AUTO INDUSTRY

Gas Costs Soar

Fri, 02 May 2008 16:47:35 GMT

As Gas Costs Soar, Buyers Are Flocking to Small Cars

By BILL VLASIC

May 2, 2008 - NY Times

The following article was also posted online at www.leasetrader.com.

DETROIT — Soaring gas prices have turned the steady migration by Americans to smaller cars into a stampede.

In what industry analysts are calling a first, about one in five vehicles sold in the United States was a compact or subcompact car during April, based on monthly sales data released Thursday. Almost a decade ago, when sport utility vehicles were at their peak of popularity, only one in every eight vehicles sold was a small car.

The switch to smaller, more fuel-efficient vehicles has been building in recent years, but has accelerated recently with the advent of $3.50-a-gallon gas. At the same time, sales of pickup trucks and large sport utility vehicles have dropped sharply.

In another first, fuel-sipping four-cylinder engines surpassed six-cylinder models in popularity in April.

“It’s easily the most dramatic segment shift I have witnessed in the market in my 31 years here,” said George Pipas, chief sales analyst for the Ford Motor Company.

The trend toward smaller and lighter vehicles with better mileage is a blow to Detroit automakers, which offer fewer such models than Asian carmakers like Toyota and Honda. Moreover, the decline of S.U.V.’s and pickups has curtailed the biggest source of profits for General Motors, Ford and Chrysler.

Once considered an unattractive and cheap alternative to large cars and S.U.V.’s, compacts have become the new star of the showroom at a time when overall industry sales are falling.

Sales of Toyota’s subcompact Yaris increased 46 percent, and Honda’s tiny Fit had a record month. Ford’s compact Focus model jumped 32 percent in April from a year earlier. All those models are rated at more than 30 miles per gallon for highway driving.

Dave Strom of South Boston, Va., recently bought a tiny Smart ForTwo Passion Coupe, made by Daimler, the German automaker.

Mr. Strom also owns a pickup truck, which he uses mainly to haul his boat. When he runs errands, he drives his Smart, which he says is getting 45 miles a gallon.

“I had to smile the other day when I filled my tank for $18 and the guy next to me had a Ford Explorer and the pump was clicking past $80,” said Mr. Strom, a 66-year-old retired manager of a Chevrolet dealership.

Previous spikes in sales of smaller cars were often a result of consumers trading down during tough economic conditions or gas-price increases. When the economy improved or fuel prices dropped again — as they did after the oil-price shocks in the 1970s eased — buyers invariably went back to bigger vehicles.

But with oil prices expected to remain high for years, auto industry executives are seeing a turning point.

“The era of the truck-based large S.U.V.’s is over,” said Michael Jackson, chief executive of AutoNation, the nation’s largest auto retailer.

Sales of traditional S.U.V.’s are down more than 25 percent this year. In April, for example, sales of G.M.’s Chevrolet Tahoe fell 35 percent.

Full-size pickup sales have fallen more than 15 percent this year, with Ford’s industry-leading F-Series pickup dropping 27 percent in April alone. Sales of pickups, though, are expected to strengthen with the economy, because of their use as commercial vehicles.

The rise in sales of more fuel-efficient vehicles occurred during one of the industry’s worst months in more than a decade. For the month, G.M. sales dropped 23 percent and Ford slid 19 percent, while Toyota fell by 5 percent. The figures were adjusted for the fact that this April had two more selling days than a year ago.

Another bright spot in the numbers were sales of so-called small crossovers — which look like little S.U.V.’s and are based on car underpinnings.

Like small cars, they also accounted for about 20 percent of the total industry sales for the month, according to the research firm J. D. Power & Associates.

The analysis by J. D. Power also showed that 42 percent of all vehicles sold in April were equipped with four-cylinder engines, compared with 38 percent for six-cylinder engines.

How the downsizing of America’s vehicle fleet will affect fuel consumption is still largely unknown. When gas prices rise, as they are now, many drivers simply drive less to save money.

But there are some indications that the trend toward smaller vehicles will reduce the nation’s fuel use. In California, motorists bought 4 percent less gasoline in January than they did the year before, a drop of more than 58 million gallons, according to the Oil Price Information Service.

“That is an incredible year-over-year drop,” said Tom Kloza, the organization’s chief oil analyst. “Some of it clearly has to do with changes in the vehicle fleet.”

Small cars have traditionally been favorites of young, first-time buyers attracted by their low prices. But sales have been creeping up since 2005, particularly among older baby-boomers whose children have grown.

Crossover vehicles have also drawn in empty-nesters who have less need for a large car, S.U.V. or minivan.

“The first of the baby boomers turned 62 this year, and they’ve started downsizing,” Mr. Pipas of Ford said.

The latest crop of small cars and crossovers also feature the creature comforts and safety features once found only in more expensive models.

Factor in the economic benefits of fuel-efficient engines, and small cars have not only become practical, but trendy as well.

