AutoNation, distaste for domestic models easing, will up inventory of U.S. autos

AutoNation, which operates as AutoWay dealerships in the Tampa Bay area, plans to re-evaluate its mix of domestic and foreign auto inventory now that General Motors has abandoned its "push production" business model, says Mike Jackson, CEO of the Fort Lauderdale-based auto retailing giant. It is a major reversal of AutoNation strategy.

Jackson spoke at a town hall meeting with GM CEO Fritz Henderson. Jackson said he looks forward to including more domestic inventory “now that this dragon has been slain,” referring to GM’s habit of churning out as many cars as their plants could produce.More from the South Florida Business Journal.

After the meeting, AutoNation spokesman Marc Cannon confirmed to the St. Petersburg Timesthat the company would begin "upping" its inventory of domestic cars as early as October. AutoNation, which operates 16 AutoWay dealerships in the greater Tampa Bay area, currently offers an inventory of vehicles that is only one-third domestic. In past interviews with AutoNation executives, they have shown little respect for the quality and designs of many domestic vehicles.

Photo: GM's Henderson (left) and AutoNation's Jackson attend a town hall meeting at Nova Southeastern University Thursday in Fort Lauderdale to discuss the future of the auto industry. (Photo by Joe Raedle/Getty Images)

-- Robert Trigaux, Times Business Columnist.

Tampa Bay Chevy sales bode well for "new" GM, but the fridge may have to wait

Wake up and good morning. What's the difference between a refrigerator and a new GM car? Jim Gurley knows. More on that in a moment. (Gurley photo courtesy of GM.)

Tampa Bay area Chevy dealers closed July’s books with their best sales figures of the year, and their highest numbers since last September, thanks in part to the federal "Cash For Clunkers" or CARS program. "We’ve seen a significant increase in vehicle sales and dealer traffic since the launch of the program," says Gurley, General Motors zone manager for the Tampa Bay area. "And we’ve had especially good numbers in Tampa Bay."

Not bad for a company than went into bankruptcy in June and out of it in July.

Indeed, the "clunkers" program is generating more than 245,000 vehicle sales nationwide in two weeks, prompting car dealers to increase the pressure on auto makers to ramp up production, the Wall Street Journal reports.

Overall, in GM's market area that includes Tampa Bay, dealers’ numbers were up 13 percent compared to last year, which is well above the national 2 percent increase. Month-over-month sales figures also continued trending upward, with Chevy’s July vs. June 2009 sales up 26 percent in Tampa Bay, surpassing the national Chevy July vs. June increase of 21 percent.

In an interview, Gurley says most of his GM dealers tell him there's plenty of interest in the clunkers program but many more customers' vehicles do not qualify for the rebate. Still, that extra volume lets dealers show off Chevy's current "big 3" models: the Malibu, the Traverse crossover SUV and the Equinox (shown in photo).

"It seems people are more creditworthy than usual," Gurley says of recent visitors to dealer lots. "So people who are smart with their money see opportunities with the government rebate to really capitalize on it, along with manufacturer's rebates."

In fact, Gurley sounds downright bullish. "We think we've made the turn and through the rest of 2009 we think things will get better and better. By 2010, things will rebound back," Gurley says. "Dealers are looking for light at the end of the tunnel. We think we can see it now."

Wow. Good news from Gurley the business guy. But what about Gurley the consumer? Things get a bit more complex. Remember the refrigerator at the top of this posting? Gurley says he plans to buy one but he's holding off for now. He explains:

"I am putting off a refrigerator purchase to see if my kids will be okay and keep their jobs. I want to wait, but I think people are feeling a bit better."

-- Robert Trigaux, Times Business Columnist

Domino theory? Auto supplier Lear Corp. joins industry ranks in Chapter 11

Wake up and good morning. Well, it's official. U.S. auto parts maker Lear Corp. filed for Chapter 11 bankruptcy protection on Tuesday, a day after setting out plans to restructure its $3.6 billion debt burden under a proposed deal with creditors.

Not that a Chapter 11 filing helps any of the Tampa Bay area workers at Lear's facility at 5100 W Waters Ave. They assemble electronic components and systems for auto interiors, but have known long before Chrysler and GM opted for bankruptcy that their jobs are being eliminated locally. Lear's moving the the plant and most of the assembly line components to a new plant in Mexico.

(Show above in a photo taken outside the Tampa facility last fall are -- clockwise from top left -- machine operators Betsaida Valentin, Jean Muller, Nedra Banks and Elizabeth Rondon, maintenance tech Eric Franks and control tech and UAW Local 2405 chief Richard Neal. Photo courtesy of Selim Merchant.)

