Tag Archive | "General Motors Co."

Auto Sales Per Dealer May Reach Pre-Recession Levels, Firm Says


U.S. auto sales per dealership may return to levels reached before the recession after General Motors Co. and Chrysler Group LLC closed locations.

Sales per dealer may rise to about 745 new vehicles this year, according to auto-dealership consultant Urban Science. The National Automotive Dealership Association forecasts total U.S. sales in 2011 may rise 11 percent to 12.9 million, which would be about 23 percent less than the annual average from 2000 to 2007, reported The Detroit News.

The number of U.S. auto dealerships fell 4.4 percent last year to 17,659, Detroit-based Urban Science said today in its annual Automotive Franchise Activity Report. The rate of closings slowed from 8 percent in 2009, according to the report.

“The domestic consolidations worked and have allowed the remaining dealers an opportunity see their numbers rebound faster,” John Frith, vice president of Urban Science, said in a statement.

GM, the largest U.S. automaker, and Chrysler eliminated more than 2,200 dealers as part of their bankruptcy reorganizations in 2009. The shutting of about one-fourth of the companies’ dealerships drew criticism by the special inspector general for the Troubled Asset Relief Program, which said in a report last year that the “dramatic and accelerated” closings may not have been necessary and added to unemployment.

Detroit-based GM reorganized with $49.5 billion in government aid, while Auburn Hills-based Chrysler got $12.5 billion in assistance for its reorganization that year from the government’s TARP program, which also aided banks.

More dealerships may close in 2011 after Ford Motor Co. discontinued its Mercury brand at the end of last year, according to Urban Science.

Ford plans to reduce the number of dealerships selling its Lincoln luxury brand in the biggest U.S. metropolitan markets by 25 percent to 325 outlets, the Dearborn-based automaker told dealers and reporters this month at the NADA convention in San Francisco.

The industry averaged a 16.8 million annual rate from 2000 to 2007, according to Woodcliff Lake, New Jersey-based researcher Autodata Corp.

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Lutz May Return to GM As Adviser


General Motors Co. has been in talks with former product chief Robert Lutz about bringing him back as a paid consultant, The Detroit News has learned.

The details were unclear Tuesday, but the 79-year-old Lutz continues to have a close relationship with GM, and the two have been in discussions about formalizing an advisory role, according to sources familiar with the discussions.

Lutz retired from GM last May after a storied, 47-year career in the auto industry, but he remains in contact with many of GM’s senior executives and speaks frequently with CEO Daniel Akerson, reported The Detroit News.

Lutz, reached by phone Tuesday, said a formal offer hasn’t been made.

“I have the utmost respect for the GM management,” he said. “If they want me to come in as a consultant, I’d be very happy to consider it.”

GM Vice Chairman Stephen Girsky, speaking to investors in New York City Tuesday, said they call on Lutz “every now and then,” but downplayed the company’s need for more “car guys.”

GM officials declined to comment further on what they described as speculation about Lutz’s return.

It wouldn’t be the first time GM has brought back a senior executive as a consultant. Former GM CEO Fritz Henderson worked as a consultant to the company after leaving in 2009. He has since left GM.

Lutz, who recently finished a memoir of his career, is a legendary figure in the industry and largely credited for engineering a design renaissance at GM.

He has held senior positions at each of Detroit’s Big Three automakers and overseen some of the industry’s most daring designs in recent years, from the Dodge Viper to the Chevrolet Volt extended-range electric car.

In November, Lutz was recognized at the official production launch of the Volt at GM’s Detroit-Hamtramck plant.

He also appeared at the North American International Auto Show in Detroit, raising speculation he might make a comeback.

GM has undertaken a number of significant changes in its executive ranks in recent weeks.

Last month, GM shook up its top executive ranks, moving Tom Stephens, from product chief to head of global chief technology, a new position. The company appointed electrical engineer Mary Barra, 49, replaced Stephens. Barra, a 30-year GM veteran who had headed its global human resources, is overseeing the design and development of GM’s global lineup.

She has a strong engineering and manufacturing background, but her resume is light on product design experience, some industry analysts say.

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Ex-Product Chief Lutz In Talks to Return To GM


General Motors Co. has been in talks with former product chief Robert Lutz about bringing him back as a paid consultant, The Detroit News has learned.

The details were unclear Tuesday, but the 79-year-old Lutz continues to have a close relationship with GM, and the two have been in discussions about formalizing an advisory role, according to sources familiar with the discussions, reported The Detroit News.

