F&I Management & Training

Used car warranties will see a resurgence as people seek greater peace of mind by guarding against unexpected aftersales bills, according to Car Care Plan.
Dealers also need ways to improve aftersales retention as their new car margins are further eroded.The company has seen its warranty business diluted by its insurance products like GAP which now accounts for 15% of revenue. But it believes the credit crunch and economic recession mean that the greater potential for growth is now its warranty business, which contributes 70% of its revenue.“There has never been a more opportune time for dealers to focus on customer satisfaction and retention,” said Car Care Plan managing director Paul Newton.“We’ve seen tremendous growth in GAP due to the profit opportunities it offers dealers but warranties will always be a core business because of the customer satisfaction and the repeat business it offers dealers.“Enlightened dealers see warranties as a way to get customers back into the showroom.”With the core of CCP’s warranty business in the three to eight-year-old car market, Newton believes dealers have an opportunity to increase their involvement in the five year-plus used car market. “Customers still want to buy older cars from dealers as long as they are afford-able. But dealers have to recognise the opportunities in these cars,” he said. In the face of the growing problems facing Car Care Plan’s owners, finance giant GMAC and venture capitalist Cerberus, Newton reassured dealers and manufacturers about its stability.“We are insulated against the problems in America,” he said. “FSA obligation is for us to be financially free-standing. We don’t need any additional money from them.”

DATED: 20.02.09

FEED: AM

Saab has filed for reorganisation, the Swedish equivalent of going into Chapter 11 bankruptcy protection.
Bosses at the Swedish brand discussed the future of the company last night following the Swedish government’s refusal to inject state aid.
Saab managing director Jan Ake Jonsson said reorganisation was the best way to prepare the business to become an independent entity ready for investment.
Saab said funding for the restructured company would need to be secured during the three-month reorganisation process and would be sought from both public and private sources.

During that period, the company is not allowed to pay off any debts accumulated before the reorganisation was declared.
Johnsson said: “With the new 9-5, 9-3X and 9-4X all ready for launch over the next year and a half, Saab has an excellent foundation for strong growth, assuming we can get the funding to complete engineering, tooling and manage launch costs.
"Reorganisation will give us the time and means that help get these products to market while minimising the liquidity impact of Saab on GM.”
Saab said the reorganisation should have no impact on other GM operations.

DATED: 20.02.09

FEED: AM

General Motors is seeking an investor to buy a stake in UK-based Vauxhall.
The US car group – which told the US government on Tuesday that it needed $16.6bn (£11.7bn) of financial support – would also consider an alliance or partnership, reported Daily Telegraph.
The move comes as a GM spokesman conceded that job cuts among GM’s 5,000 UK workforce were likely among staff working at plants in Ellesmere Port, Luton and Millbrook.
In an attempt to make the business profitable again by 2011, GM plans to cut costs in Europe by $1.2bn.

DATED: 20.02.09

FEED: AM

General Motors has warned that its Saab subsidiary could go bust within 10 days without immediate state help, but the Swedish government has already ruled out acquiring stakes in troubled carmakers.
GM said the luxury brand could file for reorganization as early as this month but still hoped to reach a deal with Sweden on aid for the ailing brand.

GM is capping the financial support it will give to Saab as part of its restructuring plan and is aiming for it to become an independent business by January 1, 2010.
Maud Olofsson, Swedish enterprise and energy minister, said: “The Swedish state is not prepared to own car factories.
"We are not prepared to risk the taxpayers' money, this is not a game of Monopoly."
She said it was unreasonable to expect the Swedish government to succeed where the world's biggest carmaker had failed, especially in light of the current global economic situation.
Olofsson said: "Voters elected me because they wanted nursery schools, police and nurses, and not to buy loss-making car factories.”
While Sweden's government flatly rejects the option of taking over the brand, it has said it might be willing to act as a guarantor for a European Investment Bank (EIB) loan of five billion kronor (£396.2m) to help keep it afloat.
Saab employs about 4,100 people in Sweden, 3,700 of whom work at its hub in the southwestern town of Trollhaettan.