“This shift appears to be a permanent situation,” said Jesse Toprak, chief industry analyst for the auto information Web site Edmunds.com. “These new products have become more fashionable, just like small, fuel-efficient cars are in Europe.”

The low prices on small cars are also luring consumers who are tightening their belts in an economic downturn.

“We wanted to have good fuel economy, but we were equally concerned about the price of the car,” said John Shelby of Phoenix, who recently purchased a Honda Fit for $15,600.

Smaller vehicles, though, mean smaller profit margins for automakers. The drop in pickup sales, because of the slowdown in the housing and construction industries, has been particularly painful for Detroit’s Big Three.

“It’s just a difficult truck market for everybody, ourselves included,” said Mark LaNeve, G.M.’s head of North American sales. “By and large, people are just staying out of that market.”

Automakers ignore the move to smaller vehicles at their own peril. G.M., for example, is playing catch-up by introducing a dozen new cars and crossovers in the next few model years.

With federal fuel-economy regulations increasing to 31.6 miles per gallon by 2015, car companies have another incentive to speed development of smaller vehicles.

“If you look at where the automakers are putting their resources into now, just about everything is going into small cars,” said Tom Libby, senior market analyst for J. D. Power.

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This story posted by LeaseTrader.com, the automotive service company that lets people transfer out of their Car Leases early. If you're looking to swap a lease or transfer out of your car lease, please visit www.leasetrader.com.

European Auto Sales Decline

Tue, 15 Apr 2008 18:46:42 GMT

European Auto Sales Decline

By CHRISTOPH RAUWALD and HILDE ARENDS
April 16, 2008 - The Wall Street Journal

The following story was also posted online at www.leasetrader.com.

Uncertainty in the global economy helped put a dent in car sales in Europe last month.

New passenger-car registrations on the continent were down 9.5% to 1.65 million vehicles from a year earlier, the European Automobile Manufacturers' Association, or ACEA, said Tuesday. The figures took a hit from two fewer business days in March this year than last year because of the early Easter holiday.

"In a context of economic uncertainty generated by the U.S. financial crisis, car sales in Western Europe were affected most," Brussels-based ACEA said in its monthly report. Registrations among new European Union member countries, in Central and Eastern Europe, rose 3.5% in March.

Fitch Ratings said Tuesday that auto makers in general are in better financial health than they were during the 1990s, but the downturn in the U.S. market is "an opportune reminder of the auto industry's cyclicality."

Fitch doesn't expect a broad downward revision of car makers' ratings, but it said it will continue to monitor structural issues. Analysts expect the market for new cars in Europe to be flat in 2008, but that will depend on Germany, Europe's biggest car market.

Germany last month saw a drop in new-car registrations of 14% from a year earlier, although the German market showed a recovery in the first quarter, with registrations rising 2.6% in the three months after a weak 2007.

In Western Europe, only the United Kingdom and Portugal saw new-car registrations rise last month -- by 0.5% and 5.2%, respectively. The French market slipped 0.5% in March, while demand in Spain declined 28% due to the scrapping of green incentives, and Italy registered 19% fewer new cars.

"Weak consumer confidence, which stood at its lowest in four years, the pre-elections climate and the overall economic setting contributed to the fall in Italy," the ACEA said.

Bucking the overall downward trend, German premium-car maker BMW AG was the only major European car maker to post a rise in registrations for March. Its registrations were up 2.3%, helped by sales of its Mini brand. Registrations of new Minis jumped 21%.

Europe's biggest auto maker by sales, Volkswagen AG, saw registrations drop 12.5% in March, partly due to a 13% fall in sales of its core VW brand. German premium-auto maker Daimler AG posted only a 1.4% fall, benefiting from rising demand for its small Smart brand.

Italy's biggest auto maker, Fiat SpA, saw registrations fall 12% in March. France's PSA Peugeot Citroën SA posted a 14% decline for March, while rival Renault SA saw new registrations fall 5.5%, though the decline was curbed by a 0.3% rise at its Romanian low-cost Dacia unit.

Detroit auto makers General Motors Corp. and Ford Motor Co. both reported lower registrations for March. GM posted a 12% fall and Ford had an 11% decline. New-car registrations for Japan's Toyota Motor Corp. were down 17%.

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Auto Sales Stay Strong In Canada

Wed, 09 Apr 2008 17:38:26 GMT

Auto sales motor along in Canada, stall in U.S.

GREG KEENAN

AUTO INDUSTRY REPORTER

Toronto Globe & Mail

April 9, 2008

The following story was also posted online at www.leasetrader.com.

Auto sales in the United States and Canada are moving in starkly different directions, according to forecasts issued in each country yesterday.

Standard & Poor's Corp. issued a gloomy forecast for the U.S. market, saying high gasoline prices and the housing crisis will push sales down to 14.9 million vehicles this year, which would be their lowest level since 1997.

In Canada, however, strong job creation - particularly in Western Canada - and strong sales nationally in January and February prompted DesRosiers Automotive Consultants Inc. to upgrade its forecast for Canadian deliveries in 2008.