Lutz retired from GM last May after a storied, 47-year career in the auto industry, but he continues to remain in contact with many of GM’s senior executives and speaks frequently with CEO Daniel Akerson.

GM officials declined to comment on what they described as speculation about Lutz’ return.

Lutz, reached by phone Tuesday, said a formal offer hasn’t been made.

“I have the utmost respect for the GM management,” he said.

“If they want me to come in as a consultant, I’d be very happy to consider it.”

Lutz’s return wouldn’t be the first time GM has brought back a senior executive as a consultant.

Former GM CEO Fritz Henderson worked as a consultant to the company after leaving the executive post in 2009. He has since left GM for a leadership position at Philadelphia-based Sunoco.

Lutz, who recently finished a memoir recounting his career and tenure at GM, is a legendary figure in the industry and largely credited for engineering a design renaissance at GM.

He has held senior positions at each of Detroit’s Big Three automakers and overseen some of the industry’s most daring designs in recent years, from the Dodge Viper to the Chevrolet Volt extended-range electric car.

In November, Lutz was recognized at the official production launch of the Volt held at GM’s Detroit-Hamtramck plant.

He also appeared at the North American International Auto Show in Detroit last month, raising speculation he might make a comeback.

GM has undertaken a number of significant changes in its executive ranks in recent weeks.

Last month, GM shook up its top executive ranks, moving Tom Stephens, from product chief to head of global chief technology, a new position.

The company then appointed 49-year-old electrical engineer Mary Barra to the top product position, replacing Stephens. Barra, a 30-year GM veteran who had headed its global human resources, is overseeing the design and development of GM’s global lineup.

She has a strong engineering and manufacturing background, but her resume is light on product design experience.

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GM Outlines Profit-Sharing Payments


DETROIT—General Motors Co. said Monday that its 45,000 U.S. hourly workers will get at least $4,000 each under a profit-sharing agreement with the United Auto Workers that is paying off amid the auto maker’s return to profitability.

GM expects to disclose the exact amount later this month when the company posts financial results for the fourth quarter, a company spokeswoman said. It will be the company’s largest profit-sharing payout to paid. The most GM paid previously was $1,775 in 1999, reported The Wall Street Journal.

The auto maker also is giving out a bonus to its salaried work force that for most employees will range from 4 percent to 16 percent of their annual salary, the company said.

Ford Motor Co. last month paid its U.S. hourly workers $5,000 in profit sharing, more than the company was required to pay under the profit-sharing formula in its contract with the UAW. Chrysler Group LLC didn’t earn money in 2010 but still paid its hourly workers $750 each in recognition of their contributions to the Auburn Hills, Mich., company’s progress toward recovery last year.

The auto maker is on track to post its first annual profit since 2004 when it reports financial results for 2010 later this month. GM earned $4.2 billion through September and is expected to post a profit of about $1 billion for its fourth quarter.

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GM’s, Chrysler’s White-Collar Bonuses Critical, Analysts Say


The bonuses General Motors Co. and Chrysler Group LLC are paying to about 36,800 white-collar workers are critical to recruiting and retaining talent in a competitive marketplace, analysts said Friday.

The carmakers, less than two years out of bankruptcy and still owing the federal government billions of dollars, are playing catch-up with employee compensation after years of cutting costs and benefits as the economy tanked, analysts said.

Chrysler on Friday paid out bonuses averaging about $10,000 to 10,800 salaried workers — its first payout in five years. The company’s last round of bonuses, in 2006, averaged about $9,000 per worker.

GM said most of its 26,000 white-collar workers — more than 96 percent — will receive performance pay ranging from 4 to 16 percent, based on worker responsibility and pay level.

A few GM and Chrysler workers — fewer than 1 percent — will receive bonuses of 50 percent or more. GM declined to elaborate further or say when workers would be paid.

This will be the first significant bonuses some salaried workers have received in years, reported The Detroit News.

“Surely, if they were paying out bonuses that were clearly unjustified, that’d be a problem,” said Martin Zimmerman, a business administration professor at the University of Michigan. “But they’re running a business. And an important part of a business is retaining a highly talented work force.”

The moves by Chrysler and GM come as the automakers strive to keep their post-bankruptcy momentum going and need their best and brightest workers to pull it off. GM gave its white-collar workers a bump in base pay last year, hoping to bring salaries on par with other companies. They won’t get an increase in base pay this year, but are eligible for performance bonuses.

