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Cliff Banks Cliff Banks has been involved with the automotive industry for nearly 20 years and has covered the industry for Ward's for nine years. He is an award-winning...more

Archive for June, 2009

Much Too Young…

Longtime Las Vegas dealer Daniel Towbin died on June 11 of a heart attack.


Towbin, who was 54, was chairman of Towbin Automotive Enterprises, which consists of Towbin Dodge, Towbin Infiniti, Prestige Infiniti, Towbin Motorcars (Rolls-Royce, Bentley, Vespa, Piaggio) and the Smart Center Las Vegas. The group sold 11,000 new vehicles in 2008 while employing 600 people.


He had been selling cars in Vegas since 1989, when he moved from New Jersey.


Towbin quickly became a Vegas institution. Although he was known for being behind the scenes, he became involved with numerous charities, including the Council for a Better Nevada, Andre Agassi College Preparatory Academy, the Three Square Food Bank, Easter Seals of Southern Nevada, Keep Memory Alive supporting the mission of the Cleveland Clinic Lou Ruvo Center for Brain Health and the Nevada Cancer Institute.


He was an honorary commander of the Nellis Air Force Base Support Team, member of the Andre Agassi Campaign Cabinet and past president of the TKO for Kids Foundation. The dealerships also sponsor events for Boys and Girls Club of Las Vegas, the Ronald McDonald House, St. Jude’s Ranch for Children; the American Heart Association, the Safe Kids Coalition and the Klass Foundation.


Towbin also was an industry leader serving as chairman and president on several dealer councils and was a member of the National Automobile Dealers Assn. He was a General Motors Dealer of the Year and received the Jack Smith Leadership Award, and was nominated in 2007 by Time Magazine for its Dealer of the Year award.


Towbin’s wife, Carolynn will become chairman of the group. His son, Josh “Chop” Towbin is the co-owner of Towbin Dodge, known for the A&E television show, King of Cars,” while daughter Jesika (Towbin-Mansour) is the group’s director of operations.

GM Amends New Contracts

Following a five-hour meeting on Friday and numerous email exchanges over the weekend with NADA officials and members of its national dealer council, General Motors is amending the new — and stringent — franchise agreements it mailed to surviving dealers last week. (NADA Approves GM’s Modified Dealer Participation Pact).


The meeting went so long, members of GM’s contingency, including executives Troy Clarke and Mark LaNeve, had to reschedule their flights back to Detroit.


You can read my column on the danger these contracts pose to the automotive retail system here.


GM is overnighting its clarifications and amendments to its dealers today. Dealers now have until Monday June 15 to sign and return the agreements (extended from Friday June 12).


The amendments, or clarifications, for the most part, soften language found in the agreements mailed last week.


NADA also is sending a letter to its GM dealer members outlining the auto maker’s clarifications.


Regarding the more demanding sales requirements, NADA’s letter says GM will hold a Reinvention Business Plan with its continuing dealers in the first quarter of next year “where ‘appropriate’ sales targets will be agreed upon.” The new requirements will take effect in the second half of 2010 or in 2011, “based upon overall market factors.”


Similar language is provided for the new inventory requirements.


Meanwhile, NADA says GM has agreed to work with its dealers “reasonably” regarding exclusive showrooms and may extend the December 31, 2009 deadline in certain cases.


GM also clarifies that the dealer’s waiver of protest “is not designed to allow GM to add new dealers into an existing dealer’s area of responsibility. GM intends only to realign current points, not add dealers to a market.”


According to NADA, GM will eliminate paragraph 8 from the agreements sent last week, which provided special rights to GM in cases where a dealer allegedly fails to meet the requirements of its franchise agreement. Instead of reserving special rights, any remedy sought by GM will be in accordance with state franchise laws.


GM also is providing clarifications to the wind down agreements it sent to dealers it is terminating later next year.

Painful Day for 789 Chrysler Dealers

Today, 789 Chrysler dealerships will cease to operate unless the judge in the auto maker’s bankruptcy case does the unexpected and rules in favor of more than 300 dealers who objected to Chrysler’s dealer strategy.


The judge, Arthur Gonzalez, says he will issue an opinion today on the objections, but statements he made last week indicate he’ll likely rule in favor of Chrysler.


Last week, Chrysler President Jim Press along with General Motors President Fritz Henderson testified before a U.S. Senate committee defending their elimination of more than 3,000 dealerships combined.


Press claimed a bloated dealer network costs the company money. Although he mentioned at least three areas in which dealers cost an auto maker money, dealers argue the costs are passed down to them and that they pay for everything.


The need for a streamlined dealer network makes sense when you realize Chrysler is going from building 2 million vehicles a year to about 700,000 and from 38 models to about 13. Those numbers alone suggest there has to be some dealership paring.


The problem is the way Chrysler went about it giving its dealers 26 days to wind down their stores. Terminated dealers are receiving no money from the auto maker including not getting paid for inventory and parts.


It was only after the hearing last week that Chrysler guaranteed to help all its eliminated dealers get rid of their inventory.


GM at least, is paying its dealers who are being terminated. Henderson says its a “modest sum,” but it’s something. In addition, GM, unlike Chrysler, is letting dealers appeal a termination. According to Henderson last week, the auto maker has received more than 500 appeals and has reversed 11 terminations. GM dealers also have till October 2010 to wind down their stores.

Saturn Dealers Might Want to Study Smart

Amidst the frenzied activity surrounding General Motors’s bankruptcy filing yesterday, Saturn also filed chapter 11.


Saturn Spokesman Steve Janisse tells me the filing should not impact the potential sale of the brand either postiively or negatively.


Technically, that may be true, but with Saturn in bankruptcy, it probably is easier for the brand to eliminate dealerships. Recent media reports regarding Roger Penske’s involvemnt with Saturn confirm what I’ve been hearing for a couple of months.


Sources tell me Penske is investigating a partnership with Nissan Renault to sell Korean-built Renault Samsung vehicles in the U.S. using the Saturn retail network.


It’s likely that Penske, who already distributes Smart, needs signifcantly fewer dealerships to sell Samsungs than Saturn’s current 384. I’m guessing here, but if Penske and Carlos Ghosn decide to pull the trigger on the deal, Saturn could lose anywhere from 130 to 150 dealers in the next couple of months.


So if you’re a Saturn dealer, you might want to study the Smart distribution model and its dealerships — you know, just in case.

About

Ward’s Dealer Business Editorial Director Cliff Banks shares his views on emerging trends and technologies that promise to help dealers sell more vehicles.

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