Sales should hit 1.645 million vehicles in Canada this year, up from a previous forecast of 1.603 million issued in November and down slightly from the 1.653 million last year, Dennis DesRosiers, president of the consulting firm, said in a note to clients yesterday.

"Canada is actually creating a fair number of jobs this year (the U.S. is shedding jobs) and in Canada if you have a job you need a vehicle, simple as that," Mr. DesRosiers said.

In what he called a strange twist, the U.S. slump could give a boost to auto makers in Canada. Because the Canadian market is about 10 per cent of the size of the U.S. market, auto makers normally allocate a much greater percentage of their hot-selling vehicles to U.S. dealers.

"With the U.S. market in a full-scale decline across most segments, many of the best sellers are being freed up to be sold in Canada instead of the U.S.," he said. "Great availability helps the market in Canada."

Price cuts have also helped, he added. Transaction prices have fallen by about 5 per cent so far this year as auto makers have reacted to the rise in the value of the Canadian dollar and widespread publicity last fall about lower prices for new vehicles in the United States.

The negative S&P outlook is based on oil prices at $110 (U.S.) a barrel and a frozen lending market, the ratings agency's chief economist David Wyss said in a report issued yesterday.

Mr. Wyss noted that vehicle sales were 16.1 million in the United States last year, down from 16.5 million in 2006, and the stimulus of the U.S. tax rebate is probably too small to provide a boost to the market this year.

High gasoline prices have another impact, S&P noted, by sending buyers into smaller vehicles that generate smaller profits for Chrysler LLC, Ford Motor Co. and General Motors Corp.

The fragile economic picture threatens the recovery being undertaken by the Detroit Three as they adjust to years of market share losses.

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Tougher Finding Auto Loans

Wed, 02 Apr 2008 13:55:51 GMT

Lenders Ease Throttle on Car Loans

By ELEANOR LAISE

The Wall Street Journal

The credit crunch, having knocked around the American home, is now rolling into the garage.

Even as the Federal Reserve slashes interest rates, it's getting tough for many consumers to find attractive terms on auto loans. Many lenders are making fewer loans and instituting stricter standards on loans they do approve, often requiring higher credit scores, making smaller loans and demanding bigger down payments. GMAC Financial Services tightened lending standards three times last year, and firms like AmeriCredit Corp. and Sovereign Bancorp Inc. have recently raised the minimum credit score required for borrowers to avoid an automatic rejection of their car-loan application.

Where you live can make a difference. Some lenders are applying especially tough standards for borrowers in states hard-hit by the housing crisis, such as California and Nevada.

While "subprime" borrowers with poor credit will bear the brunt of the shifting lending standards, even "prime" borrowers with good credit may be affected by some changes. And some consumers may not be able to get a car loan at all. This year through March 20, about 90 percent of auto-loan applications from prime borrowers were approved, down from 92.5 percent for the same period last year, according to CNW Research, which tracks consumer spending. Among subprime applications, 57 percent have been approved this year, down from 68 percent early last year. Loan applications for all types of borrowers are also being sent to a greater number of financial institutions before being approved, according to CNW.

When Michael Staggs, 36 years old, of Spring Hill, Fla., set out to buy a 2006 Dodge Dakota truck last month, he was looking for an auto loan with an interest rate below 10 percent and monthly payments between $250 and $300. But Mr. Staggs, an engineer for a telecom company who says his credit isn't bad, but not great, didn't get the terms he was banking on. He put down $1,500, and his $14,000, 72-month loan came with $298 monthly payments and a 13.5 percent rate. "That's a lot higher than I wanted," he says.

Borrowers hoping to get attractive terms on a car loan should do some spadework before heading to a dealership. First, get a copy of your credit report and have any errors corrected. Then, shop around local banks, credit unions and online for pre-approval on an auto loan. Having secured the best rate you can find, head to the car lot and ask the dealer to beat that rate. "You want an offer in your back pocket because that gives you maximum flexibility when you're weighing dealer offers," says Greg McBride, senior financial analyst at Bankrate.com.

Lenders are tightening standards as more cash-strapped consumers become delinquent on their auto loans. Delinquencies hit a 10-year high in January, according to Fitch Ratings, though they declined slightly in February. Also, many auto loans are bundled into securities to be sold, but the credit turmoil has caused investors to lose their appetite for these securities. That leaves lenders with less money to lend.

The changes come at a time when many consumers have fewer options for financing a car purchase. Many people with good credit in recent years have financed a car purchase by tapping their home equity, but that source of cash is also drying up as home values drop.

In addition, a growing number of consumers are "upside down" on their current auto loan, meaning they owe more on the loan than the vehicle is worth. Among people who traded in a vehicle in February, 27 percent were upside down on their loan, up from 24 percent in October according to Edmunds.com, an automotive Web site. On average, they owed nearly $4,400 more than their car's value, a record high.

