was just introduced, to 1,050 vehicles.

Audi still has its laggards. It sold a scant 52 units of the soon-to-be-replaced A8 for a 45-percent drop, only 43 R8s for a 60-percent decline, and 103 TTs for a 34-percent drop. A6 sales declined 35 percent to 507 units.

Mazda Holds Its Ground

Mazda North American Operations posted an essentially flat January, with sales up 1.8 percent to 15,694 vehicles. Mazda held 2.2 percent market share

The brand’s Mazda3 compact car was the volume seller at 7,368 units, but the number represented a 3.7-percent drop compared with January 2009.

Mazda’s top gainer in January was the CX-7 crossover, which increased 39.3 percent to 1,622 sales. The Mazda5 mini-minivan rose 21.4 percent and the Mazda6 sedan rounded out the brand’s improving sellers with a 14-percent gain.

Sales dropped a heavy 41 percent for the RX-8 sportscar to a demoralizing 92 total units, while winter was slightly kinder to the evergreen MX-5 roadster, which declined 15 percent. The Tribute compact crossover slid 42.1 percent and the fullsize CX-9 crossover dropped 12.8 percent.

Subaru: Records Shattered – Again

2010 Subaru Outback - 250.JPGAfter a gravity-defying performance in 2009, Subaru continued to shatter its own records and sped past other makes by reporting a 28-percent sales increase over January 2009. Subaru sold 15,611 vehicles in January 2010, compared with 12,194 units sold in January 2009. That pushed Subaru’s market share to 2.2 percent, up from last January’s 1.9 percent.

January’s surge also allowed Subaru to clinch the No. 9 sales spot in the U.S., speeding past Daimler brands’ Mercedes and smart as well as BMW and Mini combined. In 2009, Subaru handily whipped Mercedes-Benz in sales but the BMW brand still sold more vehicles than Subaru. In 2010, Subaru outpaced both BMW Group and Daimler.

Leading the charge were Subaru’s newly redesigned Outback and Legacy, which posted their best January sales ever. At 5,467 sold in January, the Outbacked doubled sales from 2009. Likewise, Subaru sold 2,448 Legacy models, also double what it sold a year ago.

Forester sales retreated slightly – 4 percent – from its 2009 blistering pace. Impreza sales were off 15 percent; Tribeca sales fell 38 percent to a mere 256 units sold.

Daimler: Mercedes Gets No Help from Smart

Daimler AG eked out a narrow lead over rival BMW with Mercedes-Benz and smart sales totaling 15,436 vehicles, a 26-percent climb from a year ago that gave the company 2.2 percent of the U.S. market.

But smart was no help. The relative newcomer to the U.S. sold a scant 278 fortwo vehicles in January, an 84-percent plummet from the 1,776 sold in the year-ago January.

In contrast, Mercedes-Benz saw sales soar 45 percent to 15,158 vehicles. The C-Class returned as Mercedes’ volume seller – 4,028 sold for a 33 percent rise from a year ago. The new E-Class wasn’t far behind, knocking in 3,824 units for a 166-percent hike.

Also posting beefy double-digit increases were: S-Class; SL-Class; M-Class; G-Class; GL-Class; and GLK-Class. And Mercedes sold 436 Sprinter cargo vans, which previously was sold by Dodge but is no longer due to the split of Daimler and Chrysler.

Posting equally hefty double-digit declines were the CL-Class, CLK-Class, SLK-Class, CLS-Class and R-Class.

BMW Group: BMW, Mini Off to Good Start

The BMW Group, including the BMW and Mini brands, sold 15,410 vehicles in January, a nearly 8-percent increase from a year ago. That gave the BMW group a 2.2 percent market share.

In contrast to Daimler’s smart, Mini, which had its own struggles in 2009, came out of the doldrums, posting sales of 2,247 vehicles, up 8 percent from a year ago.

BMW sales rose nearly 8 percent to 13,163 vehicles. BMW car sales rose 15 percent. The new 7-Series chipped in 1,300 sales. Still, car sales were offset by 12-percent decline in SUV sales.

“Traffic in our showrooms was a bit sporadic this month, but combined with a strong December we are delighted to see a positive January gain,” said President of BMW North America Jim O’Donnell.