DATED: 19.02.09

FEED: AM

Kia Motors UK has told dealers that they need to focus hard on used cars this year. It revealed a number of initiatives at the national dealer conference, held in Leeds on January 29, including a top- up warranty scheme.The scheme applies to used cars up to 18 months old and 15,000 miles which are supplied to the dealer network by Kia. Dealers will be able to effectively restore the original new-car warranty, which can be up to seven years on some models.Andrew Sellars, head of fleet and remarketing, said consumers don’t understand the current used car programme, Kudos. It is replaced this month with a Kia Approved used car programme in a “back-to-basics” move.“Initially, the top-up idea will apply to ex-management and rental vehicles supplied directly by us and have returned for retailing through the network,” he said. Kia will meet all the costs, and expects it will boost used car sales by more than 30% this year.“If we sell a year-old Cee’d, we will top the warranty back up to seven years,” Sellars added. “On an 18-month-old Picanto or Rio, another 18 months will be added to restore the original three-year term.Dealers will be charged £58 to join the Kia Approved used car programme. In return, Kia will provide 90 days’ free stocking – double the period offered by most makers – and allow the network to offer four years’ 0% finance on used Sedona and Cee’d models.“We want our customers to enjoy problem-free motoring in used cars and for our dealers to be profitable,” said Sellars

DATED: 19.02.09

FEED: AM

The UK, Germany and Sweden have reacted coolly to calls for $6bn (£4.2bn) of aid from US car giant General Motors. The UK said it was still considering the details. Chancellor Angela Merkel called for a plan for GM's German Opel brand before aid could be considered. Swedish industry minister Maud Olofsson said it was up to the US carmaker to save its Sweden-based unit Saab. GM said that it needed billions of dollars from several governments outside the US. A spokesman for Britain's Department for Business, Enterprise & Regulatory Reform said: "We are continuing to discuss the implications of the plan with the company, although there is no specific detail as yet on how it might affect Europe, and how we can continue to help GM in the UK." In a separate development on Wednesday, Volkswagen said it had received two billion euros ($2.5bn) from Germany's bank rescue fund to improve the availability of credit for car loans. Difference General Motors said on Tuesday it would cut 47,000 jobs around the world by the end of the year, including 26,000 outside the US. It is not clear how many jobs will be eliminated in western Europe, where GM employs about 50,000 workers, or whether any plants will be closed. The carmaker said it is talking to unions about ways to reduce costs by $1.2bn. Measures could include closing or selling off plants "in high cost locations". GM's UK subsidiary, Vauxhall, employs 2,000 people at Ellesmere Port in Cheshire and 1,400 at Luton. Short-time working was introduced there this week and Vauxhall said negotiations with unions on restructuring were continuing. It said results were expected though, in "months not weeks". Nikki Rooke from the Society of Motor Manufacturers and Traders, however, said the latest developments did not necessarily mean bad news for UK workers. "Obviously it is a very worrying situation, but there is a difference between GM operations in the US and Vauxhall in the UK, and really GM across Europe," she said. "What we're doing is talking to government at the moment to see what can be done to really support the automotive jobs within the industry in the UK, looking at how those producing in the UK can access finance and credit and also what UK government can do to really boost demand." Discussions Ms Olofsson said she was "deeply disappointed" in General Motors. "They have in practice removed their hands from Saab... they are handing over responsibility to Swedish taxpayers." For its German-based Opel business, GM Europe (GME) said that management and unions were in talks to see whether forced redundancies and plant closures could be avoided. "Management is willing to consider strategic third-party partnerships, alliances and equity stakes in case such an approach is seen as beneficial for GME and Opel's/Vauxhall's viable and sustainable future," it said. 'Necessary concepts' Germany said GM should come up with a plan for Opel if it wanted to get state support. "At the moment, politicians can't do anything because the necessary concepts from Opel are not available," Mrs Merkel said on Wednesday. "And that can't happen without the parent company in Detroit."

DATED: 19.02.09

FEED: AW

Following the appointment of Rob Foulston as Chief Executive, the Retail Motor Industry Federation (RMIF) is set to further enhance its services for its motor industry members, and to meet the demands of a changing industry. Rob Foulston was appointed Chief Executive of the RMIF on 1 February. He combines this role with his existing position as Chief Executive of ReMIT, the training arm of the RMIF. Rob has been tasked with refocusing and where necessary expanding the RMIF's member services and together with ReMIT, has embarked upon a strategy to provide a broader range of services to the automotive sector. Rob commented: 'The RMIF is evolving to meet the challenges of the time, and the expectations of a changing retail motor sector. We are looking at what we currently offer our members, and how this offering can be enhanced. My intention is to take a look at our existing range of member benefits, and where necessary, introduce new products that will support current members, attract new members, and further strengthen the RMIF's already strong market position.' The RMIF and ReMIT are currently developing a range of new services, including financial services, and communication opportunities. There will also soon be an announcement regarding a new ReMIT venture that will provide additional services to the industry.

