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Old 05-05-2009, 02:32 AM   #1
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Default Some Chrysler News

Penske emerges as possible Saturn buyer

Penske is the highly successful head of Bloomfield Hills-based Penske Automotive Group, Inc., which operates more than 300 dealer franchises in the United States and internationally, selling 40 different brands.

The billionaire Detroit booster, who oversaw the city's Super Bowl XL preparation, has accomplished almost everything in the auto industry, from racing cars to building engines as owner of Detroit Diesel Corp. to snagging exclusive U.S.

distribution rights for the iconic Smart minicar. But buying a brand and building vehicles would pose a new challenge"We have been offered an opportunity to look at Saturn," Tony Pordon, a spokesman for Penske Automotive Group, said Monday. "It's very premature to assume anything will be done. I can confirm to you that we are looking at it."

Word of Penske's interest came as General Motors Corp. said Monday it is preparing to review proposals from several suitors for its endangered Saturn brand and has hired an adviser to secure a deal later this year.

GM is working with the S.J. Girsky & Co. on the transaction. The firm is headed by Stephen Girsky, who has been an adviser to the United Auto Workers and GM, and is a well-known former auto analyst for Morgan Stanley.

Last week, GM President and Chief Executive Officer Fritz Henderson said several suitors had submitted "concepts" for acquiring Saturn and its retailer network. One bidder, Telesto Ventures, proposed to initially distribute GM-built vehicles through Saturn's 439 dealerships in North America and eventually offer small, fuel-efficient vehicles produced by several manufacturers, most of which would be sold under the Saturn brand.

The group, which includes Oklahoma City-based private equity firm Black Oak Partners LLC and several Saturn dealers, submitted a bid last month, terms of which were not made public.

GM did not identify the other suitors but will continue to look at proposals until early June. The list of potential investors will be narrowed to three or four in hopes of securing a deal by perhaps the end of the third quarter, Saturn spokesman Steve Janisse said today.

The automaker, which is subsisting on $15.4 billion in federal loans, is shedding brands as it restructures into a leaner, smaller company.

GM is focusing on four core brands -- Chevrolet, Cadillac, Buick and GMC -- and eliminating or trying to sell Saturn, Saab, Hummer and Pontiac
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Old 05-05-2009, 02:34 AM   #2
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Default New Chrysler auto incentives coming

]NEW YORK (CNNMoney.com) -- With bankruptcy threatening to further weigh down the carmaker's sales, Chrysler is expected to announce a new incentive program Tuesday.

Chrysler's "Employee Pricing Plus Plus," program ended just days after the carmaker declared Chapter 11 bankruptcy. That program combined cash rebates with price reductions and cut-rate financing for qualified customers.

The new sales program is expected to rely heavily on giving dealers cash incentives, which means that customers will see big price reductions at the dealership, said Jessica Caldwell, an industry analyst with the automotive Website Edmunds.com.

Dealer incentives give auto dealers extra cash that can, in turn, be used to offset price reductions negotiated with customers. Dealer cash incentives are more subtle than straight cash rebates, so they aren't as damaging to a car brand's image and they don't reduce resale value of cars the way more straightforward customer rebates do.

But incentive money for dealers will likely be paired with limited customer rebates as well, Caldwell said. The carmaker announced in a conference call on Friday that the incentive plan would include some "loyalty" incentives for returning Chrysler, Dodge and Jeep buyers.

Chrysler has been the biggest spender among all auto manufacturers on incentives in the U.S. market. Last month, Chrysler spent $4,288 per vehicle on incentivesThe next highest spender was General Motors, which is also undergoing a government-driven restructuring and may declare bankruptcy later this month. GM spent $4,063 per sale.

Despite the incentive spending, Chrysler sales were down 48% last month compared to April, 2008. Reduced fleet sales were a big part of the drop, the carmaker said.

Chrysler will probably not follow the lead of GM (GM, Fortune 500) and Ford (F, Fortune 500) by offering payment protection to buyers who might lose their jobs, Chrysler vice president of sales Steve Landry said in the Friday call. Those sorts of incentives didn't seem to be working well for other automakers, he said.

Media reports have drawn conflicting pictures of the bankruptcy announcement's impact on sales with some dealers reporting empty showrooms over the weekend and others higher-than-normal customer traffic.
12 cars that made Chrysler

Not everyone sees bankruptcy as a disaster for Chrysler sales. Some customers are optimistic, focusing more on the possibility of a Fiat deal and on the fact that Chrysler isn't going out of business, said Scott Painter, chief executive of Zag.com, an automotive buying service provider, and Truecar.com, an auto pricing Website.

Interest in Chrysler, Dodge and Jeep products has actually gone up, he said.

Chrysler rolled out a new print advertising campaign over the weekend aimed at reassuring customers that the carmaker will not be going away anytime soon.