Not all borrowers will see tougher terms. In some cases, lenders are "being more generous and creative for prime consumers because they want to attract (them)," says Jesse Toprak, executive director, industry analysis at Edmunds.com. The average rate on a prime five-year new car loan is now 7.2 percent, according to Bankrate.com, down from 7.7 percent before the Fed started cutting rates in September.

But some borrowers may find they can't get as large a loan as they'd like. Whereas lenders in recent years have made loans substantially exceeding the car's worth - a common practice in the era of easy credit - some are now keeping loan amounts closer to the vehicle's value.

AmeriCredit last year reduced this "loan-to-value" ratio that it allows for subprime loans. Jon Garcia, finance manager at a Toyota dealership in Janesville, Wis., says he's seeing subprime lenders supply only 85 percent to 90 percent of the car's book value, down from as much as 140 percent previously. The changes are preventing customers from buying the cars they want and have cut the dealership's sales to customers with blemished credit by about 10 percent, relative to last year, Mr. Garcia says.

Indeed, terms are getting especially tough for subprime borrowers. At GMAC, 12 percent of new loans booked in North America in 2006 and 2007 were nonprime, but that figure dropped to 9 percent in December. Capital One Financial Corp. has stopped originating loans for the riskiest segment of subprime borrowers, according to a recent presentation by Chief Executive Rich Fairbank. J.P. Morgan Chase & Co.'s Chase Auto Finance recently stopped originating subprime loans longer than 72 months. The firm also boosted by 10 points the credit score required of subprime customers borrowing more than 110 percent of the car's value. "We're trying to lend to people who will be able to pay us back," says Thomas Kelly, a Chase spokesman.

Even borrowers with good credit may find tougher loan terms if they live in areas where home prices are dropping. Chase Auto Finance has tightened lending standards across the country, but they're "even tighter in places with declining home values," Mr. Kelly says. Falling home values generally reduce borrowers' financial resources and may hurt their ability to make loan payments. Chase is requiring more collateral on longer-term loans in "high risk" states like Arizona, California and Nevada. Sovereign in January stopped originating auto loans in the Southwest and Southeast and now limits its auto lending to the Northeast. The Southwest and Southeast "were experiencing more challenges" and "the housing market was a big driver of those challenges," says Tom Nadeau, president of consumer lending at Sovereign.

In states that have been hard-hit by the housing crisis, auto-loan approval rates have dropped more dramatically than the nationwide rate. This year through March 20, 86 percent of California prime auto-loan applications were approved, down from 94 percent for the same period last year, while 84 percent of Florida prime auto-loan applications were approved, down from 90 percent a year earlier, according to CNW Research.

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US Auto Sales Fall

Mon, 31 Mar 2008 18:00:18 GMT

U.S. Auto Sales Likely Fell in March Amid Drop in Luxury Brands

By Greg Bensinger - Bloomberg

March 31, 2008

The following story was also posted online at www.leasetrader.com.

March 31 (Bloomberg) -- Automobile sales in the U.S. probably fell for a fifth straight month in March amid a drop in demand for luxury vehicles such as Honda Motor Co.'s Acura and General Motors Corp.'s Saab.

Orders for premium brands declined by at least 10 percent, estimated Jesse Toprak, an Edmunds.com analyst in Santa Monica, California. Overall sales for GM, Ford Motor Co. and Chrysler LLC probably slid by at least 5.5 percent from a year earlier, according to the average estimate of nine analysts in a Bloomberg survey.

Sales by automakers' luxury divisions -- broadly defined by analysts as those selling autos for $40,000 aimed at the most- affluent consumers -- were down 12 percent in February from a year earlier as the impact of the credit crunch and declining home prices spread.

``It's largely a myth that the luxury market holds up better throughout the economic cycle than the rest of the market,'' said George Pipas, chief sales analyst at Dearborn, Michigan-based Ford. ``Ask the guys on Wall Street if their bonuses are as big as they were in years past.''

Ford's Lincoln, Volvo, Jaguar and Land Rover brands are among 13 luxury marques that recorded sales shortfalls in the first two months of the year.

The analysts' estimates for the month account for two fewer selling days than in March 2007. Bloomberg and some automakers use unadjusted percentage comparisons, which would be about 8 percentage points lower than the analysts'.

Lowest Since 2005

The industry's annualized sales rate probably fell to 15.1 million cars and light trucks in March, which would be the lowest since October 2005, based on a survey of 19 analysts and economists. That compares with 16.3 million a year earlier.

Automakers release March results tomorrow.

U.S. auto sales fell 5.4 percent in January and February, and may drop to their lowest total since 1998 this year after a 2.5 percent tumble in 2007.

The average estimate among the analysts surveyed by Bloomberg is for a 12 percent decline this month at Chrysler, 9.7 percent at Ford and 5.5 percent at GM.