DATED: 19.02.09

FEED: AW

Troubled US carmakers GM and Chrysler have asked the US government for another $21.6bn (£15.2bn) in support, on top of the $17.4bn already received. The auto giants also plan to axe 47,000 and 3,000 jobs respectively, as well as shedding a number of car models. The moves form part of their drastic restructuring plans submitted to the US Treasury Department on Tuesday night. It came as the United Auto Workers (UAW) union reached agreement with GM, Chrysler and Ford on contract changes. The UAW is one of a number of stakeholders whose agreement is needed before the proposed plans can be pushed through. Plant closures General Motors said it would try to borrow up to $16.6bn more from the government, on top of the $13.4bn it has already received. Its plan includes cutting 47,000 jobs and closing five more US factories, with about 26,000 of the cuts taking place outside the US. The job cuts would take place by the end of 2009 and are the largest work force reduction announced by a US firm in the current downturn. GM has also put its Saab business up for sale, and "given the urgency of stemming sizeable cash demands associated with Saab operations" is requesting Swedish government financial support prior to any sale. However, on Wednesday the country's Enterprise and Energy Minister Maud Olofsson told Swedish public radio that "voters picked me because they wanted nursery schools, police and nurses, and not to buy loss-making car factories". GM says that it could be in profit within two years and fully repay its loans by 2017. 'Lot of work' In December, GM had said it would cut the number of plants from 47 in 2008 to 38 by 2012, but has now said a further five factories will be shut, which would leave it with 33 facilities. The carmaker's brands would also be reduced from eight to four - Chevrolet, Buick, Cadillac and GMC. GM chief executive Rick Wagoner said the company's plan was "comprehensive, responsive, achievable and flexible". "We have a lot of work in front of us, but I am confident it will result in a profitable General Motors," he added. Models cut The plan came after Chrysler, which was given a $4bn loan by the US government at the end of 2008, revealed its own survival plan. Chrysler has asked for another $5bn funding, and plans to cut 3,000 posts. The firm will also cut three car models in 2009 - the Chrysler Aspen and PT Cruiser, and the Dodge Durango. Unveiling its proposals, Chrysler said it now expected the current downturn in the US car market to last another three years. The US's third-biggest carmaker said its radical surgery had the support of the United Auto Workers (UAW) union, dealers, and suppliers. The UAW said it had also reached tentative agreement with Ford and General Motors to help cut those firms' labour costs. Chrysler also said it planned to cut outstanding debt by $5bn and reduce fixed costs by $700m in 2009. Analyst Lincoln Merrihew, of TNS Automotive Consulting, said: "I'm curious to see how the government responds to this plan, but Chrysler has said all the right things." Union talks GM confirmed last week it would be cutting 10,000 jobs worldwide by the end of 2009. About 3,400 jobs will go in the US under GM's initial restructuring plan submitted to the government last December. The US Treasury will be studying the survival plans for several weeks before making a decision whether to call in or extend the loans. The decision is due by the end of March. GM and Chrysler received their first bail-outs at the end of last year, warning that without the support they risked financial ruin. Ford, the third of the "Big Three" US carmakers, has yet to require any bail-outs, but says it may need funds in the future. GM, Ford and Chrysler have all seen sales fall sharply in their home market. While this decline reflects an industry-wide fall that has also hit European and Japanese carmakers in the US, the Big Three have also been criticised for not offering an attractive range of vehicles. It is argued they have been too slow in responding to the growing popularity of smaller, more fuel-efficient vehicles. 'Expertise' Meanwhile, it has been reported that US President Barack Obama has decided to create a new car task force, designed to restructure the struggling industry. However, no formal announcement has been made so far. According to Obama administration officials, the force is an alternative idea to the option of a single "car czar" with far reaching powers. US Treasury Secretary Timothy Geithner and top presidential economic aide Lawrence Summers are said to head the multi-agency operation. White House spokesman Robert Gibbs said the task force would provide "a vast amount of expertise that crosses a number of governmental agencies and departments". The Detroit carmakers are considered to be too big to fail, as their collapse would trigger serious problems for suppliers, dealers and other businesses, potentially resulting in massive job cuts.

