The End Of An Era

General Motors announced on Monday that the company will cut 21,000 hourly jobs and dissolve its Pontiac brand within one year.  Once labeled as GM’s  “excitement division,” the company that helped create the muscle car niche in the US auto market with the Lemans GTO in the 1960’s will soon be unceremoniously put to rest in a fashion similar to Saturn, Saab, and Hummer.  

M has been surviving on federal loans for several months and is under pressure from the Obama auto task force to restructure by June 1 or face bankruptcy.  GM’s fourth try at an approved viability plan reflects the decision to do away with Pontiac and focus on smaller more sustainable operations. Even though Pontiac was GM’s third best seller in 2008, GM decided to put a halt on Pontiac so the company can focus on what they call their “four core brands” Chevrolet, Buick, GMC, and Cadillac which GM views as the most profitable. GM also said that they will be restructuring their US dealer organization by getting rid of 40% of their dealerships by the end of next year.

GM Teaming Up With Segway Launches Project PUMA

Charged with laying out a vision of the future by President Obama’s Auto-Task Force last week, GM introduced Project PUMA to the public on Tuesday.

PUMA, which stands for Personal Urban Mobility and Accessibility, is the result of a partnership between GM and small vehicle company Segway. The 700-pound, two-seat vehicle can reach speeds of up to 35 mph and is powered by lithium ion batteries that can travel approximately 35 miles on a single charge. The easily maneuverable PUMA is ideal for crowded cities.

Not so much SUVs. According to GM, gas-guzzling SUVs average just over 18 mph and between 30-40 percent of fuel is wasted looking for a place to park. And you thought the meters were expensive!

The PUMA prototype is fully operational, and a next generation model is expected to be unveiled to the press later this year.

Ford Falls In Line, Offers Advantage Plan

In light of slumping sales figures, Ford announced last week that they will be offering an assurance plan similar to those currently available for GM and Hyundai. Ford is hoping that the new program  that they call the Ford Advantage Plan  will help restore consumer confidence and get customers back into Ford dealerships. 

The Ford Advantage Plan is available now through June 1st, and can be applied to all Ford, Lincoln, and Mercury vehicles. The plan  offers zero percent financing and covers payments in excess of $700 for as many as 12 months in the event of the customer loosing his or her job.

Washington Takes Tough Stand Against Automakers

President Obama announced this week that the government is rejecting the turnaround plans by General Motors and Chrysler, and has denied both automakers more long term federal aid based on the viability plans that they presented late last year. The president also implied that bankruptcy is a very real possibility for one or both of the companies. The two Detroit automakers have to date received over $17 billion in federal aid and have been under the magnifying glass to illustrate sustainable operations.

In an effort to regain consumer confidence, president Obama also announced that the government will insure new car warranties issued by GM and Chrysler even if the companies dissolve. Obama has stated that the goal of congress and US automakers is to “lead the world in building the next generation of clean cars” and that currently the American auto industry “is not moving in the right direction fast enough to succeed.”

Deemed as too small to survive on its own, Chrysler was granted 30 more days of federal funding to reach an agreement with Italian automaker Fiat, or another automaker. Fiat and Chrysler had been working on a proposal where Chrysler would receive small car technology, transmissions, and other manufacturing techniques  and in exchange Fiat would assume 35 percent stake in Chrysler.

General Motors was granted 60 additional days of federal funding to revise its turnaround strategy. As part of the negotiations, GM’s long time CEO Rick Wagoner was forced to resign from his position and walk with a $23 million pension plan. In quick response, GM has introduced a new assurance package similar to the successful approach by Hyundai. In the event of a new car purchaser being laid off or fired within the first two years, GM dealerships will cover as many as 9 car payments worth up $500 each. GM calls the program Total Confidence and it is available through April 30.   

Chevy Volting Into The Future

GM Chevrolet announced at the Automotive News World Congress this week that they will invest $30 million in their new plant specializing in lithium-ion batteries. The batteries will be used in the new Chevy Volt. For anyone unfamiliar with the Chevy Volt it is a new hybrid that GM has been working on. With production set to begin in late 2010 Vermont Car Dealerships should begin offering the Volt in 2011. The car uses a lithium-ion battery that allows the vehicle to drive up to 40 miles on battery power alone. Once the battery has died the Volt can run for an additional 300 miles on it’s gasoline reserve.  The battery will take about three hours to charge using a 240v adapter, meaning that most people living in a urban or suburban area will not even need to use gas to get around town if they own a Volt.  Hopefully the Volt will serve as a stepping stone towards a cleaner more eco-friendly lifestyle for the average American and help to to wean us off of our dependence on foreign oil.  

