Car For Sale: Another Misinformed Journalist

Why Alfred E. Newman? Because it Reminds me of the Figure Behind this Story (or why Political Journalist are Political  Journalist and Car Guys are Car Guys)

At this time last year  the price of gasoline was well on its way to starting a nation wide panic. No longer would America buy trucks or SUV’s. The press predicted that the price of gas would get so high that people would just park their SUV’s on the side of the road and walk away. The Ford F150 and all of its counterparts were doomed for extinction.

Last year the price hike on a gallon of gas could change three times a day. Do you think that was caused by a shortage in oil or was it caused by speculators and an over hyped media looking for another sensational story? There was no shortage of oil but there certainly was a lot of hype. That hype cost you and I a lot of money and was one of the catalysts that started our current economic meltdown. I don’t recall any journalist coming out and saying “Maybe we over-reacted!”.

Fast Forward.

This appeared on the front page of MSN.com this morning.”Deal or No Dealership Why is Chrysler closing 789 car dealerships? The author claimed to be a Political Reporter for Slate. Another title for this article could have been “How Irresponsible Journalism Takes Money Right Out of Your wallet”. First why is a Political reporter attempting to write an objective, non biased story on the state of the automobile business?

What this country needs right now is a sustained boost in our economy. One way to boost the economy is to fuel confidence and optimism and remove irresponsible, hype journalism such as witnessed below by Christopher Beam. Follow me through this article as I help Beam get his facts straight.

By Christopher Beam Posted Wednesday, May 20, 2009, at 6:20 PM ET

Beams View of the Automobile Business

Chrysler disclosed in a bankruptcy filing last week that it plans to close 789 dealerships—about one-quarter of its total. General Motors,meanwhile, told the owners of 1,100 dealerships that it will drop them from its network.

How does shuttering dealerships help car companies?

It saves them money. Car companies don’t actually own dealerships—instead, they have contractual agreements that dictate factors like location, display space, signage, and service options. Nevertheless, Chrysler and GM and other auto manufacturers must maintain a large, costly field force of trainers (to train technicians to fix cars), salespeople (to persuade dealers to buy more cars), and auditors (to verify claims for reimbursement). The more dealerships, the more go-betweens a car company needs to employ and the more money it has to shell out.

The Car Guys View of how it really works.

The manufactures never have and never will “give or supply” a service to a dealer without charging the dealer for it. There is no FREE LUNCH. All Dealers incur the cost of training any and all of their employees. 95% of the training for salespeople is done in-house. The dealer picks up the tab in full or in part on training. In a lot of cases salespeople invest in their own training with notables like Dale Carnigie, John Maxwell and Brain Tracy. Service technicians do the same in house training. They watch training videos and study the work-study manuals. So some training is completed outside the dealership, the majority is completed in-house.

The amount of money Chrysler pays it support staff before or after reconstruction is minuscule in comparison to the whole.[Multi Billions] Beam’s comparison and example is absurd unless you were presenting this to third graders.

Beams View:

Another benefit: Shutting down dealerships weeds out weaker branches to help stronger dealerships stay viable. It also makes sense from a branding perspective, because when a dealership starts to fail, dealers resort to tactics that make the car company look bad. Think free hot dogs, “push, pull, or drag” sales, and giant inflatable gorillas on the roof. (Luxury car companies like Lexus explicitly forbid dealers from using the words price or sale in their ads.)

The Car Guys View:

In every industry, in every vertical market you have the Neiman -Marcus operators and you have the Dollar General operators. Neiman-Marcus and Dollar General both satisfy a niche in the market. These niches are consumer driven not industry driven. They both satisfy a demand and work well in their respective markets. There is nothing “wrong” or socially unacceptable with a “free hot dog”.

Beams View:

Finally, pre-emptive closings help car companies from getting saddled with tremendous amounts of debt. Let’s say a GM dealer is just getting started: He’ll buy hundreds of cars from GM with money borrowed from GMAC, the financing arm of GM. If the dealership collapses suddenly, GMAC may not get a lot of the money it’s owed. So it makes sense for GM to shutter a dealership before it goes too far into the red.

Car Guys View:

The above is all based on a NEW dealer going into business. Before anyone can buy a dealership they have to prove that they have enough capital to withstand the two or three years it takes to get established. Plus today no one is rushing out to buy a dealership. So Beam your argument is real weak.