DATED: 19.02.09

FEED: AW

Efforts to break a logjam in plans to help finance car sales were being made yesterday (Tuesday, February 17). Business Minister Lord Davies met Bank of England Governor Mervyn King to try to persuade him to give carmakers access to the Bank's £50 billion special liquidity scheme. The Government wants to use the scheme to help the finance arms of car companies to increase the attraction of financial packages to stimulate sales, but Mr King has been reluctant to open the doors to them. Suggestions for a compromise mechanism, involving the nomination of a bank to handle the flow of money, have been under discussion over the past week. Carmakers have been stepping up pressure on the Government to give the go-ahead for the scheme, and the axing of 850 agency workers at the Mini plant in Oxford on Monday (February 16) is being used to reinforce the plea for help. Meanwhile, Business Secretary Lord Mandelson is involved in European Union negotiations over providing incentives for car owners to scrap old cars in return for buying more economical models. Following the loss of jobs at Mini, Derek Simpson, joint leader of trade union Unite, said: "There is a huge onus on the Government to take drastic action to support the motor industry and to encourage people to buy cars. The banks will also have to start making credit available again or this is going to lead to disaster."

DATED: 19.02.09

FEED: AW

The jobs of over 2,000 car workers at Vauxhall's Ellesmere Port factory hang in the balance after American parent company General Motors said further reorganisation would take place at its European operations. General Motors is to take 'aggressive steps' to reduce its European cost base, but has declined to comment on possible factory closures. In a statement the company said: "The economic crisis and its severe impact on consumer confidence and purchase behaviour will require GM Europe to take further restructuring measures, while trying to preserve as many jobs as possible." The plants thought to be at risk include the Ellesmere Port factory and another in Antwerp in Belgium and a third factory in Germany. Fears for the future of GM's European operations grew as the European Employee Forum, a group that speaks for workers, called for General Motors to spin off its Vauxhall and Opel brands rather than make potentially fatal cost-cutting measures.

DATED: 19.02.09

FEED: AW

Troubled US carmakers General Motors and Chrysler must later submit their survival plans to the government, as part of the terms of their bail-outs. They are set to detail their latest cost-cutting programmes in order to keep multi-billion government's loans. A US official said GM would get another $4bn ($2.8bn) on Tuesday on top of already received loans worth $10.4bn. Chrysler is also expected to get an additional $3bn loan on Tuesday. It has already received $4bn. Union talks GM's cost-cutting plans are expected to include the closure several plants, and sale of brands like Hummer and Saab. The company confirmed last week it was cutting 10,000 jobs worldwide by the end of 2009. About 3,400 jobs will go in the US under GM's initial restructuring plan submitted to the government last December. However, GM is not expected to reached detailed redundancy agreements with the United Auto Workers (UAW) union by the government's deadline. According to sources, the sides cannot agree on such issues as contributions towards run retiree health care expenses, elimination of productivity bonuses and unemployment pay period, though they are said to have made progress. Future funds The US Treasury will be studying the survival plans for several weeks before making a decision whether to call in or extend the loans. The decision is due by the end of March. GM and Chrysler received their first bail-outs at the end of last year, warning that without the support they risked financial ruin. Ford, the third of the "Big Three" US carmakers has yet to require any bail-outs, but says it may need funds in the future. GM, Ford and Chrysler have all seen sales fall sharply in their home market. While this decline reflects an industry-wide fall that has also hit European and Japanese carmakers in the US, the Big Three have also been criticised for not offering an attractive range of vehicles. They have been said to be too slow in responding to the growing popularity of smaller, more fuel-efficient vehicles. 'Expertise' Meanwhile, it has been reported that US President Barack Obama has decided to create a new car task force, designed to restructure the struggling industry. However, no formal announcement has been made so far. According to Obama administration officials, the force is an alternative idea to the option of a single "car czar" with far reaching powers. US Treasury Secretary Timothy Geithner and top presidential economic aide Lawrence Summers are said to head the multi-agency operation. White House spokesman Robert Gibbs said the task force would provide "a vast amount of expertise that crosses a number of governmental agencies and departments". 'Wait and see' The Detroit carmakers are considered to be too big to fail, as their collapse would trigger serious problems for suppliers, dealers and other businesses, potentially resulting in massive job cuts. Meanwhile, when asked if the White House was ruling out bankruptcy for GM and Chrysler, White House advisor said on Sunday: "I'm not going to prejudge anything." "We'll wait and see what they have to say on Tuesday," he told Fox News.

DATED: 19.02.09

FEED: AW

Over a third of British motorists are planning to buy a used car this year, according to the latest research from Auto Trader. The survey, conducted amongst 1,270 UK motorists shows that 35% are planning to buy a used car in 2009, with nearly a fifth (19%) planning to buy a nearly new car and 6% planning to buy a new car. Two thirds (58%) are looking to upgrade their current car, while nearly a third of motorists (29%) want to save money on rising fuel, road tax and insurance costs with their next car purchase.