Lear's bankruptcy is a reminder that the extraordinary hits to the U.S. auto industry will not only be reflected in the Florida economy in shrinking numbers of auto dealerships. Florida does have auto supplier jobs, too, although they are dwindling quickly.

Lear now says its bankruptcy plan -- the largest in a string of failures of auto parts suppliers -- was supported by about 68 percent in principal amount of its secured lenders and more than 50 percent in principal amount of its bondholders, says Reuters.

"We intend to proceed on an expedited basis and expect to submit the plan to the Bankruptcy Court within 60 days," Lear Chief Executive Bob Rossiter (shown in photo) said in a statement. Here is Lear's press release. And here is Lear's letter, dated July 7, to its retirees.

Added Rossiter: "Our goal is to emerge from this process quickly and with an appropriate capital structure to support our long-term business objectives as a leading global competitor with the financial flexibility to build on our strengths and take advantage of future growth opportunities."

-- Robert Trigaux, Times Business Columnist

In Tampa, GM plays underdog role well amid cutthroat competition

 Wake up and good morning. General Motors landed in force in Tampa this week by showing off its 2010 line of Camaros as part of the "new" reincarnation of GM and to celebrate the debut of the Camaro-laden Transformers sequel movie opening today. Here's the column I wrote in the St. Petersburg Times on Tuesday's splashy moves in Tampa by GM. And here's the St. Pete Times movie critic's review -- but don't click here if you want to see the movie. It's not a pretty review.

Full disclosure. I have very mixed emotions about writing about the debut of the Camaro and GM's new underdog persona as a Chapter 11 bankrupt company desperately seeking a strategy to survive and prosper. As a columnist, I wrote a piece way back in 2001 defending GM's decision at the time to stop making the Camaro and the Pontiac Firebird as sports cars that had seen their day in the sun. That column generated well in excess of 1,000 protest (that's a polite way to describe it) e-mails. Funny how the response was all about me and my foolishness and not about GM's actual decision to stop making the vehicles after 2002. (Ieven got a "Dear Moron" e-mail last month about the '01 column. I guess someone out there was late to the Internet.) It was a great lesson for me in the depth of muscle car loyalty out there in the country, even as Camaro sales back then were plummeting. Go figure. 

And obviously GM, too, got the message by opting to bring back the Camaro, even as the company decided to call it quits on the entire Pontiac brand.

 I've added these two photos from Tuesday's Camaro-palooza in Tampa (both photos shot by Kathleen Flynn of the St. Petersburg Times) because they personalize GM's plight. The top shot shows two GM designers who helped bring back the Camaro. Jeff Perkins (leaning on the yellow Camaro fender, and in second photo in blue shirt) re-energized the Camaro interior with a simplified dashboard and touches like "Inferno Orange" (see second photo) colors on the seats. Jeff's Dad also was a GM designer.

The other designer (top picture, yellow Camaro, in background) is Humberto Ortiz, a whiz kid GM found in its Mexico business and brought to Michigan to spearhead the Camaro restyling. Humberto spoke Monday evening to the Latin Chamber of Commerce in Tampa where a surprising number attendees brought their children (apparently all Transformer movie fans). Humberto is a design-sketching maniac, so a long line of kids with parents formed after he spoke to have Humberto quick-draw some cars on any available scrap of paper. Pretty cool.

So what's the point of all this hoopla? Chrysler is becoming an arm of Italy's Fiat. GM's selling its Saturn line to auto baron Roger Penske who plans a revival big on electric vehicles. The feds are lending billions to Ford, Nissan (a Japan auto maker, go figure) and Tesla Motorsto goose fuel efficient car manufacturing in America. Exxon Mobil just teamed up with a Canadian battery maker to produce battery-driven cars called Maya 300s. GM, now 24 days into bankruptcy, absolutely must keep waving its Hey Look At Me flag to consumers just to get their attention. After that, it's up to the company to (1) make attractive, fuel-sipping vehicles people actually want, (2) produce quality vehicles priced with a sense of real value and (3) stop resting on yesteryear models. I'm cheering for GM's Great Rebound but it's gonna get bloody out there in the auto wars of the coming years.

-- Robert Trigaux, Times Business Columnist

Florida's GM dealers spared the heaviest cuts while Midwest bears brunt

Wake up and good morning. Out of the 1,323 General Motors dealers targeted for elimination, only 35 are targeted in Florida. The most will come from Pennsylvania, where 90 dealerships will be forced to wind down. Pennsylvania is followed by Ohio with 79, Illinois with 66, California with 65 and New York with 60.