Mitsubishi Slides

Mitsubishi sold 4,170 vehicles in January, a slight decrease fro last year’s 4,730 vehicles. It’s market stood at 0.6 percent.

Mitsubishi said Galant sales rose 22 percent from a year ago, Endeavor sales were up 128 percent from then and Outlander sales were about even with a year ago.

Jaguar/Land Rover Sales Dip

Jaguar Land Rover North America was one of the few manufacturers to report lower sales this January than last. The company sold 2,589 vehicles, down 3 percent last January. The brands combined hold 0.4 percent market share.

The drop was caused by lower Jaguar sales. The automaker sold only 631 Jaguars, down 19 percent from 781 sold in January 2009. The Jaguar XK bucked the marque’s trend with sales up 41 percent to 138 units. Still the XF and XJ, which is being wound down, dropped.

Land Rover sold 1,958 vehicles, up 4 percent from a year ago. Ranger Rover Sport, for the second consecutive month, had a sales increase – 46 percent to 823 units. LR4 sales were up 12 percent. Range Rover and LR2 sales were down double digits.

Suzuki Plunges 44 Percent

Despite gains of 5 percent for the Grand Vitara crossover, 12 percent for the SX4 lineup and even a 97-percent jump for the Equator pickup, American Suzuki Motor Corp.’s total sales still dropped 44 percent compared with last January. Suzuki sold a total of 2,040 units last month for a 0.3 percent market share.

The tiny brand couldn’t overcome the 978 sales lost from the discontinuation of the Forenza/Reno line or the 1,000 units-plus gone with the XL-7 crossover.

Those losses could not be made up by the meager 197 sales for the all-new, recently launched Kizashi sedan, a performance that cannot be encouraging for Suzuki or its enthusiasts. The Kizashi went on sale in early December last year and sold 71 units in its first month on the market, so January’s 197 sales did represent a 270-percent month-over-month gain.

Panamera Sales Move Porsche Forward

After a rough 2009, Porsche sales edged higher in January compared with a year ago.
The sports car maker sold 1,768 vehicles in the U.S. for an 8-percent increase and a 0.3 percent market share.

The rise came on the strength of the new Panamera. Porsche sold 534 of them. Sales of the rest of Porsche’s models were down significantly.

“In this environment, we are very pleased with the sales performance of our new Panamera, which continues to build up market share,” said Detlev von Platen, Porsche Cars North America’s president and CEO. “Even though we see a small ray of sunshine in consumer confidence, the luxury car segment remains challenging, especially for sports cars.”

Toyota U.S. sales fall 16% in Jan.; Ford, GM, Nissan UP

JANUARY U.S. AUTO SALES
Toyota sales fall 16% in Jan.; Ford, GM, Nissan rise

Toyota Motor Sales U.S.A. Inc., hobbled by suspended sales on eight recalled models, suffered a 16 percent drop in January demand while most competitors rose from depressed levels of a year ago.
U.S. sales at Toyota Division, which markets each of the recalled models, fell 19 percent. The Lexus luxury division, which wasn’t targeted in the Jan. 21 recall, gained 5 percent.
Sales at Ford Motor Co. jumped 25 percent — the company’s fourth straight monthly increase. General Motors Co. was up 14 percent, while Chrysler Group, the other survivor of a 2009 bankruptcy, fell 11 percent. In unit sales, Chrysler fell behind Nissan North America, which advanced 16 percent. American Honda slipped 5 percent.
Subaru, the only brand with U.S. sales gains in each of the past two years, began 2010 with a 28 percent sales jump.
Shinichi Sasaki, Toyota’s vice president in charge of quality, said today in Japan that the automaker’s sales probably will take a hit. On Jan. 26, Toyota halted U.S. sales of eight models following a recall of 2.3 million vehicles tied to faulty accelerator pedals.

CLOSED DEALER APPEALS IN CENTRAL FLA.; HOLLER’S IN, JIMMIE VICKERS OUT, SONIC TAKES THE CASH

Last summer, 789 Chrysler and about 2,000 General Motors dealers received letters from the manufacturers saying that their services were no longer required. Both were In bankruptcy and consequently allowed to make decisive moves that might be prohibited by law otherwise. So they trimmed what they considered to be “underperforming dealers” from the rolls.

