Jay Alix Now Takes Credit for GM Bailout

Editor’s Note: Lots of people–including President Obama–have trumpeted their role in the success of the government-backed turnaround plan that saved General Motors, the most important industrial company in the history of the United States. But on the fifth anniversary of the crisis, Forbes presents an exclusive, unprecedented look at what really happened during GM’s darkest days, how a tiny band of corporate outsiders and turnaround experts convened in Detroit and hatched a radical plan that ultimately set the foundation for the salvation of the company.

Author Jay Alix, one of the most respected experts on corporate bankruptcy in America, was the architect of that plan, and now, for the first time, he reveals How General Motors Was Really Saved.

Transparency and the Retail Auto Business

The new buzz word in the Auto Industry these days is “Transparency.” Auto manufacturers have fallen in  love with the word, as have vendors looking to charge Dealers money to bring "Transparency" to their customers. To some, the word is euphemism for “One Price,” where every buyer pays the same profit margin.  This has been proven to be an abject failure. The demise of the Ford Collection is the prime example.  We could revisit the Saturn debacle, but why? How many times does the lesson have to be learned. Does anyone actually think Saturn was a success story?

There are still Dealers using “One Price” as a strategy of Negotiation, but “One Price” ONLY works when there is more demand than supply. Most Dealer’s fantasy is to wake up one day and find out that his nearest competitors have all gone to a “One Price” strategy.

Did We Dodge a Bullet?

Ruggles, Auto Finance News

Or did we just get President Obama’s Second Choice?

Now that Larry Summers has taken himself out of the running for the position of Chairman of the Federal Reserve Bank of the United States, President Obama has appointed the current Fed Vice Chairman, Janet Yellen, to the post.   If confirmed, it would make Yellen one of the most powerful woman in the world, with her hands on the controls of the globe’s largest and most powerful economy.

People LOVE Their Car Dealer, But Hate Yours

Steve Finlay - WARDS June 2013

People carry on a love-hate relationship with car dealers.

They typically love their dealer, as evidenced by rating websites where grateful customers say things like:

• “He cares about his clients and is extremely helpful with any questions or issues.”
• “I have always been extremely pleased with the service and professionalism.”
• “It was honestly the BEST customer service I’ve received in my whole life.”

But many consumers dump on dealers in general. Disliking from afar is a human flaw. Disdaining faceless groups is a building block of bias.

Outsiders Poised to Buy Car Dealerships

Oct. 15, 2013 Phil Villegas&nbsp

Reprinted from WARDS AUTO

As the auto industry surges, private-equity firms and others may drive up blue-sky values, but they face obstacles.

This is an attractive time to be a car dealer. Dealership profitability is up across the board, automaker are producing great vehicles and the upswing looks like it will last for the next few years.

Accordingly, we’re once again seeing activity brewing from outside speculators looking to enter and redefine the dealership arena. It’s similar to 2004 through 2007 when individuals and entities new to the industry vied to buy dealerships.

Can “Friction” Be Eliminated in the Buying/Selling Equation?

Ruggles in WARDS October 2013

At the recent J. D. Power event held in Las Vegas in October Scott Painter, TrueCar CEO, introduced a new theory, something most of us had never heard. According to Painter, elimination of “friction” from the car buying process could lead to a 20 million SAAR in the near term. He seems to believe that the “agony” and trepidation car buyers feel about the car buying experience costs the industry sales, as if many consumers are so fearful of the car buying process that large numbers of potential car buyers essentially hold on to their current vehicle so they don’t have to venture into a punishing game where there is a chance they might not “win.” According to Painter, there are many things that the industry would have to do to achieve the elimination of the harmful “friction.”^{Note 1}

One of those “friction” causing items, according to Painter, is the practice of OEMs offering “trunk money” to dealers,

The Fundamentals of Global Oil Economics

By Gal Luft and Anne Korin

The first U.S. energy secretary, James Schlesinger, observed in 1977 that when it comes to energy, the United States has “only two modes -- complacency and panic.” Today, with the country in the middle of an oil and gas boom that could one day crown it the world’s largest oil producer, the pendulum has swung toward complacency. But 40 years ago this week, panic ruled the day, as petroleum prices quadrupled in a matter of months  

Data Check: Should you add inventory or build capacity?

One side effect of the government shutdown is a delay in data collection and release. If you're in business, you either track directly data such as that below, or rely on those who do. So this is what the impact looks like for this month...

The PACE of supplier innovation

GM just announced that it will begin selling a dual gasoline/CNG (compressed natural gas) version of its Impala – the first Chevy in years (decades!?) to get a top rating from Consumer Reports. Now such vehicles are standard in Brazil, allowing the country to take advantage of the widespread availability of natural gas.

China: all's well ... for now

Today VW claimed sales of 2.35 million units in Jan-Sep. Meanwhile GM's PR machine releases brand sales monthly. I track these, out of curiousity and because I teach a course on the Chinese economy (in which I use Michael Dunne's American Wheels as one of 4 books I ask students to read). GM's 9-month total is ... 2.35 million units.

At one level it seems rather silly for a manufacturer to seek to be the market leader – after all, you can typically boost sales through aggressive discounting, and while a price war is great for consumers and car dealers, it's really, really bad for manufacturers. However, journalists find "who's first" makes good copy,

The Economy and Car Sales

Every month I peruse select details of the monthly labor market surveys – the Current Population Survey and the Current Employment Survey – for hints on how the economy is performing. Not this month, thanks to the continuing inability of the House to pass a budget, or now even a continuing resolution. Both the Bureau of Labor Statistics and the Bureau of Economic Analysis, key sources, are hit. Ironically, this month is when such data might be most helpful, because the timing of labor day makes it hard to interpret September car sales data.

...we've lost access to data on employment and wages just when an early Labor Day makes it hard to interpret auto sales

Automotive Futures: High Tech or High Dreams?

In the online NBR Japan Forum (and in a chat with a retired vice miniser of METI – the Japanese Ministry of Economy, Trade and Industry [経済産業省]) – I hear about how electronics, hybrids, and yes, fuel cell vehicles will turn around the [domestic] Japanese auto industry. (The US, too, has its advocates of industrial policy.) After all, the Prius has been a huge success.

This is wrong on three counts.