Of the people that took part in the survey, 12% are looking to purchase their next vehicle within the next month, with a further 22% looking to buy within the next three months, 27% within the next six months, 20% within the next nine months and 13% within the next 12 months. However, only 11% of motorists are planning to change their car around the time of the new plate change in March or September.

Not surprisingly, rising costs have put over two thirds of motorists (38%) off purchasing 4x4s, while one in five motorists (21%) have been put off MPVs. The budget for many motorists seems to be holding up well, according to the research, with nearly half (40%) planning to spend up to £10,000, over a fifth (23%) planning to spend up to £15,000 and a quarter (26%) planning to spend up to £20,000. Nearly two thirds of motorists (69%) intend to pay for their next car with cash, followed by a fifth (20%) who will use an unsecured personal loan.

DATED: 19.02.09

FEED: AW

Mercedes-Benz is piloting a new sales channel aimed at winning more registrations from small fleet operators and also taking business away from brokers.The manufacturer is aiming to build on its success in growing corporate sales over the past two years (up by 16%), and is also aiming to remove brokers from the sales channel.Mercedes-Benz Business will be aimed at small fleets operating between two and 25 vehicles, offering the full range of cars on a contract hire basis supplied direct from the manufacturer.Wilfried Steffen, president and chief executive officer of Mercedes-Benz UK, said: “We are in the early stages and will be piloting this initiative in the first quarter of this year.

“We have seen an increase in the broker market which means we have lost the chance to build a relationship with customers through our retailers. This initiative will drive business through the website and link it in to dealers.“Our retailers have invested heavily in facilities and training – they are the best people to serve our customers and build relationships.“Obviously this will get them to come back again, and also helps keep servicing within the retail network. We are competitive in service, maintenance and repair terms – people don’t need to go to non-franchised dealers.”Corporate sales now account for 60% of Mercedes-Benz registrations in the UK, driven mainly by the C-Class range and the recently-revised CLC coupé.
The manufacturer also has high hopes for the new E-Class saloon which will be launched in June.

Steffen added: “We have identified growth potential in corporate sales – people think a Mercedes-Benz is not a company car but we have seen 16% growth in the last two years. In 2005 we had eight people working in corporate sales, but now in 2009 there are more than 20.”

DATED: 16.02.09

FEED: AM

Jon Walden, managing director of Lex, the vehicle contract hire company, is to leave at the end of March.
Lloyds TSB acquired Lex parent company HBOS in September 2008 and has decided to have one senior management team for Lex and its own contract hire business Autolease.
Nigel Stead, currently managing director of Autolease will become managing director for both businesses with effect from early March.
David Oldfield, managing director for Lloyds Banking Group Asset Finance, which includes the contract hire, motor, consumer and asset finance businesses, said: “Jon has decided to pursue work outside the financial services market and we offer him our best wishes as he prepares to leave the group.
“Nigel Stead has been in the contract hire industry for many years and is well known and highly respected. We are already planning how to bring the Lex and Autolease businesses together to create a strong and innovative market leader offering the highest levels of service, buying power and industry expertise.”

DATED: 16.02.09

FEED: AM

The two giant American-owned dealer management system providers have changed the face of the UK DMS market after making numerous acquisitions in recent years.
Reynolds and Reynolds last year bought MMI, adding it to its earlier purchases of Kalamazoo and DCS, while ADP complemented its acquisition of Kerridge by snapping up KBA/Automaster. The activity has transformed the shape and nature of the systems available to UK dealers.Reynolds & Reynolds has dropped DCS’s GDMS and no longer supplies Kalamzoo’s Elite, KDMS and Ford-only Darts systems, but it continues to support all of them.It has focused its attention on two products sold under the Kalamazoo brand: Power, Reynolds’s own system, which is targeted at larger dealer groups; and Automate, MMI’s product, aimed at smaller dealers.ADP Dealer Services, meanwhile, has just stopped supporting Modems Solution and will discontinue support for the Rev 7 version of Autoline at the end of the year.
A who's who of DMS suppliers and what they offer

ADP: Autoline
Kalamazoo Reynolds: Automate and Power
Ebbon Dacs: Ebbon Dacs DMS
Gemini: Evolution, Ignition and Evolution SQL
Dealer Management Services: Navigator
Pinewood: Pinnacle
Autoview: Autoview

DATED: 16.02.09

FEED: AM

This is a short story about the bond formed between a little girl and a group of building workers.
A young family moved into a house next door to an empty plot.

One day Joe, Steve and a gang of building workers turned up to start building a house.
The young family's 5-year-old daughter naturally took an interest in all the activity going on next door and started talking with the workers. She hung around and eventually the builders, all with hearts of gold, more or less adopted the little girl as a sort of project mascot.