GM, at least, gave dealers until their current franchise agreements ran out, which for the vast majority is in October, to shut down. And it had an informal appeal process that allowed a few dealers to successfully plead their cases to stay open. Chrysler was much more brutal, giving the 789 terminated dealers less than a month to shut down.

In Central Florida, eight Chrysler dealers — which sold Chrysler, Jeep, Dodge or some combination — got the ax. General Motors has never released a list of terminated dealers, but the best guess is that about 15 statewide got “Dear Dealer” letters, and that does not include brands that GM is closing or selling: Saab, Hummer, Pontiac and Saturn.

That was that, until last month, when President Obama signed a bill that will allow terminated dealers a chance to plead their cases before a neutral arbitrator. The American Arbitration Association is compiling a list of arbitrators — most of them judges or attorneys with a financial background — and dealers who filed for arbitration before the deadline a week ago will have their cases heard, and decided, by the middle of June. More than 1,500 dealers paid the estimated $2,000 in filing expenses, well more than half of the terminated dealers.

In Central Florida, some dealers will fight the closing. Holler Chevrolet and Classic Chevrolet, both controlled by the Holler family, will appeal. “Our roots go deep into the Chevrolet brand, and we feel a strong sense of commitment to our Chevrolet customers. That’s why we are participating in this process,” said dealer counsel Frank Hamner. Holler has been selling GM products in Orlando since 1938.

But some dealers will not fight. “We didn’t file,” said Buddy Vickers, whose Jimmie Vickers Jeep dealership in Merritt Island lost its Jeep franchise after 38 years when Chrysler awarded it to a Dodge-Chrysler dealership a mile up the road. “The cards are stacked against a small dealer,” Vickers said, “and I don’t think we’d stand much of a chance, particularly given what it could cost.”

Vickers remains in business selling Suzukis, and performing service on Jeeps. “It still hurts,” Vickers said. “I especially feel bad for my father, who started this store nearly 40 years ago. It isn’t right, but it is what it is.”

Other dealers have already closed after being paid some negotiable termination fee by the manufacturer to essentially go away. That was the case with Massey Cadillac in Sanford, which is owned by Charlotte, N.C. -based Sonic Automotive, controlled by motorsports magnate Bruton Smith. “We lost some dealers, but we aren’t appealing any of them,” Smith said. “We just took the money and closed them up.”

Sonic still has 11 dealers in Florida.

So even if a dealer arbitrates, what are the chances of succeeding?

It depends on a lot of things, said attorney Alex Kurkin of Kurkin Forehand Brandes, a law firm in Miami. Kurkin is handling 10 arbitration cases, including some for Central Florida dealers. Kurkin said he must prove the dealership was terminated without proper cause. Three outcomes are possible: The dealership can be terminated, it can be reinstated or the manufacturer can negotiate some financial settlement to close the case.

The arbitrator will be agreed upon by both sides, and if they can’t agree, one will be appointed, Kurkin said.

“We have so much work to do between now and the June deadline,” Kurkin said. “Normally we have months to prepare a case. With this, we have weeks.”

And, unless one side can prove “gross” misconduct during the arbitration process, the decision is binding.

Kurkin could probably have more than 10 cases if he wanted, “but that’s all I want to handle right now. This is an incredibly complex, time-dependent procedure.” Total costs for a dealer? As much as $80,000, Kurkin estimated. That is especially hard on Chrysler dealers, who have not been in business since last June.

In Florida, if you have been out of business for a year, you have to re-file with the state as a brand-new business. All 789 Chrysler dealers lost their franchises last June. “That’s why this June deadline for completing arbitration is so critical for Chrysler dealers,” Kurkin said.

And one aspect of the process that makes it even tougher for Chrysler dealers, such as Jimmie Vickers Jeep. Even if the arbitrator decides in the dealer’s favor, and Chrysler must return the franchise to the dealer, there is no provision that requires Chrysler to take the franchise away from a dealer that it was awarded to last year. So even if Vickers arbitrated and prevailed, the Dodge-Chrysler dealer a mile up the road could still have its new Jeep franchise. That would then have to be resolved under state franchise laws.

It’s a mess, but at least it’s a second chance for wronged dealers to plead their cases. Chrysler and GM acted arbitrarily in many of their closings, with no concern for loyal dealers, even less concern for loyal customers. This could get interesting.