Over the tagline "Come see what we're building for you," the ad describes Chrysler's planned relationship with Fiat and points out that the carmaker's warranties are now backed by the federal government. To top of page
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Old 05-05-2009, 02:38 AM   #3
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Default UAW chief says union will sell Chrysler stock

United Auto Workers President Ron Gettelfinger said late today the union will sell its 55 percent stake in Chrysler as soon as possible to fund a trust that will take over the company's retiree health care payments starting next year.
The UAW last week ratified concessions to help keep Chrysler afloat. The company filed for bankruptcy protection Thursday and is trying to emerge in 30 to 60 days as a stronger company that could end up majority owned by Italy's Fiat. Though the health care trust fund will own 55 percent of the company's stock, that doesn't mean it will control the auto company and the union gets only one seat on a nine-member board that will govern a new Chrysler-Fiat joint venture.
Gettelfinger told reporters Monday that critics who think the union is getting a better deal than Chrysler's secured debtholders are wrong because the UAW is taking a big risk with Chrysler stock.
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Old 05-05-2009, 02:39 AM   #4
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Default Fiat ranks last in UK JD Power survey, bodes poorly for Chrysler

Chrysler's vehicles, like all of America's cars, have improved greatly in recent years. But not-too-distant memory reminds us of the Le Baron and even of another ill-fated Italian tie-up and its Maserati-branded spawn. So Fiat's poor scores in the most recent JD Power survey in the United Kingdom gives cause to wonder if the Fiat-Chrysler union might ultimately be a tragic one.

Fiat's role in helping to save Chrysler post-bankruptcy was applauded by President Obama just days ago, but already the naysayers are building their case. And unfortunately, it's shaping up to be a decent one. The latest JD Power figures put Fiat at the bottom - 28th of 28 - in UK satisfaction rankings. Lexus, Skoda, Honda, Toyota and Jaguar filled out the top 5 spots, while Citroen, Kia, Chevrolet, Mitsubishi and Fiat rounded out the bottom five.

Which is a roundabout way of saying Fiat's car's aren't exactly renowned for their reliability in Europe, nor are those of sister brand Alfa Romeo though the brand wasn't separated in the results list. The last time either car was sold in the U.S. they had developed and suffered from a reputation for unreliability that ultimately contributed to their retreat from our shores.

Now the continued poor performance of Fiat in markets where it's already established calls into question whether the Italian company will be able to turn things around at Chrysler, or whether the partnership will just degenerate into a downward spiral of poor design feeding poor execution. On the other hand, Fiat also makes brilliant cars like the 500, which slots into a segment where Chrysler is completely absent.

Will the synergies make both companies better than they are on their own? Or will the Fiat-Chrysler partnership make the DaimlerChrysler era seem like a golden age?
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Old 05-05-2009, 02:41 AM   #5
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Default Malignant Rumors: Can FIAT's World Domination Plans Crash the Toyota - VW Party?

The latest gossip around the campfire -i.e. the charred remnants of the auto industry- is the next stage in Fiat's plan for automotive world domination. What else could the Italian manufacturer be after, now that they've secured a 20% stake in Chrysler? Apparently Fiat CEO Sergio Marchionne and his gang are on a bit of a shopping spree, looking to pick up GM Europe and its subsidiaries/affiliates. For those just tuning in, that means Fiat could end up owning Opel, Vauxhall and other operations owned by GM over in the EU along with its Chrysler "partnership" in the US.
If this happens, Fiat will become one of the world's largest automotive manufacturers, competing against the likes of Toyota and Volkswagen with up to 100 billion dollars in sales annually and moving upwards of six million units a year. Why would Fiat do this? Consolidation, cost cutting, and sheer numbers. As is to be expected, there are pros and cons for this balls-to-the-wall crazy scheme.

The pros are plain as day. With the ability to pick and choose the best platforms from a variety of automakers, Fiat will be able to turn itself into one of the widest-spread carmakers on the planet in respect to manufacturing and market penetration. The idea would be to use Fiat's small car platforms worldwide (as Chrysler hopes to do), while adapting and updating GM Europe's midsize platforms and sharing them with its other brands. This would also allow certain manufacturers to remain, keeping a number of dealerships and factories open. Then there's the money.

Marchionne, the Godfather behind this scheme, argues that fusing GM Europe's platforms with Fiat's could potentially save the company around one billion Euros a year. Coincidentally, this is a little less than what Fiat originally offered the currently de-testicled General Motors for its European division, meaning that it is looking to have any losses recouped in less than a product cycle.

All this sounds well and good, but what about the cons? With Opel - a German subsidiary currently owned by an American company - possibly being absorbed by an Italian firm, problems are bound to arise. The biggies are the jobs and the cash, and in this case the two are inextricably linked.

Germany would end up loaning Fiat money for the purchase of Opel, which would lead to a consolidation of manufacturing facilities. The consequences are closure of factories and the resulting job losses. Also, some of the politicians seem to think that the money acquired from Germany would help offset the costs incurred by the Chrysler deal. This is a big no-no when it comes to public relations (however it is quite shrewd business-wise).