They, in order, are followed by Michigan with 58, Texas with 55, Wisconsin with 50, Indiana with 48, Iowa with 46, Minnesota with 39, Missouri with 38 and North Carolina with 36. Yes, 13 states face a larger number of dealer closings than Florida's 35.

GM and its CEO, Fritz Henderson (in photo from AP), have declined to name individual dealers. But it released the state-by-state list for the first time Friday to a House Energy and Commerce subcommittee. As reported by the Washington Post, lawmakers vented their frustration, demanding that GM and Chrysler executives provide even more detailed explanations of their restructuring decisions.

So Florida GM dealers should be feeling pretty good about themselves. Florida's only taking about a 2.6 percent hit in dealer closings of those 1,323 to be shut down nationally -- far less than states of more modest size.

GM CEO Henderson told a skeptical House panel that the dealer cuts were "quite painful" but necessary to preserve over 200,000 jobs at GM's remaining dealers. "In essence, this is our last chance," he said. GM filed for Chapter 11 protection on June 1 and the company hopes to emerge from bankruptcy as a new company in 60-90 days.

Using a scoring system, here's how GM said it picked which dealerships to wind down.

Overall Score: Each of the four category scores below is added together to total an overall score. Dealers scoring less than 70 received a wind-down agreement. They include:

• Sales - Weighted at 50 percent measured against appropriate average for size of market (measuring relative share performance against dealers in similar size markets in the state).
• Customer Satisfaction Index - Weighted at 30 percent measured against regional average. (GM has 5 regions in U.S.)
• Capitalization - Weighted at 10 percent measured against dealer's needed working capital standard.
• Profitability - Net profits before taxes weighted at 10 percent.

An overall score of 100 is average, GM says. Below 100 indicates a performance issue with 70 or
below indicating extremely poor performance.

-- Robert Trigaux, Times Business Columnist

Jack Fitzgerald: One Chrysler dealer who's not taking his shutdown without setting record straight

 Wake up and good morning. Jack Fitzgerald has been around the car dealer block a few times as owner of 13 dealerships in Maryland, Pennsylvania and at 27365 U.S. 19 in Clearwater, Fla. Three of his Maryland dealerships will lose their Chrysler franchises by June 9, as will his Fitzgerald Countryside Jeep here in Pinellas County. 

Dealers targeted to be shut down are making a good point -- just too late in the process now to make a difference. Chrysler made cars consistently panned in Consumer Reports' annual rankings, and then blamed the dealers when they did not sell. GM's got the same problem. It would be in last place in the rankings, if not for Chrysler.

Fitzgerald, whose Fitzgerald Auto Malls have been around since 1966, normally follows his 11th Commandment: Thou shall not dis the factory that makes the cars your dealership sells.

Consider it broken. "Some jerk in Detroit who has ruined his company is going to say I'm an underperforming dealer?" Fitzgerald told the Washington Times this week. "I've done nothing but grow every year for 43 years."

Check out Fitzgerald's own blog, The Fitzway Blog, that includes a video clip of Fitzgerald interviewed by Fox TV's Greta Van Susteren. FItzgerald is smart, articulate, critical and offers advice to the "failed management" at both Chrysler and GM. Well worth a look and listen.

Fitzgerald says he's bugged automakers to improve their consumer ratings for 20 years and, according to the Washington Times, has letters from former GM CEO Rick Wagoner and former DaimlerChrysler CEO Dieter Zetsche to prove it. Here's what Zetsche wrote to Fitzgerald in 2001:

"We're putting a lot of effort into increasing the reliability and quality of our vehicles, which we're expecting will result in ... even more favorable ratings from Consumer Reports."

In the magazine's April issue, which includes rankings of 2009 models, Chrysler was the lowest-rated automaker. GM was second lowest.

-- Robert Trigaux, Times Business Columnist 

 

Electric Karma coming soon to Tampa dealer

Wake up and good morning. Demand for fuel-efficient vehicles may be slipping but auto makers are still pushing ahead with battery-powered cars. Here's one you've probably never even heard of, and it's coming to a dealer soon in Tampa. Just be prepared to shell out some big bucks.

This week, Fisker Automotive Inc. -- the maker of this luxury sports car, called Karma -- said it received $85 million in additional venture capital that will help the 18-month-old California start-up begin producing the car it has been developing. According to the Wall Street Journal (subscription required), Fisker hopes to sell 15,000 vehicles in 2010. (Photo courtesy of Fisker Automotive.)