Among the biggest Japanese automakers, Toyota Motor Corp.'s sales may have dropped 5 percent and Nissan Motor Co.'s 2 percent, while Honda's may have risen 4 percent, New York-based Deutsche Bank analyst Rod Lache said

Luxury brands account for about one in 10 auto sales in the U.S. Of 18 luxury brands, only five -- GM's Cadillac, Nissan's Infiniti, Fiat SpA's Maserati, Daimler AG's Mercedes-Benz and Bayerische Motoren Werke AG's Rolls Royce -- posted higher sales in January and February.

Entry Level

Sales of so-called entry-level luxury cars, such as Acura's TSX and BMW's 128i that start around $30,000, helped fuel the upscale segment's growth. Since 1990, sales of the top 12 luxury brands grew 79 percent in the U.S. to about 1.8 million units annually.

Now consumers are reluctant to stretch their budgets to pay for a lower-priced Saab or Mercedes, said Chris Hopson, an analyst with Global Insight Inc. of Lexington, Massachusetts.

``Those people are being smarter with their money, or they simply can't afford it, because of the economy and housing market.''

Also, some luxury-vehicle owners are holding on to their autos longer, waiting for the economy to improve, said Toprak of Edmunds.com, an auto marketing Web site.

Trucks Fall

The slip in luxury-car sales comes amid a slide in sales of vans, pickup trucks and sport-utility vehicles, also some of the industry's most profitable products. Sales of these light trucks, as they are categorized by the industry, were down 8.5 percent in January and February.

Housing starts, considered a crucial indicator of truck sales, fell 6 percent in February from January. Consumer sentiment fell to its lowest in 16 years on declining home prices and average gasoline prices hovering around $3.25 a gallon.

Chrysler, based in Auburn Hills, Michigan, will probably post a 13 percent decline after truck sales, which account for about three-quarters of its U.S. deliveries, fell 17 percent, said Chicago-based Lehman Brothers analyst Brian Johnson in a March 27 note. Declining sales of such vehicles as the Dodge Ram pickup reflect ``the company's aging large truck lineup.''

GM: `Weak'

GM probably will report 5 percent fewer sales this month compared with a year earlier because of a ``very weak performance in full-size pickups and SUVs'' such as the GMC Sierra, said New York-based Goldman Sachs analyst Patrick Archambault in a March 28 note.

The Detroit-based automaker probably will say sales of its Cadillac CTS and Chevy Malibu sedans improved this month, he said.

Ford probably won't post an increase for March, Pipas said in an interview, without giving details. The automaker likely increased sales of its crossover sport-utility vehicles, such as the Ford Edge, he said.

Last week, Ford announced plans to sell its Jaguar and Land Rover divisions for $2.3 billion to India's Tata Motors Ltd. Ford lost $15.3 billion in the last two years, most of it in North America.

Ford shares fell 24 cents to $5.59 on March 28 in New York Stock Exchange composite trading and have declined 30 percent in the past 12 months. GM was down 59 cents to $18.67 and has dropped 40 percent in the past year. Toyota's American depositary receipts rose $1.53 to $103.79; they are down 19 percent since March 28, 2007.

Bonds, Swaps

GM's 8.375 percent note due July 2033 slipped 0.19 cent to 71.5 cents on the dollar on March 28, yielding 11.97 percent, according to Trace, the NASD's bond-price reporting service. Ford's 7.45 percent note due July 2031 plunged 2.25 cents to 66.75 cents on the dollar, yielding 11.61 percent.

Credit-default swaps on GM debt fell 18 basis points on March 28 to 1099 basis points, according to CMA Datavision in New York. Ford's lost 13 basis points to 1157 basis points.

The contracts are designed to protect bondholders against default. A rise in the price indicates a decline in the perception of a company's credit quality.

The following table provides estimates for car and light- truck sales in the U.S. Estimates for companies are percentage changes from March 2007. Forecasts for the seasonally adjusted annual rate, or SAAR, are in millions of vehicles.

The SAAR average is based on forecasts from nine analysts and a survey of 10 economists. The analysts' estimates are based on daily selling rates. March had 26 selling days, two fewer than March 2007.

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Dealership Fees

Thu, 27 Mar 2008 17:21:27 GMT

Contact 5 Investigation: Dealership Fees

(WPTV Staff)

Reported by: Shannon Cake

The following story was also posted online at www.leasetrader.com.

You don't hear it from too many auto dealers, "Take your money and put it in your wallet!" That's what one local dealer said, and he also said he is being met with opposition from other dealer's from across the state.

Contact Five's Shannon Cake took a look at the dispute over dealer fees and whether Floridian's will be paying them in the future. Earl Stewart of Stewart Toyota in Lake Park said he's going where most car dealer's won't! He's talking openly about something industry insider's call 'Dealer Fees.' He claims they're tacked onto your bill after you've negotiated the price of your car.

"The dealer fee, maybe most people don't know, is an extra charge, a surprise charge coming after the price has been quoted for the car. They range in my experience from as low as 389 dollars to 999 dollars, almost a thousand dollars." said Stewart. "The consumer should have the right to price and compare cars just like they have the right to price and compare TV's, refrigerators, or any item that they buy."Stewart is so convinced dealer fees are misleading.