Remember when I stated that with the manufactures there is no Free Lunch. Anything a dealer receives from the manufacturer the dealer pays for. There are no gimmes. The manufactures does not negotiate with the dealer. The dealer pays “Full List Price” for every vehicle we buy from the manufacture. There are no discounts. There is no negotiation. Once the dealer buys the car from the manufacturer they have 60 to 90 days to sell it before their cost of the vehicle goes up again due to interest expense. The first 60 to 90 days are not interest “FREE”. Believe when I say that the initial 60 to 90 days of interest is factored into the price of the vehicle way before the manufacturer sells it to me.

Beams View:

When the auto industry first started expanding in the early 20th century, it made sense to have dealerships in every community. Much of the population was rural, and cars broke all the time, making proximity to the original vendor necessary. These days, with a more urban population and better auto engineering, it’s not necessary to have so many dealerships. At the same time, people are willing to drive farther to buy or tune up their cars. As a result, more dealerships don’t correlate with more sales. Toyota sells more cars than Chrysler with fewer than one-third of the number of franchises. (The average Toyota dealer sold 1,589 vehicles in 2008; the average Chrysler dealer sold 124.)Deal or No Dealership Why is Chrysler closing 789 car dealerships?

Car Guys View:

First let me apologize for making you read Beams third grade class presentation on why we do not need more dealers. That was real torture wasn’t it?

First Rural or Urban?

Doenges Ford Linclon Mercury Toyota went urban from rural and started as a Ford dealership 68 years in the American urban metropolis city of Bartlesville Oklahoma. For 10 years prior to that my grandfather owned a ‘rural” Ford dealership in Braman Oklahoma. Most dealerships followed suit in the 1950’s and 60’s. The dealerships that stayed rural were assets to and of their communities. Some of the most profitable dealerships in the country are rural.

Is the Kansas City Metropolitan Area Rural?

According to the Kansas City Star, Chrysler send out pink slips to 11 (eleven) Kansas City Chrysler Dealerships. I would not consider Kansas City rural. So Beam, your assumption that most of these dealerships were rural proves that your research for this article was myopic or non-existent. This type of reporting is irresponsible and is the currency for hype. This kind of hype is the fuel that undermines the confidence of the consumer and our economy.

Toyota and Single Points

Toyota is a single point dealership. Chrysler is a multipoint dealership. In a single point dealership only one brand of cars can be sold. Lexus is also a single point operation. However they do not have the same sales volume numbers that Toyota does. A lot of Chrysler rural dealers have “bundled” franchises. Which means they may have one of the GM or Ford franchies as part of their overall dealership. My point ii this Beams comparison of 124 cars sold per dealer to Toyota’s 1,589 is not a “apples to apples” fair and objective comparison.

Bottom Line: More dealerships sell more cars for that particular manufacture without a substantial increase in manufactures cost. So Chrysler is really taking the real risk. The risk is can we sell enough cars to justify keeping X number of plants open. If I’m selling a product do I want more distributors or fewer distributors? I’m placing my bet with more distributors.

In the majority of cases it was not the dealer who was inefficient it was Chrysler manufacturing. Here is a novel idea. Manufacture quality cars at a fair price. This will help any manufacturer solve 90% of their problems.

BTW…Ford Motor Corporation started to thin out their dealer ranks three years ago. Ford had the leadership and the foresight to avoid some of the land minds currently faced by Chrysler and GM.

For more information please contact Brad Doenges of Doenges Ford Lincoln Mercury Toyota in Bartlesville Oklahoma at (918) 333-0900.

Popularity: 35% [?]

Quality is Free if You Do it Right the First Time

I’m lucky and proud to be a Ford dealer because not only do we have quality products we have quality leadership.

I came across this story on Bloomberg yesterday and I would like to share it with you.

May 20 (Bloomberg) — Ford Motor Co. Executive Chairman Bill Ford, great-grandson of the company’s founder, said it is in the national interest that the automaker keep operating without federal aid.

“It is not up to the taxpayer to save the automakers”…

“It’s in the country’s interest that Ford remain free of taxpayer money,” Ford said yesterday in an interview in his Dearborn, Michigan, office overlooking the 2,000-acre Rouge factory complex built by Henry Ford. “Anything we can do to minimize the amount of taxpayer money going into the private sector is probably a good thing.”

Level the playing field by not allowing bribes to go to GM and Chrysler

Ford, 52, said he has talked with members of the Obama administration to ensure the company isn’t hurt by being the only U.S. automaker to forgo federal funds. Chrysler LLC is restructuring in a U.S.-backed bankruptcy, and General Motors Corp. probably also will end up in Chapter 11 by June 1.

The discussions are aimed at “not being disadvantaged from the fact that we’re an independent company, not taking taxpayer money,” Ford said. “That’s in the national interest that that happens.”