They chatted with her, let her sit with them while they had tea and lunch breaks, and gave her little jobs to do here and there to make her feel important. They even gave her very own hard hat and gloves. At the end of the first week they presented her with a pay envelope containing two pounds in 10p coins.

The little girl took her 'pay' home to her mother who suggested that they take the money she had received to the bank the next day to start a savings account. When they got to the bank the cashier was tickled pink listening to the little girl telling her about her 'work' on the building site and the fact she had a 'pay packet'. "You must have worked very hard to earn all this", said the bank cashier. The little girl proudly replied, "I worked all last week with the men building a big house." "My goodness gracious," said the cashier, "Will you be working on the house again this week, as well?"

The little girl thought for a moment and said... "I think so. Provided those w*nkers at Jewsons deliver the f*cking bricks."

DATED: 15.02.09

FEED: PTL

Greater Manchester-based Academy Group has acquired former Ribble Valley Motors' dealership site and is set to open a used car sales, service and accident repair centre.
Ribble Valley used to have a Bentley new car sales franchise at the Harwoord Road site in Rishton, but this was terminated in November last year by Bentley.
It had since started to focus on nearly-new and used Bentleys but it is currently unclear as to what the reasons are behind the closure of the business.
Property developer Hurstwood was leasing the site to Ribble Valley and is now leasing it to Academy Group.
The new site will begin trading on March 1, creating 10 new jobs.
Jason Mawdsley, Academy Group managing director, said: “We have been looking to expand our operation for some time and we are delighted to have secured the location in Rishton.
“It gives us a first class showroom facility, which we don’t presently have and the site boasts a service department, as well as bodyshop that are both equipped to a high standard.”

DATED: 15.02.09

FEED: AM

Commercial Motors South West, the Mercedes-Benz van and truck dealer, has gone into administration, blaming the economic downturn.
The firm employed around 200 people at seven sites in the south west.
Administrator Nigel Morrison, of Grant Thornton, said: "In the end, the directors had no choice but to place the company into administration.
"They had been attempting to sell the company since before Christmas but while there was interest, it was not possible to conclude a sale.
"We are hoping to enter into early discussions with Mercedes Benz and a possible buyer with a view to transferring the majority of the business to a new operator.”
Grant Thornton had to make the majority of employees redundant as it was unable to place the company into a position to trade after it was appointed.
Mercedes-Benz has already appointed City West Commercials as the new franchise holder for the south west. Commercial Motors South West had its franchise agreement terminated when it was placed into administration.

DATED: 15.02.09

FEED: AM

Given the hammering 4x4s have taken in 2008 dare we suggest a 4x4 as a profitable used car?
Values of 4x4s have stabilised, and we expect that as customers see how much metal can be bought for the money, demand should begin to pick up.
About £15,000 spent on a good three-year-old Land Rover Discovery SE auto could be converted into an £18,000-plus sale with the right customer.

DATED: 15.02.09

FEED: AM

Changes to the way car dealer staff will pay company car tax due to be introduced later this year have not been thought through properly, and the Retail Motor Industry Federation (RMIF) is challenging Government on the proposals. HM Revenue and Customs (HMRC) are revising the way that tax due on company car use for motor trade staff is collected. The current situation, where dealers make individual agreements with their local tax office, is perceived to be inconsistent. A new national arrangement will come into force on 6 April 2009, and will replace all local agreements. According to RMIF Director Sue Robinson, there is major concern that the proposed changes have been made without proper evidence, or consultation, and without any assessment of the likely impact on the industry and its employees: 'No evidence of any suggested abuse of the current system has so far been provided by HMRC, and there has been a lack of consultation on the issue. Although HMRC consulted trade bodies on the changes, it was obvious they had already decided the main outline of the scheme prior to discussion. The RMIF have concerns about the arrangements, and have strongly lobbied for changes with HMRC only agreeing to minor amendments.' Robinson also believes that many businesses will be caught by surprise if the changes are made in April: 'We do not believe that those who will be affected by these amendments have been formally advised by HMRC of the change in approach.' The RMIF has written to Exchequer Secretary Angela Eagle MP to request a deferment of the proposals, and intends to work with HM Treasury to determine and implement a more practical solution.

DATED: 15.02.09

FEED: AW

Britain's beleaguered car industry has already received taxpayer handouts worth £527.5 million, according to figures obtained from the Department for Business Enterprise and Regulatory Reform. And that is before a penny of the £2.3 billion bail-out package announced last month by Business Secretary Lord Mandelson has been distributed. The £527.5m cash handed out to date has been awarded to companies in the automotive sector by Government departments and Regional Development Agencies in England and Wales since 1990. The DBERR says that the figures 'serve as a timely reminder that state handouts to car firms are not a recent phenomenon'.