"Every dealer can choose his own dealer fee, there's no state cap." said Stewart. He took his message to the State Capitol, 'Talked out of school' if you will, and told lawmakers all about his industry's sales tactics. "We name it some thing obscure. We always try to get the word fee in there cause that's got the official ring to it," said Ted Smith, President of Florida Automobile Dealer's Association. "Our opinion as a trade association is consumers should know everything that happens with a sales transaction. We have a difference of opinion with Mr. Stewart because we believe people do know what they're paying for cars, we believe the contract stipulated what people pay for cars and to that end, we don't think there's a problem that's broken here."

But since Stewart has been running his ads, he's been logging his answering machine messages."I agree wholeheartedly with Earl Stewart. I just stopped by a dealership yesterday and the dealer fee is $2295, on every car they have on their lot. I think this is outrageous and it should be stopped. "But Florida's Automobile Dealer Association believes the sales table is one place the government doesn't belong.

"We don't believe the legislature should control the selling point of a vehicle or any component of the sales price of a vehicle," said Ted Smith. "The consumer of today is not this poor unknowledgeable,uneducated person who comes and sits at the mercy of car dealers. My goodness! Gross margins on vehicles have never been at a lower point."

F.A.D.A. said this is really a debate about a difference in pricing. One dealer might price their care super low so it looks good in the ads in newspapers, to get extra traffic through their doors. It's a way to compete with other auto dealers in town.

But F.A.D.A. claimed the dealer fee is more of a sales strategy than a misleading sales tactic. The Association said that they are in favor of always making sure the dealer fee is clearly disclosed according to Florida Law. Stewart said just by the fact that it's called a 'fee' on the contract, that is miseading and he's hoping one day, dealer fees are banned altogether in this state.

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March Auto Sales

Wed, 26 Mar 2008 18:59:14 GMT

March Auto Sales Likely to Drop Again

By TOM KRISHER – AP

March 26, 2008

SOUTHFIELD, Mich. (AP) — Just like everyone else in Southeast Michigan, Desta Woudenh is worried about declining home values, high gas prices and the economic slowdown.

But the computer software maintenance specialist still spent much of his Good Friday holiday inside the showroom at Tamaroff Honda, sitting in a deluxe new Accord and talking with a salesman.

No matter what happens to the economy, Woudenh, 41, needs to replace his 1995 Honda Civic with 180,000 miles on it.

"I pushed it as much as I can," he said in the showroom of the dealership in the Detroit suburb of Southfield. "I need a good, dependable car."

Automakers are hoping that there are more people like Woudenh out there as they face what could be one of the toughest months in one of the toughest sales years in more than a decade.

Industry analysts are predicting that U.S. auto sales in March will be worse than the same month last year. Just how bad depends on the analyst.

"We're seeing the same negative forces that had an impact on consumer demand in the first couple of months of '08," said Jesse Toprak, chief industry analyst for the auto information site Edmunds.com.

He predicts that when automakers report their U.S. sales results for March on April 1, the U.S. market will be down 12 percent when compared with March of 2007. J.D. Power and Associates reported that for the first half of March, information from dealers showed nearly a 22 percent decline from the same period last year, although the company counted two more selling days in the first half of March 2007.

In uncertain times, Toprak said, people postpone large purchases until they know what will happen to their home values. A run-up in gasoline prices to $3.50 per gallon or more didn't help, either, and some analysts are predicting that tighter auto loan standards will crimp sales as well.

"We are in a very challenging environment," said George Pipas, Ford Motor Co.'s top sales analyst, although he cautions that sales generally are slower during the first half of the month than in the second.

Pipas wouldn't give specifics, but says Ford and most other automakers will see lower sales than in March of last year.

The Detroit Three, once again, are likely to be hit harder than their Asian competitors as the market continues its shift away from trucks and sport utility vehicles to more fuel efficient small cars and crossover vehicles, industry analysts say.

"The bottom line impact on domestics is negative," Toprak said. "They make most of their money on SUVs and trucks, and those segments have been suffering quite a bit."

At Crippen Buick-Pontiac-GMC-Mazda-Volvo in suburban Lansing, the foreign brands fared better than the GM brands in the first three weeks of the month when compared with the same time last year, said owner Jeff Crippen. But Buick, Pontiac and GMC still are the biggest chunk of the business.

He was hoping for a rebound in the final week of the month.

Lehman Brothers analyst Brian Johnson, in a note to investors, predicted continued weakness in auto sales this year due in large part to tighter lending standards.

"We believe that even modestly rising delinquencies in auto lending (as well as broader consumer credit) are leading to tightened credit standards and pressure on sales," he wrote.

But Crippen said that's not happening in the Lansing area.

"We haven't seen the banks tightening on their end, nor have we seen a decrease in our customers' overall credit scores," he said.

Pipas says demand could increase later in the year because of lower interest rates and because the U.S. auto fleet is getting old. The average car in the U.S. is 9 years old, while the average truck is seven, Pipas said.

