Thursday, November 27, 2008
Motor industry response to meeting with Lord Mandelson
The Society of Motor Manufacturers and Traders (SMMT) and representatives from the automotive sector have concluded their meeting with the secretary of state for business, enterprise and regulatory reform, Lord Mandelson.
Commenting on the meeting, SMMT chief executive, Paul Everitt said, "The motor industry had an open and constructive meeting with Lord Mandelson, Ian Pearson MP and BERR officials. The industry outlined the scope and scale of the challenges it faces and the unprecedented difficulties in the market place. We emphasised the urgent need to address liquidity and restore demand and discussed a variety of measures to address these challenges. Government and industry have agreed to explore collaboratively, a range of solutions in a timescale that matches the urgency of the situation."
POS increases to a 4 year high
A strong performance by its members and dealers over the past 12 months has taken point of sale showroom finance to a four-year high, says the FLA.
In July it topped the halfway mark at 50.7% and has now eased up slightly to 50.9%.
Dealer finance for retail new-car purchases grew 5% by value and 6% by volume over the past year.
This was despite the sharp fall in private purchase revealed by SMMT data.
FLA members and dealer customers are now seeing the rewards from a POS campaign which was launched last year.
This has enabled retail showroom staff to receive free online training in finance sales from the FLA.
Specialist automotive lenders say that now wholesale lending is tighter, they have an advantage over high-street and direct rivals that have won much of their business.
DATED: 27.11.08
FEED: AM
Finance round up
GE in MG link
GE Capital Solutions is supplying wholesale stock finance to 50 MG dealers appointed by Nanjing Automotive which has started to build the LE TF 500 sports car at Longbridge, Birmingham.
This year GE has signed deals with Nissan and Kia to provide finance for their retailers in the UK and elsewhere in Europe.
Staff deals at VFS
Volkswagen Financial Services UK is encouraging company loyalty among its 450-plus staff at Milton Keynes by launching a benefits programme.
Holders of an ‘employee deals card’ can access discounts from more than 100 brands and local retailers and is administered by Scandinavian benefits provider LogBuy.
FLA briefs sector
The Finance & Leasing Association is holding a motor finance training course on November 25-26 in London.
It covers the legal framework of the industry, the roles of finance houses and dealerships in transactions, and how finance houses and retailers make profits from finance sales.
Costs rising
Sainsbury’s Finance says the cost of running a car – excluding any interest on purchase loans – has risen by 13.55% in a year.
It calculates that the average cost is now around £2,544 a year. The main reasons were rises in fuel costs, servicing and tax.
DATED: 27.11.08
FEED: AM
GM considers dropping Saab
GM was not immediately available for comment.
U.S. lawmakers last week rejected pleas from GM, Ford Motor and Chrysler for $25 billion of loans, and asked the automakers to submit detailed turnaround plans.
The lawmakers are scheduled to reconvene during the week of December 8 to review any plans and consider aid. Some analysts have said GM's remaining equity value could be essentially wiped out by any government recapitalization.
GM has said it might run short of operating cash by early 2009.