DATED: 15.02.09

FEED: AW

Aircraft engine manufacturer Rolls-Royce has said it is confident about its long-term prospects, despite the challenges of the current recession. Its comments came as it reported a 2008 pre-tax profit of £880m, up 10%. The Derby-based company's annual revenues increased 22% to £9.1bn, while its order book rose by 21%. Rolls-Royce said it was too early to say what effect the downturn would have, but predicted 2009's profits would be similar to those in 2008. "The group's financial position remains strong and investors continue to enjoy a progressive dividend payment," said Keith Bowman, analyst at Hargreaves Lansdown Stockbrokers. "Management continues to deserve credit for both the current business model and retaining faith in the virtues of manufacturing."

DATED: 15.02.09

FEED: AW

French carmaker Renault has reported a steep fall in profit and abandoned its targets for 2009, blaming an economic crisis "of massive proportions". The company announced a net profit of 599m euros ($769m; £541m) for 2008, down 78% on the previous year. Worldwide sales fell by 4%. Sales in Europe were down more than 7%. Renault said it expected market conditions to worsen and added that its volume and operating margin targets for 2009 were now "unachievable". 'Profound crisis' The company said it had a single priority for the year ahead - to aim for positive free cash flow. The car industry has been hit by a slump in demand amid a wider economic slowdown. Industry-wide new car sales in Europe fell 17.8% in December. "The crisis facing the automobile industry is profound," said Renault chief executive Carlos Ghosn. "It risks being long and without doubt will change the industrial landscape."

DATED: 15.02.09

FEED: AW

HPI and Car Dealer survey reveals 86% unmotivated to buy in 2009 Leading vehicle information organisation, HPI, in association with the only glossy magazine for the motor trade, Car Dealer, reveals that 41% of new car buyers say the cut in VAT is 'unlikely' to make them buy in 2009. The figures suggest that the government's 2.5% VAT cut has failed to get Britain spending, especially as the reduction has the greatest impact on big-ticket items such as cars. Daniel Burgess, Automotive Director at HPI comments says: "Confirming our worst fears, measures to incentivise buyers to the new market are failing. In total, a staggering 86% of those we surveyed reported that the VAT cut had not motivated them to consider a new car purchase, adding to the intense pressure already faced by the motor industry. In fact, consumers are more likely to be wooed by the many special offers and promotions car dealers are running in a bid to boost business." Motor industry expert and editor of Car Dealer, James Baggott adds: "Less than 15% of new car buyers surveyed said they would be more likely to buy a new car following the VAT cut. A staggering 36% said they would 'definitely not' buy a new car, despite the reduction, with 10% saying it was 'very unlikely'. They could save £500 on a £20,000 car and £1,250 on a £50,000 vehicle, but it's clear from our survey that the savings are just not swaying them to spend." An extremely quiet November was followed by a boost in sales in December, but this consumer spending spree seems to have burnt out. With so little savings to be made, anyone struggling to afford a new car is unlikely to take the bait. In addition, finance is still unavailable to many and ongoing economic uncertainty makes big purchases out of the question. From a dealer perspective, many have complained that the biggest effect of the VAT reduction is the extra expense and administration burden of producing new brochures and prices lists, as well as reduced operating margins in some areas of the business. Says James Baggott "Some dealers have even had to pay expensive software engineers to reprogram computer systems, hitting revenue margins still further." Concluding on a more positive note for both the dealer and the consumer, Daniel Burgess says: "In the used car arena we have seen falling values on higher ticket cars for many months now, and those consumers who are currently in a comfortable finance position are making the most of buying fantastic cars at fantastic prices. However, we are already beginning to see a shortage of nearly new, low mileage cars on forecourts and this will only intensify over the coming months."