Ford won’t touch that with a 10 foot pole.

His comments reinforced the company’s efforts to distance itself from Chrysler and GM, which received $19.4 billion in emergency loans to stave off collapse. While those automakers restructure in and out of court, Ford Motor has been showcasing projects such as factory investments to support new small cars.

Ford Motor’s strategy on a bailout evolved throughout late 2008, Ford said.

‘Go It Alone’

On Dec. 2, Chief Executive Officer Alan Mulally testified to Congress with the CEOs of GM and Chrysler and appealed for a $9 billion credit line. Within weeks, the second-largest U.S. automaker reversed the decision after deciding it had the cash to “go it alone,” said Ford, who served CEO before he hired Mulally in 2006.

The Government is Not Good At Manufacturing Quality Cars, Crossovers, SUV’s and Trucks

“When we started seeing what the restrictions of taking government money would mean to our ability to operate quickly and strategically, we felt that wasn’t a position we wanted to be in,” Ford said. “We felt we could pull ourselves up by our bootstraps and make it on our own.”

While Ford Motor lost a record $14.7 billion in 2008 and remains at risk from the worst U.S. auto market in 27 years, it’s getting a public-image boost for not taking government aid, said Efraim Levy, a Standard & Poor’s equity analyst.

“Ford is benefiting from its independence,” said Levy, who is based in New York and advises holding the shares. “Consumers don’t resent them for taking their tax dollars to stay alive.”

Mulally’s Gambit

Mulally’s borrowing of $23 billion in late 2006, with all the company’s major assets pledged as collateral, positioned Ford Motor to shun a rescue, Levy said.

“Ford was fortunate enough to get those loans in advance of the credit markets freezing up,” he said. “Take away that liquidity, and Ford would be in the same boat as the other two.”

Ford Motor has more than doubled this year in New York Stock Exchange composite trading as it cut debt by $9.9 billion and won concessions from the United Auto Workers to pare annual labor costs by $500 million. The shares fell 7 cents, or 1.2 percent, to $5.56 at 11:45 a.m. in New York.

Bonds for Ford Motor’s lending arm, Ford Motor Credit, rallied today. Ford Credit’s 7 percent notes due October 2013 rose 3.3 cents to 81.1 cents on the dollar, the highest since June, according to Trace, the bond-pricing service of the Financial Industry Regulatory Authority. The yield was 12.8 percent.

With $21.3 billion in automotive cash at the end of March, Ford Motor is now working to add new, fuel-efficient models and retool factories to wean itself from dependence on fuel-thirsty trucks.

Opportunity, Caution

“This is a time of real opportunity for us, but also some real cautions as well,” Ford said. “We are spending a lot of time trying to figure out what this all means to us.”

Among the risks are lower costs and better financing for GM and Chrysler from a U.S.-backed restructuring, said Brian Johnson, a Chicago-based Barclays Capital analyst. He rates Ford as “underweight”

This Author Says Johnson is the “Underweight” NOT FORD  and this is why: Johnson says”lower costs and better financing for GM and Chrysler”…really! When? The front of the bread line starts with suppliers and employees of GM and Chrysler and this idea of lower cost and better financing is years away…if ever.

More funding for those automakers and their credit arms would increase “their ability to offer discount financing and subsidize price wars,” Johnson said. “It will certainly put pressure on Ford’s strategy to improve their retail prices.” (Comment…Johnson this is total NONSENSE…would this also put pressure on Toyota and Honda? Hardly!)

This Author Says Johnson Must be Smoking Crack (Go Look at My Article of March 16, 2009-Under Car Buying Tips-)What  GM and Chrysler need are better products,quality merchandise, an improvement in quality across the board. What sells today in dealer showrooms is quality, NOT hyped up discounts. To survive GM and Chrysler need to invest in quality.

Ford said the automaker is improving its prospects with new models like the Fiesta subcompact car coming from Europe and the Fusion hybrid, along with two battery-powered autos coming in the next two years and a plug-in hybrid due in 2012.

‘Competitive Position’

“I really like our competitive position,” Ford said. “Having said that, we are still speaking with the government to say, where possible, ‘Please don’t disadvantage us.’”

Besides his own contacts with administration officials, company executives talk frequently with President Barack Obama’s autos task force, Ford said.

He said he was pleased shareholders rejected a proposal at the May 14 annual meeting to strip Ford family members of a special class of stock that gives them 40 percent voting control of the 105-year-old company. Bill Ford and his cousin, Edsel Ford II, are directors.