"Clearly there are people that need to replace a product," he said.

Edmunds' Toprak said automakers likely will raise incentives as the year progresses in an effort to boost slackening demand, so deals could get sweeter.

Already, incentive spending per vehicle is $2,469 so far this year, inching closer to the record of $2,603 set in 2004.

"Now that demand is so low, they need some tools to bring people back in the showrooms. They have no choice but to be more generous," he said. "It's very likely that by the time we reach summer it will reach that record number."

Woudenh said he'll be among the shoppers looking for incentives and other deals. He plans to look at Asian automakers as well as the Detroit Three, especially GM, which he says is building better cars now.

Gas prices will weigh heavily on his purchase. Even though he's planning to get a larger car than his Civic to handle his growing children, he still will get a four-cylinder engine to get better gas mileage, he said.

"I'm just going to go to one dealership after another and just see which one will give me the best deal," he said.

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The U.S. Auto Market

Tue, 25 Mar 2008 17:42:19 GMT

Contradictions Drive The U.S. Auto Market

By WARREN BROWN | Washington Post

March 25, 2008

The following story was also posted online at www.leasetrader.com.

The best way to cover massive automotive exhibits, such as the 108th New York International Auto Show, under way through next Sunday at the Jacob K. Javits Convention Center, is to dance among extremes.

That way, an observer can glean something of the truth about what really is happening in the global automobile industry.

It does not matter what automobile manufacturers propose or governments dictate; consumers will have the final say on what will be done, how it will be done, and at what pace it will be done. But the problem is that consumers are of varying, often contradictory minds, wanting to have their oil and burn it, too; and wanting to do it all at the cheapest possible price.

Thus we have the Smart, a micro-car that "in no way would have been offered in the United States 10 years ago," said Anders Sundt Jensen, global marketing director for Smart, a subsidiary of Germany's Mercedes-Benz car group.

"It would have been impossible to bring that car here then," Jensen said. "How could we possibly have done that? You had the world's cheapest gasoline."
But with oil prices topping $100 a barrel and with prices for regular unleaded gasoline approaching $4 a gallon, lots of Americans are thinking Smart now, so much so that the little car, with an initial U.S. allotment of about 30,000, is sold out in the United States through 2008, said David Schembri, president of Smart USA.
"We're walking a fine line between customers who are waiting too long for a Smart and those who are willing to wait long enough," said Schembri. He said Smart USA is launching an "It Pays to Wait" communications campaign to help placate customers who are eager to get the tiny, two-seat car that can get up to 40 miles per gallon in highway cruising and easily can be parked in the most congested urban environment.
Jensen and Schembri are worried that all the waiting for Smart will drive prospective customers into the showrooms of Toyota, Honda or Nissan, all of which are exhibiting fuel-efficient little cars here.
Pontiac has a different problem. The "excitement division" of General Motors has to come up with hot cars to keep its enthusiast-driver customer base happy. That means more sleek designs, more horsepower and more muscle in an era when fuel prices are soaring. Car groups such as Pontiac are tasked with pleasing two gods — the government and the consumer. If the company displeases the government, it will be hit with heavy fines and bad press. If it displeases the consumer, it will be hit with lousy sales and more bad press.
So Pontiac is trying to please both groups with stunningly sculpted models such as the Pontiac Solstice GXP roadster exhibited here, and the equally attractive Pontiac G8 sedan. Both cars offer oomph without egregious fuel consumption.

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Small Electric Cars

Mon, 24 Mar 2008 18:14:18 GMT

Small Electric Cars Coming to U.S.

US News & World Report

Posted: Mar. 24, 2008

The following article was also posted online at www.leasetrader.com.

The Detroit Free Press reports, “The electric car has risen again. Within four years, at least two Japanese automakers plan to have all-electric cars on American roads,” and “several other automakers from around the world…are mulling similar vehicles.” Many of the new electric cars are small, and travel “probably no more than 90 miles without recharging.” These vehicles re-imagine how Americans might use cars – they are intended for use in congested, urban areas, for short drives only. “But with better battery technology, tougher environmental laws and growing demand for oil-free forms of transportation, auto executives say there's a niche for electric cars to thrive.”

The New York Auto Show, which opened to the public this week, hosts three electric vehicles.

Business Week reports, “Subaru of America Inc. showed off the automaker's R1e electric car Thursday, saying it's fun to drive while also being easy to charge and emissions free.” The tiny R1e “has a range of 50 miles and can post a top speed of 65 mph.”

Nissan’s all-electric Denki Cube is a new version of a vehicle that has been sold in Asia for several years. Technology News Daily says the Denki Cube “serves as a preview of Nissan’s future small car strategy for the North American market, which includes plans to sell a redesigned gasoline-powered, next-generation Cube at Nissan dealers in the United States and Canada beginning in 2009.” Wired says, however, that the electric Denki Cube “brings some well-considered technology of its own.” CNET offers photos.