DATED: 15.02.09

FEED: AW

France's biggest carmaker, Peugeot Citroen, has announced it will slash more than 11,000 jobs in 2009, starting with European plants outside France. The news comes just days after French President Nicolas Sarkozy unveiled a three-billion-euro (£2.7bn; $3.9bn)loan for the company. Peugeot Citroen cut 2,700 jobs worldwide at the end of last year. On Wednesday the company reported an unexpected 2008 net loss of 343m euros ($433m; £308m) after its sales slumped. Peugeot Citroen has said it will make the job cuts through a series of voluntary redundancies and and non-renewal of contracts, starting in its non-French European plants. Not in France "France is, of course, our biggest country in terms of employment," said Peugeot Citroen chairman Christian Streiff, "but we have lots of staff in other countries which we are currently reducing quickly." The news will further fan flames of discontent in the Czech Republic and Slovakia, which have accused President Sarkozy of protectionism. Mr Sarkozy's loan to Peugeot Citroen and Renault is dependent on assurances they will not shut French plants or cut French jobs. The car manufacturing sector is a stronghold of French industry. "We want to stop factories from relocating abroad and, if possible, bring them back home," said Mr Sarkozy last week. "If we give money to the auto industry to restructure itself, it's not so we can hear about a new plant moving to the Czech Republic or wherever," he said. The loan to the carmaker, along with a similar one for Renault, is yet to be approved by the European Commission and the body has already warned it could violate EU laws against protectionism. Dwindling demand The European car market has been hit by a slump as consumers cut spending to beat the economic crisis and recession. On Wednesday, Peugeot Citroen said sales revenues across its Peugeot and Citroen brands declined 7.4% last year to 54.4bn euros. The firm warned it expected to make a similar loss in 2009, but said it aimed to return to profit in 2010. Next year was supposed to have seen the conclusion of a profit recovery programme and the group had set its sights on a 6% operating margin for 2010. Mr Steiff warned the European car market was in for further tough times and forecast a 20% decline this year. He said the company was continuing efforts to reduce levels of unsold cars and maintain cost-cutting. The unexpected 343m-euro net loss compares with a profit of 885m euros in 2007. Analysts had forecast a net profit of 180m euros at Europe's second-biggest carmaker.

DATED: 15.02.09

FEED: AW

Luxury carmaker Bentley has said it is cutting 220 jobs and also revealed all staff will take a 10% pay cut. The Cheshire-based firm said staff salaries would be cut between April and December, including that of chief executive Dr Franz-Josef Paefgen. Bentley said it hopes to make the cuts through voluntary redundancies, but warned it would not rule out compulsory action if necessary. Bentley employs 3,800 staff in Crewe. The firm cut 200 jobs in October. Bentley is now starting a 90-day consultation with workers. A seven-week shutdown is due to come into effect in March.

DATED: 15.02.09

FEED: AW

Overall dealer showroom traffic and the number of test drives showed a seasonal decline across all segments in December, according to John Simpson, managing director at Manheim Retail Services. Interesting exceptions to the downward trend are executive models, which appeared to hold up well, and 4x4 models which saw only a small decline. After a steady decline, both are now good value. Sales conversion rates were up for executive, small hatchback and 4x4 segments. Mike Pilkington, managing director of Manheim Auctions and Remarketing, said overall stock for retail sales values fell in December, reflecting the seasonal norm. At less than 1%, the fall was relatively small. Activity in the auction halls remained strong, with overall first-time conversion rates up by 5%, taking increases across all vehicle segments into consideration. First-time conversion rates of part-exchange vehicles also held up. It will be interesting to see if the normal January and February uplift is evident again.

DATED: 15.02.09

FEED: AM

The French government’s £5.7 billion financial support package for carmakers in France could be deemed illegal.
The European Commission warned that the loans could be blocked if there were conditions obliging PSA and Renault to preserve French jobs for French workers.
Jonathan Todd, EC competition spokesman, said: “There are indications that carmakers will be obliged to maintain their centre of production in France as a condition for government support.
“If there were any conditions which would mean that aid would be subject to conditions that violated the principles of the internal market then the aid would be illegal.”
EU commissioner Neelie Kroes has been alarmed by reports that Paris has linked the loans to a requirement that production remains in France.

DATED: 15.02.09

FEED: AM

Mervyn King, governor of the Bank of England, has warned that further action may be necessary in order to pull the UK out of the recession.
The Bank of England is forecasting that the UK’s economy will fall sharply in the first half of this year.
The Bank also said that inflation would remain below its 2% target by the end of its two-year forecast period.
The Bank of England has already cut interest rates from 5% to 1% in the last five months in a bid to kick-start the economy and rates could be reduced even further.
King said: "Monetary Policy Committee can and will take action to return inflation to the target and so ensure that economic growth will again match its potential.”
He indicated that as well as interest rate cuts, the Bank was ready to use a wider group of policy measures to increase the money supply, including buying a new £50 billion facility to buy up distressed corporate assets. These measures include buying assets such as corporate and Government bonds.
He added that other central banks were taking similar actions and that the common approach would help see the world through the economic crisis.

DATED: 15.02.09

FEED: AM