Bill Ford Works Lean Tough and Smart and the Reward Goes to His Customers

“I would hope that shareholders would see that our interests are aligned with theirs,” Ford said. “It’s more than just a financial investment, it’s an emotional investment. It’s pride. I mean, our name is on the product. If it was just a financial investment, the family probably would have been out years and years ago.”

For more information please contact Brad Doenges of Doenges Ford Lincoln Mercury Toyota in Bartlesville Oklahoma at (918) 333-0900.

Popularity: 37% [?]

5 Hot Reasons to Drive the Fusion Today-The 2010 Ford Fusion Lightning Round

From Boston to Bartlesville to Bakersfield  the word is out. The Fusion is HOT!!! The 2010 Ford Fusion and Fusion Hybrid have received a lot of press and this car deserves every bit of ink it gets.

I found five posts that talk and demonstrate a very objective view of he Ford Fusion and Fusion Hybrid. You will gain a another perspective by reading each post and most of the comments (I must warn you some are weird and off the wall) . I have made a short commentary about each post to start. If my intro sparks your interest click and read the post.

Reason #1 to Go Drive the Ford Fusion Today|The Fuel Efficiency |There has been a lot written the last week concerning the 1000 Mile Hybrid challenge. A lot of people just did not think it was possible for a four door sedan to get in excess of 50 miles to the gallon. Look at this report from Pure Green Cars.

Post #1 Ford Fusion Hybrid Gets 1445 miles on a Single Tank. The Ford hybrid engineering team was able to get an 1445.7 miles on a single tank of gas in the new 2010 Ford Fusion Hybrid.

Reason #2 to Go Drive the Ford Fusion Today|Discover Green Driving Habits | Learn the Hypermiler techniques of getting 80 miles to the gallon in this post I found in Jalopnik. Also read the comments in this paot, some of these people are real passionate .

Post # 2 One of Two Jalopnik – NASCAR Star Drives Ford Fusion Hybrid Slowly, Gets … Nascar star Carl Edwards, using eco-driving tips, drove this 2010 Ford Fusion hybrid non-stop 1445.7 miles on one tank of gas. Over 69 hours he averaged 81.5 MPG Another interesting point is that Edwards raced the night at Talladega.

Post # 2 Two of Two Hypermiling: Ford Fusion Opens Eyes and Gags the Opponents … The off-the-showroom-floor 2010 Ford Fusion Hybrid, by hypermiling legend Wayne Gerdes, was driven for 69 continuous hours. This post by Fast Company also gives you a look at 10 concept cars from Ford to Rolls Royce that could change the way we drive.

Reason #3 to Go Drive the Ford Fusion Today |The Best Car You Don’t Know About | C-Reports-Ford-Fusions For some odd reason, when people are chatting about new cars, they rarely mention the Ford Fusion. For a really good car that’s been around for a while, the Fusion seems to get less name recognition than Archibald Leach, better known as click on this link  Post # 3 Ford Fusion – The best car you don’t know about: Consumer Reports …

Reason #4 to Go Drive the Ford Fusion Today |It is Just Not all About Honda and Toyota | This particular post has a real good video plus the related posts are packed with good information.  Unimpressed with the marketing blitz of Honda and Toyota’s hypermiling challenges, Ford set out to hold one of its own. The 2010 Ford Fusion Hybrid issued a 1000 mile challenge. While I’m a big fan of the Insight and the great mileage …Post #4 Fusion Hybrid Gets 81.5mpg in Hypermiling Challenge | Zoomi Life

Reason #5 to Go Drive the Ford Fusion Today| Safety| Fusion Pancakes a 1 Ton Bison and the Driver Survives to Talk About it. Montana driver buys a 2010 Ford Fusion to replace her totaled 2007 Fusion after walking away from a catastrophic crash with a herd of bison near Yellowstone Park * The all-new 2010 Fusion and Fusion Hybrid – the most fuel efficient …Post #5 One of Two Fusion vs bison, bison loses and driver walks away More Must See |Safety |Photos on the 2010 Ford Fusion| Post #5 Two of Two | 2010 Ford Fusion Safety Features on Flickr – Photo Sharing! The 2010 Ford Fusion has even more safety features than its predecessor, such as side curtain air bags and is “Top Safety Pick” rated by the Insurance Institute for Highway Safety (IIHS). It also offers optional all-wheel drive and …

In Oklahoma and in particular Bartlesville, Oklahoma I will bet we could exceed 1600 miles on a tank of gas in 2010 Ford Fusion Hybrid. There are several reasons for this. One reason is we do not experience ttheraffic congestion of the East Coast…and there are two more reasons. Can you guess what they are?