Mitsubishi, meanwhile, “is testing U.S. reaction to its all-electric iMiEV,” according to Kentucky’s Courier-Journal. The iMiEV is “a four-door car [that] can run for 80 miles on a full charge.” Mitsubishi managing director for product development, Tetsuro Aikawa, said the automaker “will consider bringing the car to the United States or Europe after 2010 if there is enough demand.”

With gas prices rapidly approaching $4 a gallon, interest in electric cars seems to be growing. Many mainstream manufacturers are developing electrics, exotic electric sports cars have begun to make the rounds of the auto show circuit, and even luxury makes like BMW are investigating the technology.

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New York Auto Show

Fri, 21 Mar 2008 19:21:48 GMT

US Auto Shows Reflect Industry Doldrums

By DEE-ANN DURBIN – AP

March 21, 2008

The following story was also posted online at www.leasetrader.com.

NEW YORK (AP) — Manufacturers were short on new cars at this year's major U.S. auto shows, including the New York International Auto Show this week, but automakers remained upbeat as they showed products they hope will lift the U.S. industry out of its doldrums.

U.S. auto sales are expected to hit their lowest level in at least a decade in 2008, and talk about the economy dominated this year's shows.

"The market is a headwind. We're in choppy waters," Chrysler LLC Vice Chairman and President Jim Press said Wednesday in New York. "But the great thing is that it affects everybody. It rains on all sides of the street."

Vehicles unveiled at auto shows in Detroit, Chicago, Los Angeles and New York have been in the making for many months and even years, but several automakers in New York predicted an upswing in the second half of 2008 as consumer confidence improves.

In the meantime, facing slower sales and tighter budgets, they are putting out fewer fantastic concept vehicles and focusing their product development resources on vehicles that are more likely to be built, according to Jack Nerad, executive market analyst for Irvine, Calif.-based Kelley Blue Book.

Just weeks after showing its Ford Verve as a concept in Detroit, for example, Ford Motor Co. confirmed that the subcompact — now called the Fiesta — will hit U.S. shores in 2010.

"When times aren't flush, the faucet is turned off on out-there concept cars," Nerad said.

One way automakers are trying to raise profits is by competing in new segments. Hyundai Motor Co. introduced its first luxury sedan, the Genesis, in Detroit in January and its first performance-oriented sports car, the Genesis Coupe, in New York. Kia Motor Co. showed its first mid-size sport utility vehicle, the Borrego, in Detroit. General Motors Corp. is inventing a whole new segment with its Pontiac G8 sport truck, a two-door with a six-foot bed that's reminiscent of the Chevrolet El Camino.

But new models were generally in short supply. After an influx of introductions in Detroit, including the 2009 F-150 and Dodge Ram pickups and 2009 Toyota Venza crossover, most automakers seemed to have little left over. Toyota Motor Corp. unveiled no new products at the Chicago auto show in February and introduced only a Scion concept this week. Chrysler got some extra mileage from its Dodge Challenger muscle car, introducing the 2008 model in Chicago and the 2009 model in New York.

Aaron Bragman, an auto analyst with the consulting company Global Insight, said new products could be in short supply in the next few years as auto makers try to figure out how to meet new fuel economy standards that will require a fleet average of 35 miles per gallon by 2020.

"People are still gearing up and trying to figure out what they need to do," he said.

GM was one of few automakers with a constant product offensive at the U.S. shows, Nerad said. The automaker produced strong buzz in Detroit with its elegant Cadillac CTS sedan and concept coupe, introduced the hybrid GMC Sierra hybrid pickup in Chicago and unveiled three new performance-oriented Pontiacs in New York, including the sport truck and a hardtop version of its Solstice convertible.

The rear-wheel-drive, performance-oriented Pontiacs might seem out of touch in an era of high fuel prices, but analysts said there is still a substantial market in the U.S. for those and other high-performance vehicles that got top billing at this year's shows, like the Challenger and the Genesis Coupe.

"That type of car isn't someone's only car, and it's not marketed to 21-year-olds who are worried about gas prices," said Erich Merkle, vice president of auto industry forecasting for the consulting company IRN Inc. in Grand Rapids.

Merkle said it's essential for automakers to build excitement and emotion, and those cars help them do it.

"Ultimately, what sells cars at the end of the day is the emotional response of the consumer," he said. "Automakers can't lose that emotional hook."

But Bragman said this year's shows could be a final gasp for the American muscle car, as automakers try to figure out whether fuel economy standards will force them to compromise on horsepower and whether younger buyers will even be interested in the kind of nostalgic performance cars that are captivating Baby Boomers. He noted that the Genesis Coupe has a V-6 engine — not a V-8 — and that the 2009 Challenger also has a new, optional 3.5-liter V-6 instead of the V-8 that comes standard in the 2008 model.

"We're unlikely to see those in the future, unless there are some miraculous improvements in the technology of the V-8," he said.

The New York show was starting Friday after two days of media previews.

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