Caffyns hit by car sales downturn
The car dealer group, which has sites across the south of England, suffered the losses in the six months to 30 September. The pre-tax loss compared with a profit of £3.6m over the same period in the previous year. Turnover also fell from £95m to £84.6m. To cope with the downturn in the UK car market Caffyns said it had implemented several measures to combat falling revenues. They include reducing costs through the closure of under-performing branches and reducing staff numbers as well as improving sales performance through concentrating on lower-priced and fuel-efficient vehicles and used car sales. Chief executive Simon Caffyn warned that trading would remain tough for the foreseeable future. "The outlook is for trading to continue to be challenging for the remainder of 2008, well into 2009 and possibly beyond," said Caffyn. "The actions we have taken, combined with our relatively low gearing, place us in a stronger position to deal with recessionary conditions." DATED: 27.11.08 FEED: MT |
Caffyns has plunged into the red after reporting a pre-tax loss of £2.1m in the first half of the year.VAT opportunity for car dealers
 Dealers should consider putting off the sale of new cars until the lower rate of VAT comes into force next week.Chancellor Alistair Darling announced a 2.5 per cent cut in VAT to 15 per cent until the end of next year in his pre-Budget report yesterday and motor trade accountant Trevor Jones said this would have an immediate impact on car retailers. Trevor Jones said by delaying sales until the introduction of the reduced rate, dealers could recover input VAT at 17.5 per cent but declare output VAT at 15 per cent "giving a small profit and cashflow advantage or alternatively the opportunity to pass this saving onto the customer." Trevor Jones said dealers should postpone the sale of more expensive, high margin vehicles in particular as the tax cut on these would provide "a real profit and cashflow benefit". However, the accountant warned margins could be squeezed by consumers expecting dealers to act upon the chancellor's request to retailers to pass on VAT savings immediately. Paul Brown, tax director for Trevor Jones, said that although the VAT reduction would boost consumers' spending power, it was "unlikely the prospect of a cut of £425 in the price of a £20,000 new car" would be enough to tempt "hordes of buyers" back into showrooms. Overall the motor industry reacted positively to the chancellor's moves to fend off the ravages of recession. Paul Everitt, SMMT chief executive, said the pre-Budget report would lift consumer confidence and "kick-start responsible spending" but called for credit and finance to be freed up to allow businesses to take advantage of the changes. Sue Robinson, director of the RMIF, said delaying the introduction of VED hikes to 2010 and reducing the planned increases would "reduce the burden on the motorist". However, Robinson argued that Corporation Tax rises should have been scrapped rather than just delayed to benefit businesses in the long term. DATED: 27.11.08 FEED: MT |
Porsche backs away from VW Majority
"In light of the current economic environment, it therefore becomes increasingly unrealistic to achieve this goal within 2008," CEO Wendelin Wiedeking told a news conference.
He said the goal remained to raise its voting stake to above 50 percent as soon as possible but added: "We are under no time pressure."
Wiedeking reaffirmed his intention to take Porsche's stake to 75 percent in 2009. ...
Tuesday, November 25, 2008
Little help in Pre-Budget says HPI
Martin Keighley, HPI’s used car valuations expert, said the effect of VED changes on used car values and buyers of higher emissions cars will remain to be seen.
He said: “Overall market confidence has been buoyed by the reduction in VAT; this will provide some help to dealers with used sales on the VAT margin scheme, but only by £25 per £1,000 profit.”
Paul Brown, tax director for Trevor Jones, believes that while on an item-by-item basis the VAT cut may be relatively small it will have a positive impact on the spending power of all but the least well off.
However, he adds: “It seems unlikely that the prospect of a cut of £425 in the price of a £20,000 new car, combined with the relatively minor impact of the personal tax changes announced, is enough to tempt hordes of buyers back into car showrooms.”
Market confidence dentedFurthermore, Keighley believes overall market confidence has been dented first by the fact the VAT reduction is only temporary and secondly by proposed increases in duty, with a vast increase in borrowing being encouraged by the Chancellor.
This is supported by Brown: “The sting in the tail of course is that the VAT change is only temporary, and by 2010/2011 everyone, dealers included, will be paying for the Chancellor's rescue plan through increased levels of tax and National Insurance contributions, both those announced now and those that may well drip through in time.“Added to this, duty on petrol and diesel will increase in order to negate the effect of the VAT decrease on fuel. There was nothing to indicate this increase would be reversed when the VAT rate returns to it current level, meaning this will represent a real terms increase in duty from January 1, 2010.”Keighley said: “For whatever the reason, the differential between petrol and diesel has increased to 15p per litre. This means that unless you are driving roughly more than 10,000 miles per year, for most people the petrol will be the more economical choice.”Both Keighley and Brown believe the impact of the budget on the motor trade will largely depend on whether it has the desired effect of stimulating immediate demand within the economy.