Will it happen? Well, that's up to Germany and its brethren in the EU. The trade unions and politicians will no doubt have a field day with this, but it is important for everyone to look at the big picture. People stand to lose their jobs; this is a fact. However, keeping some people employed instead of having all people lose their jobs is a hit that will have to be taken. Not everyone can walk away a winner. Too many companies have been near-sighted over the past several decades, and they have paid dearly.

Marchionne may be walking on a financial tightrope, but the man is no Rick Wagoner. He has turned Fiat around and now sees the perfect opportunity to expand while taking advantage of a bad situation. Corporate vulture? Maybe, but he is thinking about the long-term, and that's what matters.

By Phil Alex

Phil Alex was born in Rhode Island in 1985, yet for reasons unbeknownst to him moved to South Carolina. He graduated with degrees in Finance and German from Wofford College in 2007 and has had a strange obsession with cars and travel. When not back in Sparkle City, he resides near Japan's international airport in Narita. He makes no apologies for his articles and welcomes all feedback, as long as it is adamantly worded. Oh, and if for any reason you are inclined to vent some more, check out more of his posts on the Examinerhere.

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Old 05-05-2009, 02:49 AM   #6
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Default Chrysler seeks $753 million for dealer incentivesChrysler seeks $753 million for deal

NEW YORK -- Chrysler LLC is asking for court permission to pay up to $753 million in dealer incentives during its 60-day bankruptcy period.

The company also said in U.S. Bankruptcy Court here it won't make incentive payments to all of its dealers. In filings today, Chrysler said it will "only pay incentives to those dealers that they believe have value to the acquiring company," to be controlled by Italy's Fiat S.p.A. Chrysler hasn't said how it will measure that value.

Chrysler representatives were in court today to lay out a budget for the 60-day bankruptcy period. In its filing, the company also asked that its suppliers be paid $1.49 billion in debtor-in-possession financing for parts already received.

The filings came on the second day of motions before Judge Arthur Gonzalez. Chrysler's strategy under Chapter 11, Section 363, of the bankruptcy code is to separate good assets from bad as quickly as possible to set up a financially healthy new company. That includes shutting down eight factories and closing unprofitable dealers.

In supporting documents, Chrysler said its post-bankruptcy budget assumes that 25 percent of its dealers won't get the incentive payments "as the company looks to reorganize its dealer network." Kathy Graham, a Chrysler spokeswoman, said she could not immediately clarify what that means.

The company makes incentive payments to dealers weekly. As dealers sell cars, the incentives are electronically credited to the dealers' accounts. The company posts the incentive payments to dealer accounts every Sunday evening.

Chrysler adviser Robert Manzo said Chrysler had sought $1 billion for dealer incentive payments but scaled that back to $753 million after discussions with the U.S. Treasury. That amounts to a 25 percent cut.

Chrysler has not said how it will decide which dealers will continue with the new company and which ones will not. Chrysler co-President Jim Press last week asked dealers to be patient while it put together a list.

As of March 31, Chrysler had 3,215 dealers. If it cuts out payments to 25 percent of its dealers, that means more than 800 dealers won't receive the payments. In its filings, the company also said its overall incentive spend would be reduced 50 percent from June 1 to July 5, which would be the second month of a possible 60-day reorganization.

Chrysler has budgeted $477 million for incentives for the first four weeks, peaking at $147 million for the week of May 25. Payments tail off sharply after that. Factories, which have already closed, will not be making new cars during the period.

Chrysler also is asking for debtor-in-possession financing to pay its suppliers about $1.49 billion in bankruptcy for parts already delivered, Manzo testified at Chrysler's bankruptcy proceeding today. He spoke on Chrysler's behalf as executive director with Capstone Advisory Group LLC., a financial advisory firm.

Manzo said the payments were necessary to preserve Chrysler's dealer and supplier networks until a new Chrysler emerges from bankruptcy in an alliance with Fiat in 30 to 60 days. Those claims typically are unsecured and would be locked in a bankruptcy for weeks and months before the creditors could be paid for them in whole or in part.
Manzo also said the supplier payments are for about 45 days of payables for parts.

During the bankruptcy, Chrysler also intends to spend about $69 million for marketing, about half of what it would normally spend over the period, Manzo said. Again, Chrysler arrived at its number in consultation with Treasury.

Chrysler also is asking for about $266 million for warranty claims during the bankruptcy.
All told, Chrysler wants $4.6 billion in debtor-in-possession financing, including about $4.1 billion from Treasury. The current secured lenders will loan about $400 million, and another $100 million will be generated through the sale of Mopar inventory parts, Manzo said.

Manzo said Chrysler's 11,000 salaried employees would take two weeks of unpaid leave during the bankruptcy, saving the automaker about $21 million.
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