Ford Motor Co., the only Detroit automaker not to take government bailout loans, plans to notify its white-collar employees of bonuses in March.

Because the government has a 33 percent stake in GM, bonuses for its 100 highest paid executive must receive U.S. Treasury approval.

The government restrictions also limit Chrysler from paying out bonuses to its top 25 employees, but the automaker has extended that to include its top 50 earners, said Chrysler spokeswoman Shawn Morgan. The U.S. Treasury owns a 9.2 percent stake in the company.

As the only privately held U.S. automaker, there were no stock options to sweeten the pot for workers or keep them from leaving for better-paying jobs, said analyst Joe Phillippi of AutoTrends Consulting in Short Hills, N.J. “If you don’t want to pay your people, someone else will,” he said.

The white-collar bonuses were not welcomed by all.

At least one hourly worker at Chrysler’s Jefferson North plant groused about the payouts being too big, given all the concessions the United Auto Workers made to help the companies through bankruptcy.

The Detroit Big Three will also pay out profit-sharing bonuses to hourly workers this spring.

Contracts talks begin this summer between the UAW and the automakers.

UAW officials did not return phone calls Friday for comment.

U.S. Sen. Chuck Grassley, R-Iowa, sent a statement Friday questioning the bonuses.

“Since the taxpayers helped these companies out of bankruptcy, the taxpayers should be repaid before bonuses go out,” Grassley said.

“Unfortunately, the Treasury Department never asserted ownership rights. It didn’t put the taxpayers first.”

The payouts for active white-collar workers at GM also raised some eyebrows among the automaker’s salaried retirees.

“Since the salaried retirees participated in the sacrifices, we’re hoping to participate in the prosperity as well,” said John Christie, president of the GM Retirees Association.

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GM Launches Leasing Deals to Spur Sales


DETROIT – General Motors Co. is offering to waive the last three payments on existing leases if holders buy a new car, adding an incentive onto deals that last month exceeded offers made by rivals.

The promotion began this month and is valid on most models with leases that expire between now and Aug. 31, according to the company. GM raised incentive spending in January by 16 percent to an average of $3,663 per vehicle, the highest among major automakers, according to researcher Autodata Corp. GM sales outpaced the industry that month, reported Automotive News.

GM said in a video presentation for its initial public offering in November that it intended to offer fewer incentives that crimped margins and created an impression that price was the main selling point for GM vehicles. Early-return leasing deals may conflict with the that pledge, said Jessica Caldwell, an analyst at Edmunds.com.

“I hope they’re not walking down that road,” said Caldwell, who is based in Santa Monica, Calif.

GM’s U.S. sales rose 22 percent last month, topping the industry’s 16 percent gain. Don Johnson, GM’s vice president of U.S. sales, said on the company’s monthly sales conference call with analysts and reporters that the company would begin discussing incentives “directionally” rather than giving specific data on a month-to-month basis.

“I am not seeing any internal behavior that suggests we have gone back to old ways,” Rick Scheidt, GM’s vice president of Chevrolet marketing, said in an interview this week at the Chicago auto show. “It’s still way too close to the bankruptcy for us to be sliding back into bad habits. We know everybody’s watching.”

GM is being smart about incentives, said Duane Paddock, who owns Paddock Chevrolet in Kenmore, New York. His dealership advertises a Chevrolet Cruze compact for $119 a month and the Chevrolet Equinox sport-utility vehicle for $219, including other incentives. The promotions fend off Honda Motor Co. and Toyota Motor Corp., both of which have drawn customers away with attractive lease offers, Paddock said.

Toyota, which halted deliveries of some models a year earlier due to a recall, raised incentive spending in January by 24 percent to an estimated $1,962 a sale. Honda boosted discounts 41 percent to $2,016. GM had increased its promotions by $498, or 16 percent.

The incentives may be GM’s way of signaling it’s back in the leasing business after spending $3.3 billion last year to buy General Motors Finance, said Nicholas Colas, chief market strategist at BNY ConvergEx Group in New York.

“I don’t think these incentives have as much to do with overall discounting as they have to do with messaging to the marketplace,” Colas said.

Leasing represented about 14 percent of GM’s deliveries in January, up from less than 5 percent during the recession, Johnson, GM’s U.S. sales chief, said on a Feb. 1 conference call. GM remains below the industry average of about 20 percent, he said.

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