Keighley said: “While the measures are welcomed, overall motor trade profitability will hinge on whether the economy recovers according to the Chancellor’s timetable.
“Unemployment will probably continue to rise, further reducing demand in the used market, and new car stocks are too high, hence supply will also continue to rise. These are the ingredients for a recipe of falling used car valuations and in turn, profits.”
DATED: 25.11.08
FEED: AM
Monday, November 24, 2008
Chrysler maybe bust by 2009
Nardelli said without bridge financing support, Chrysler's liquidity could fall too far to sustain operations by the end of this year. The company would need $7bn in government loans, he claimed. Nardelli listed Chrysler's current financial obligations, including $20bn in healthcare, $2bn in annual pension payments to retirees and surviving spouses and $6bn in annual wages. He reiterated Chrysler owner Cerberus Capital's promise to give up any profits from the potential sale of the carmaker if federal aid was given. DATED: 24.11.08 FEED: MT |
Chrysler could run out of cash by the end of this year, according to CEO Bob Nardelli.£1bn for Jaguar Land Rover?
The manufacturer said it backed the SMMT's UK and Acea's European campaigns for the automotive industry to receive federal aid, but would not divulge details of its "confidential discussions with government". "The automotive industry is facing unprecedented trading conditions as a direct fall out of the banking crisis and turbulence in financial markets and we are of course keeping government appraised of the impact on our business," the company said. JLR has come under pressure from the economic downturn. Land Rover sales plummeted 58 per cent in October and were down by more than a quarter in the first 10 months of the year. Although Jaguar has bucked the trend with new sales up 11 per cent in the year-to-date, JLR has already set a one-week production cut at its plant in Merseyside Halewood in December and earlier this year axed 198 jobs. DATED: 24.11.08 FEED: MT |
Jaguar Land Rover has refused to comment about reports that it requested a £1bn loan from the government.Honda closes Swindon for a further two months
| Friday, 21 November 2008 | |
The Japanese manufacturer announced that in addition to the 32,000 unit production cut between December 2008 and March 2009 previously announced, volumes will be reduced by a further 21,000 units. Total automobile production in the UK plant for the current fiscal year, which was originally announced as 228,000 units at the beginning of the fiscal year, will now be 175,000 units. Despite the cuts, Honda said there were no plans for redundancies among its 4,800-strong workforce. The company is also cutting production at its plants in Japan and the US. The announcement arrives after the release of figures showed UK car production fell by 25% in October. DATED: 24.11.08 FEED: MT |
Honda will stop production at its Swindon plant for two months during February and March of next year.Porsche does diesel
Porsche said the move was in response to changed legal regulations, particularly in Europe, resulting in tax incentives for vehicles with diesel engines. The company is taking advantage of its recently increased stake in the Volkswagen Group, which has opened up opportunities to utilise its compression-ignition technology. VW's subsidiary Audi will supply the 3.0 litre V6 turbo diesel engine with 240 bhp for the Cayenne. In response to customer demand, the new model will initially be offered in Europe, though Porsche said preparations for market introductions in other countries are underway. The new model will cost from £40,250. DATED: 24.11.08 FEED: MT |
Porsche's Cayenne will be available with a diesel engine from February 2009, becoming the manufacturer's first oil burner.Lookers to close Lexus sites
A spokesman for the group said the Brighton and Southend sites would cease trading on 5 December. The Brighton site employs 17 staff and the Southend outlet has a workforce of 18. "Every effort will be made to redeploy staff," the spokesman said. At the end of October Lookers warned it would scale down its retail operations to reduce its cost base in order to cope with the market downturn. Finance director David Dyson told Motor Trader: "We are closing underperforming sites. By the end of the year we'll have sorted out a dozen businesses." With the latest closures the group has reduced its network from 140 to 128 sites in 2008. It has remaining Lexus dealerships in Hatfield, Hertfordshire and Belfast, Northern Ireland. The spokesman said the decision to close the Brighton and Southend dealerships was part of "a planned restructure of Lookers operations in the South East". He said the group intended to provide customers with aftersales services in the local area. In line with the overall market, Lookers new car sales fell 19 per cent in the third quarter of the year. This followed a 28 per cent drop in pre-tax profits to £13m in the first six months of 2008. Lexus has suffered from both the economic slump and a lack of new product this year. It sold fewer than 10,000 units in the first 10 months of the year - down 30 per cent on the same period in 2007. DATED: 24.11.08 FEED: MT |
Lookers has announced it intends to close down two Lexus dealerships next month.Recruitment needs to be 'More Thorough'
Anne Fairweather, head of public policy at the Recruitment and Employment Confederation (REC) said that good practice is not to tick boxes but carefully review a potential employee.