Given the recession, the $2-a-gallon price of gas and the Karma's price tag, somebody's a real optimist. The Fisker Karma is a sleek sports car that is supposed to start at $87,900 and travel 50 miles on electrical power and for an additional 250 miles on a 2.0-liter gasoline engine before requiring refueling. The Irvine, Calif., company has orders for 1,300 vehicles, Fisker Automotive CEO Henrik Fisker told the Journal. Fisker Automotive was founded in 2007 by Fisker Coachbuild LLC and Quantum
Technologies. It is privately owned and backed by the well known Silicon Valley venture capital firm Kleiner Perkins Caufield & Byers. Interestingly, it is also backed by the Qatar Investment Authority, an investment arm of the State of Qatar, an emirate located halfway down the west coast of the Arabian Gulf.

All this is happening while America fixates on the fate of GM, Chrysler and Ford. The message here is the auto/transportation industry is changing fast. Other players and other investors are pouring into niches because they recognize there are opportunities to get into the auto business at a time when some of the big players are swirling the drain.

And why do we in the Tampa Bay area especially care about Fisker's Karma? Because they will soon be for sale by Elder Automotive Group's Jaguar and Aston Martin dealership in Tampa located at 310 E. Fletcher Avenue. Stated Irma Elder, who heads Elder Automotive Group:

"This is such an incredible time in our industry, when we are on the leading edge of new technology that is becoming reality. We certainly look forward to showing the new Fisker Karma to our customers and will have our display models fully charged and ready to go beginning in early 2010."

Obviously at nearly $88,000, the Karma is a premium priced auto. But it's not the only electric-powered option out there. On the other end of the price spectrum, the all electric ZENN -- which stands for Zero Emission No Noise -- "neighborhood electric vehicle" can travel up to 35 miles and its 120-volt battery can be recharged in as little as four hours. ZENN Motor Co., based in Toronto, said this week it is dropping the price of its vehicle to under $10,000.

Robert Trigaux, Times Business Columnist

GM, Segway unveil innovative transport

This is not Tampa Bay specific, per se, but it illustrates the type of collaboration and innovative thinking that we should have seen from GM and even the Segway folks long ago. Project PUMA (Personal Urban Mobility and Accessibility) is a joint venture between the two businesses to make a new type of two-wheeled vehicle designed to move easily through congested urban streets. Tampa's WFLA radio morning show chatted with a GM manager about it this morning, and the Wall Street Journal reported on the innovative transportation device (subscription required). The electric vehicle would have a range of 35 miles and cost between a third to a fourth that of a traditional vehicle. (Photo courtesy of Segway.)

My only real question to GM is: Why did you wait until a hair's breadth of Chapter 11 bankruptcy to start showing you have an out-of-the-box innovative streak?

Segway, the two-wheeled gyroscopic-balanced transport that was supposed to revolutionize personal movement -- especially in urban areas -- has some detail about Project PUMA, including video of it on the move. Let's hope there's more success in mainstreaming the new device than Segway had selling its original design which has been largely relegated here to local tours, as the photo shows, starting at the Pier in St. Petersburg. (Photo by John Pendygraft of theSt. Petersburg Times.)

According to GM, cities around the world are actively looking for solutions to alleviate congestion and pollution. Project PUMA addresses those concerns. It combines several technologies demonstrated by GM and Segway, including electric drive and batteries; dynamic stabilization (two-wheel balancing); all-electronic acceleration, steering and braking; vehicle-to-vehicle communications; and autonomous driving and parking.

I say: Bring it on.

-- Robert Trigaux, Times Business Columnist

Auto dilemma: Gas swings wreak sales havoc

Wake up and good morning. Anyone want a nice shiny red Honda Fit (shown in photo)? A Toyota Yaris (in photo below)? Anyone? Auto dealers could not keep up with small car demand last summer when gas cost $4 a gallon. Now that gas prices are down -- we're talking about $1.95 for regular in the Tampa Bay area -- dealers apparently can't (almost) give them away.

A Wall Street Journal story today (subscription required) explores the turnabout in consumer buying tastes, coming at such a bad time for an auto industry that, amid a recession, already shifted production gears at its plants to boost small car output. Those moves were prompted by coming stricter federal fuel-economy standards and the Obama administration's car-bailout plan, which encourages auto makers to boost their vehicles' mileage, according to the Journal. Practically every small car in the market is stacked up at dealerships. At the end of February, Honda Motor Co. had 22,191 Fits on dealer lots -- enough to last 125 days at the current sales rate, according to Autodata Corp. In July, it had a nine-day supply, while the industry generally considers a 55- to 60-day supply healthy.