Source: http://www.egmcartech.com

Chrysler, Fiat Seeing Eye To Eye

Chrysler announced on Tuesday that the company will be forming an alliance with Italian based car manufacturer Fiat. The proposed alliance would give a 35% stake in Chrysler to Fiat in exchange for sharing of management, manufacturing, and technology. The alliance hopes to allow Chrysler and its subsidiary Dodge to enter into foreign markets where the American car manufacturer has fallen behind its competitors, and boost Fiat’s North American sales. Chrysler will have access to all Fiat vehicle platforms allowing the US auto maker to offer smaller, more fuel efficient, and environmentally friendly cars into their production portfolio. The hope is that the agreement will help provide sustainable sales and market share consequentially creating more jobs and helping to boost the economy. The deal was designed to enhance the return on investment for American tax payers from the $4 billion loan that Chrysler  received earlier this month.  The alliance, that is expected to be completed by April of this year, is subject to approval by the U.S. Treasury which is overseeing the $4 billion rescue package for Chrysler. No stipulations involving cash compensation from Fiat were involved in the agreement.

Source: http://www.freep.com/

Chrysler Auto Financing Gets A Boost

 The US Treasury Department this past week okayed a $1.5 billion loan to Chrysler specifically to provide loans to consumers. After a thirty percent drop in sales this past year, the news could not come at a better time for the US automaker. The five year loan starting with a $100 million installment last week will come from money in the Troubled Asset Relief Program that was created late last year in an effort to help bolster failing financial institutions. Following the news of the loan, Chrysler announced that they will ease off on credit standards for customers purchasing new cars, and will be offering zero percent, 60 month financing on 11 of their vehicles such as the Dodge Ram pickup and the Chrysler Town & Country minivan. With the massive loan, the hope is that Chrysler will be more willing and able to lend to potential car buyers and restore faith in the consumers; which should be good news for the people over at Goss Dodge in Burlington. The auto industry and the rest of the economy are certainly not out of the woods yet, but it’s a good sign that things are pointing in the right direction and help is on its way.

Source: http://www.nytimes.com

Auto Plants Closing For January

All three U.S. automakers are extending their normal two-week holiday shutdowns. These closings reflect two stark realities facing U.S. automakers. First is the unconfirmed and undefined bailout plan. Second is the lack of buying customers in the showroom resulting in the lowest sales rate in 26 years.

Ford is closing 10 of its North American plants for the first full week of January. In a plan made public in early December their goal is to reduce first-quarter production by 37.9 percent or 430,000 vehicles.

Chrysler’s closings are more dramatic extending the already planned two-week holiday shutdown to a month, possibly longer for 30 U.S. factories. Whether or not all of the plants actually open again is yet to be seen.

General Motors will temporarily close 20 factories.

All of the automakers are in a fragile state, but Ford is at least in a position to maintain its operations without intervention through 2009. GM and Chrysler need some government assistance or… else.

U.S. Automakers Revival Plans Due Today

Ford, General Motors and Chrysler lobbied hard for a bailout of the U.S. auto industry last month and were firmly rebutted by congress, primarily for not having explicit plans to outline how they would use the money to turn their companies around.

Today is the due date for those plans and hundreds of thousands of people around the country, whose livelihoods are tied to the auto industry, are hoping they came up with something good. That remains to be seen.

Each CEO took a private plane to Washington D.C. for their previous meetings with congress and were chastised for that waste in the face of millions of dollars a month in losses. This time Ford’s CEO Alan Mulally will drive to new congressional hearings, taking place this week, in a Ford Escape Hybrid. Did he get the message or is it just good marketing? Probably a bit of both.

Ford Has Most Top Safety Picks

The Insurance Institute for Highway Safety (IIHS) issued its awards list of Top Safety Picks for 2009 and Ford comes out on top with 16 awards. If there is any doubt that these guys are working hard to compete with their foreign counterparts I think this helps clear it up. And if that doesn’t convince you Consumer Reports also gave Ford serious kudos last month reporting that Ford vehicles are now on par with Toyota and Honda. The CR survey is in the Best & Worst for '09 guide on newsstands now.

Honda comes next with 13 awards, then GM and Toyota tie with 8 each. The IIHS also calls attention to Honda, Acura and Subaru for having at least one Top Safety Pick in every vehicle class that they compete.

Electronic Stability Control (ESC), which senses when a driver is losing control and adjusts accordingly to avoid a skid or rollover, is required in all vehicles by 2012, but mandatory now if you want to achieve a Top Safety Pick.  The adoption of this feature among many important others is behind manufacturers doubling the number of vehicles that achieved the safety this year versus last.

That’s good news for everybody on the road.

All In The Family

In Swanton, Vermont, there is a small, family-owned Ford dealership by the name of EJ Barrette & Sons. The sons have long since grown up; these days a customer is likely to be greeted by EJ’s 3-year-old great-great-granddaughter Bella, or Maggie the showroom dog. I met these nice folks through Auto Finder and recently drove north to take in the down-home atmosphere and query the descendents of EJ Barrette about what makes them unique.

BOB KILPATRICK: How long has EJ Barrette been in business?
JON BARRETTE: It was started in 1922 by my grandfather, Elias Jeffrey. That’s where the EJ came from. My dad took it over after that. I was the next generation, and now we have the three kids here to follow on.