For more information please contact Brad Doenges of Doenges Ford Lincoln Mercury Toyota in Bartlesville Oklahoma at (918) 333-0900.

Popularity: 38% [?]

What Does The Chrysler Bankruptcy Mean For Owners?

If you have not heard Chrysler filed for bankruptcy yesterday.

There are a lot of views on the Chrysler bankruptcy: Liberal, Moderate and Conservative. Today I decided to post a collection of every point of view to see if I could at least level the playing field. So be my guest and let me know what you think.

Doenges Ford Lincoln Mercury Toyota in Bartlesville Oklahoma is Benefiting From Ford’s Investment

I invite my neighbors who perhaps never visited one of our showrooms to come take a look at what Ford has invested heavily in the last two years: Smart Technology. Fuel Efficiency, Safety, Styling. Quality and Value.

You will be surprised and delighted to know that Ford has put their money where their mouth is.

Now let’s see what people are saying.

What does a Chrysler bankruptcy mean for Chrysler owners?

With Chapter 11 bankruptcy staring Chrysler in the face, what is going to happen to the extended warranty plan that we purchased? If the company enters into Chapter 11 bankruptcy, anyone purchasing a new Chrysler will know that the …

Best-Kept Secret in America: Ford, Toyota Gaining and Could …

Ford’s gain on GM has been more gradual. I believe this is because early media coverage of the GM and Chrysler bailouts frequently referred to “the domestic auto industry” as a whole and to “Detroit,” and significantly downplayed Ford’s non -participation. …. mb, Scenes of waiting at the DMV for hours , come to mind.. April 29, 2009 – 14:13 ET by upcountrywater. Only to be denied because some bit of paper work isn’t filled out correctly. Reagan VS 0bama …

Chrysler Bankruptcy Looms as Debt Talks Falter – DealBook Blog …

During a prime-time press briefing at the White House on Wednesday, President Obama appeared to lay groundwork for a Chrysler bankruptcy filing, although he said it was “not yet clear” Chrysler would have to move forward with one. …

Analysis: Chrysler bankruptcy extends Obama risk, reach …

WASHINGTON — In forcing a swift bankruptcy on Chrysler, President Barack Obama expanded the risk and reach of the presidency in the hope that the hidebound auto industry will find a way to remake itself. …

Anatomy of a Disaster. Chrysler Bankrupcy Detailed

Barack Obama has taken a short break from remaking America, to CHANGE how Bankruptcy works…

Chrysler bankruptcy, the bike industry and the American way …

Chrysler bankruptcy, the bike industry and the American way. Bicycle Blog. Cyclelicious Shop Bicycle Lights – Wald Baskets – Dahon – Strida. Thursday, April 30, 2009. By Yokota Fritz. I’m reading Robert Hurst’s latest book The Cyclist’s …

Goverment Says Chrysler Bankruptcy Will Be Easy, Pigs Also Fly …

The Administration is talking like it has the judge who will preside over the Chrysler Chapter 11 in its pocket. Obama recently made the comment that “it will be a quick trip through bankruptcy.” The government also indicated that it …

Chrysler’s Bankruptcy Highlights GM’s Problems – Automotive * US …

Chrysler’s bankruptcy filing underscores just how difficult it would be for General Motors to complete its own restructuring deals with key stakeholders and avoid the same fate as its smaller rival.

Lenders Fault Treasury in Chrysler Bankruptcy – DealBook Blog …

A group of Chrysler’s secured lenders, contending that they are being unfairly blamed for sending the automaker into bankruptcy protection, are striking back at the Obama administration, which they believe is skirting bankruptcy law by …

EzraKlein Archive | The American Prospect

What the federal government is hoping for — in it’s happiest-of-happy-thoughts scenarios — is a quick “surgical” bankruptcy of only 30-60 days with Fiat swooping in to pick up the pieces of a tarnished and broken Chrysler, helping them …

Bartlesville Oklahoma Ranks #1

So there you have it. The good, the bad and the ugly. The Liberal, the conservative, and the moderate point of view.

Bartlesville, Oklahoma is a small but vibrant community and I can’t think of a better place to own a business number two, and number one what a great place to live! The future of our business and of our community shines bright on Doenges Ford, Lincoln, Mercury and Toyota.

Every day I count my blessings.

For more information please contact Brad Doenges of Doenges Ford Lincoln Mercury Toyota in Bartlesville Oklahoma at (918) 333-0900.

Popularity: 33% [?]