It's no better at other dealers. Toyota Motor Corp. has enough Yaris (photo, shown in gray) subcompacts to last 175 days. Chrysler LLC has a 205-day supply of the Dodge Caliber. And Chevrolet dealers have 427 days' worth of Aveo subcompacts. At the current sales rate, General Motors Corp. could stop making the Aveo and it wouldn't run out until May 24, 2010, according to the Journal story.

The Journal talks to Clearwater-based AutoWay general manager Brian Speas who's standing next to a Honda Fit that's sat on his lot for more than 140 days. The recession in part has caused a logjam of small cars at dealers. AutoWay Honda, part of Fort Lauderdale-based AutoNation, used to sell Fits like hotcakes. Now Speas struggles to get customers to give them a look. He has a whole row of Civic hybrids that draw little interest, and a half-dozen Fits that have been sitting unsold for more than three months, says the Journal story. Speas just launched a radio campaign offering Civic hybrid leases at the same price as the model's traditional gas engine counterpart. Last summer, the hybrid fetched a $130-a-month premium over the standard Civic.

Auto makers can't turn production lines around on a dime. So they're wrestling, like the consumer, on which vehicles to produce and market.

In the Tampa Bay area, auto sales have been generally battered by the economic slowdown. Here's a look from R.L. Polk at the top 16 auto makers in sales (based on new auto registrations) in the Tampa-St. Petersburg area in 2008 versus 2007.Everybody's down, though Honda and Volkswagen managed to remain fairly steady while others sustained double-digit declines:

Rank Make       Registrations   Change '08 vs. '07
1      TOYOTA        26,980                -23.2%
2      HONDA         17,356                  -0.5%
3      FORD            15,231                -35.6%
4      CHEVY          13,404                -34.6%
5      NISSAN         13,194                -19.4%
6      HYUNDAI        9,668                 -19.4%
7      DODGE          5,763                  -44.2%

8      MAZDA         4,728                   -10.0%
9      KIA               3,991                   -16.6%
10    JEEP            3,806                   -34.0%
11    LEXUS          3,738                   -32.0%
12    CHRYSLER   3,523                   -38.8%
13    VOLKSWGN 3,481                     -1.9%
14    BMW            3,454                   -23.0%
15    CADILLAC     3,233                   -29.6%
16    LINC/MER     3,145                   -30.0%

-- Robert Trigaux, Times Business Columnist

AutoNation CEO: 'Better mood at funerals'

AutoNation Mike Jackson's never been one to mince words. How many top executive in the auto dealership world actually called for higher gas taxes to motivate automakers to make more fuel efficient vehicles more quickly?

So when Jackson, who runs the nation's largest public car dealership group, on Sunday said AutoNation scaled back its orders for new vehicles from automakers by 60 percent this month due to weak demand and increased inventories of unsold vehicles, people listen.

"Inventory is high for everyone," Jackson told Reuters in an interview at the Detroit Auto Show, which opened for a preview on Sunday. "Orders have been scaled back dramatically .... have been scaled back 60 percent for January." He said the plunge in U.S. sales has caused cars and trucks to pile up on dealer lots and he does not expect any improvement in demand during the first quarter.

'You may see some signs of life by end of March,' he said, calling the U.S. auto industry at "depression level sales" at the current annual sales rate of about 10-million units.

The poor sales environment was affecting the mood at the Detroit auto show, Jackson said. "I have seen a better mood at funerals,' he told Reuters TV. Still. Jackson said orders for trucks are up as gas prices decline from their 2008 highs.

Fort Lauderdale-based AutoNation owns and operates 321 vehicle franchises in 15 states with a range of U.S., Asian and European automobile brands. The company operates under the AutoWay brand in the Tampa Bay area. Shares of AutoNation, which fell below $4 last fall, have rebounded and are trading on Monday between $9 and $10 a share.

In November, Autoway Chevrolet of Tampa Bay, at 1700 Hillsborough Ave. E in Tampa, closed its showroom. AutoNation said the decision came from General Motors and reflected slower sales. The parts and collision center will stay open at the Hillsborough Avenue location. The closing reduces AutoNation's presence in the Tampa Bay area from 14 to 13 stores. The company said it has no other plans to close stores in the area.

Jackson told  Reuters he expects a gradual improvement in the U.S. market in the second half of the year, given the massive stimulus package being considered by the incoming Barack Obama administration. AutoNation will announce its fourth quarter earnings on Jan. 29.

(AP photo of Mike Jackson, St. Petersburg Times files.)

-- Robert Trigaux, Times Business Columnist