BK: How old were you when you started working here?
JB: Probably 9 or 10 years old, washing cars. I went on to college and graduated in 1968. I was in the Air Guard for 29 years and, other than deployments, I’ve been here.

BK: 1968 was pretty much the middle of the muscle-car era. You guys must have seen some sweet rides come across the parking lot.
JB: I had a very limited-edition Boss 429 — that was in ’69. I had a 1968 Cobra Jet 428 and a 351 Mach1 in ’71.

BK: Those must have been some fun cars. Did you get yourself in any trouble?
JB: Not any more than anyone else!

BK: How many of your family members work here?
JB: There’s the three kids, my sister, my wife and myself.

Photo Front Row: Maggie, the showroom dog, and Bella, the greeter
Back Row (L to R): Linda Barrette, Aaron Barrette, Meredith Barrette, Jon Barrette, Paula Barrette Howrigan, Sara Barrette

BK: Is Ford doing anything new that would be of interest to car drivers?
JB: Quality. Our quality is equal to, or better than, Toyota or Honda. There were eras where we didn’t do as well as we should have, but we’ve certainly surpassed that now. We have more to offer, we really do. Buying foreign, even if it’s built over here, the components come from overseas. With the economy struggling, people don’t realize that 80 percent of the content comes from overseas, which is jobs. They’re glued together here, but these big companies take their profits and they bring them back overseas. People do not understand that. They want the economy to flourish, but they don’t want to participate.

BK: What’s your role here, Sara [Jon’s daughter]?
SARA BARRETTE: I think everybody does a little bit of everything. Mostly I do the advertising, Internet sales, computer repair and some selling.

BK: What’s the advantage that your dealership brings to its customers?
SB: We know everybody by their names. We often know what vehicle they have and what vehicle they had five years ago. A lot of customer loyalty, a lot of repeat buying, because they know where to find us if they’ve got a problem, if they’ve got a question, if they need a loaner. We get calls all times of the day and night. [Customers] know we’re going to be honest and give them the truth. Sometimes it’s good news, sometimes it’s not, but they know they’re going to get the truth from us.

BK: How does that work for the customers?
SB: Most people who end up buying here buy here because they immediately feel like they’re one of our good friends or one of the family, even if they’ve never walked in here before. I’ve had a few people say that to me; they just immediately felt it, with the kids running around and the dogs coming up to them. Their kids can go and play with Bella’s toys that are everywhere.

BK: What would surprise people about EJ Barrette?
SB: I think that we’re pretty competitive with our price. People think that because we are small we can’t compete with big places on pricing. We’ve been around so long, we don’t have a lot of overhead — we own our building. We’re not big and splashy. When you come here and buy a vehicle, you’re only paying for the vehicle, you’re not paying for our building, or our trips to Italy. When you look at the bottom line and you’re comparing apples to apples, I think we’re very competitive on price — and above and beyond on service.

Suddenly joined by Bella Barrette:
BB: Bwa wa wa wa

BK: What kind of car would you buy?
BB: A pink one and a purple one.

SB: Would you ever get a truck?
BB: No, I’m not a boy.

SB: Nothing cracks me up more than when I’m sitting in here doing my work and I hear her say [to a customer], “Would you read me a book?” while they’re waiting for their car to get serviced.

Editor’s Note: That’s just the sort of experience you’ll likely have if you venture up to this family-owned Ford dealership. If you ever find yourself in need of a new or used car or truck consider swinging by EJ Barrettes and see for yourself what they’ve got to offer. From what I’ve seen I’d expect that they’ll do their very best to make sure you’re another satisfied customer.

Big 3 Bailout is Being Pushed Hard on Campaign Trail

GM, Ford and Chrysler are working hard to get the government to provide a $50 billion loan package. The money would primarily be used for converting truck plants over to producing smaller and more energy efficient vehicles.

For the first time in 23 years the mantle for best-selling vehicle in the country fell from Ford's F-150 to the Honda Civic. Previously the Ford F-150 had been the best-selling vehicle in the country for, yes you heard me right, 23 years! and the best-selling truck for 31 years! Profits for the F-150 were estimated to be half or more of Ford's overall profit... until now. With gas prices climbing the truck market has tanked, dramatically effecting all 3 companies.

Foreign car makers have better balance sheets and can get cheaper loans for Q&A projects and re-tooling. The US auto industry is a bigger credit risk and without the loan package would be looking at loans in the 10% range.

So the Big 3 are out on the campaign trail trying to seize the political opportunity to get the loan package through before a new congress takes over. McCain, Obama and the current Bush administration are all said to be in favor of the plan. The actual cost to tax payers would be approximately $8 billion. The cost of one of the Big 3 failing could be far worse... or would it?

What do you think? Is it a good use of our Federal budget or is it just being pushed through because of the number of lobbyists they have on the case?