“Criminal record checks are not the be and end all of good quality recruitment practice,” she added.
Chris Eastwood, from recruitment consultancy Chris Eastwood Automotive, said “You really need to look at the gaps in CVs and ask the appropriate questions to find out those things which aren’t told on paper.”
IMI appoints its first Chief Operating Officer
The Institute of the Motor Industry today (20 November 2008) announced that Linda Stansfield is to become the company's first Chief Operating Officer.
Linda joins the IMI from AGA Performance Ltd, a leading training consultancy, where she worked as the Account Director for the Ford Motor Company at Henry Ford College, Loughborough.
Chairman of the IMI's Executive Board and Aftersales Director of BMW Group UK, Steve Nash, said: "I am delighted to announce the appointment of Linda Stansfield to the position of Chief Operating Officer. The IMI has undergone a period of unprecedented growth over the past year and with many innovative projects planned, I am confident that Linda will be a great asset to the senior team."
Since becoming the Sector Skills Council for the automotive retail sector last year, 2008 has been a momentous year for the IMI. A public campaign to raise awareness of the ATA scheme was successfully launched at the British International Motor Show and numerous other initiatives to further the skills agenda in the sector have followed. 2009 will be an even greater challenge with the main focus being to continue to identify and deliver tangible benefits, for employers, IMI members and all industry partners.
Speaking about her appointment, Linda Stansfield said: "I am very much looking forward to joining the team at the IMI and am excited by the many varied opportunities and challenges that lie ahead. With over 20 years experience in the automotive industry, I hope that my knowledge and understanding of the sector will help with the delivery of the company's business objectives and in turn benefit the industry as a whole."
Linda will take up her position on 23rd February 2009.
Peugeot Citroen cuts 2,700 jobs
French car company Peugeot Citroen has announced plans to shed 2,700 jobs because of falling demand in Europe.
It predicts sales volumes will fall by at least 10% in 2009, following a 17% drop in the last quarter of this year.
The company said the job cuts would affect assembly-line workers, managers and office staff.
In October this year, Peugeot Citroen cut its profit forecast for 2008 and started "massive" production cuts in the wake of a global downturn.
The carmaker also plans to move 900 workers from its French factory in Rennes to other sites, under a plan which is to be presented to its works council on 2 December.
Peugeot Citroen human resources director Jean-Luc Vergne said urgent action was needed in order to protect the future of 200,000 employees.
The group's sales fell 5.2% in the third quarter.
Gloomy climate
According to the European carmakers' association, Acea, new car sales in Europe dropped by 14.5% in October, the sixth monthly fall in a row.
Peugeot Citroen's announcement is the latest in a series of drastic measures taken by car companies worldwide in order to prevent the build-up of unsold stock.
BMW offers dealers £54,000 lifeline
BMW car dealers launching the new 7 Series executive saloon in the UK have been given a financial boost by the manufacturer.
The luxury carmaker has said it will retain ownership of 7 Series dealer demonstrator vehicles, saving the dealers a considerable outlay on a vehicle that retails from £54,160.
Each car will remain with a dealer for a six-month period before being replaced.
