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Ally Files Copyright Infringement Lawsuit Against Chrysler Group

Claims former employee took documents that helped with start of Chrysler Capital.

by on Sep.24, 2013

Ally, the former GMAC, filed suit in federal court against Chrysler Group LLC and a Spanish bank.

Ally Financial Inc., the former General Motors Acceptance Corp., has filed a lawsuit against a Spanish bank and Chrysler Group LLC in a dispute that has its roots in the 2009 auto bailout.

The federal suit alleges copyright infringement and misappropriation of trade secrets by Chrysler Capital, a partnership between Chrysler Group and Santander, a Spanish bank. In the suit, Ally asked a federal judge to Chrysler Capital, from “imitating, copying or making use of” the copyrighted forms.

A Safe Source!

Ally became the finance arm of Chrysler Group during the bailout. A task force established by the Obama White House to organize a rescue of the distressed domestic auto industry decided to prop up GMAC, which had been crippled by the recession and by GM’s ill-advised foray into the home mortgage business, which turned into an outright disaster when the U.S. real estate bubble burst in 2008. (more…)

Motorists Paying More – But Loans Easier to Get

Incentives also increase.

by on Dec.05, 2012

Hyundai boasted the lowest incentives -- and the lowest transaction prices -- last month.

If you bought a car in November odds are you paid more than you would have at almost any time in the past year.  Transaction prices – what motorists actually spend after working in incentives and factory options – are at or near record levels.

That’s despite the fact that many manufacturers increased givebacks last month, hoping to keep sales momentum going. They’ve also been working with lenders to ensure that credit continues to become more readily available – though motorists have been stretching out loans and are now taking an average of 64 months to pay off a car purchase.

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“Industry average transaction prices climb once again with consumers’ continued appetite for highly contended vehicles,” said Jesse Toprak, Senior Analyst at the data tracking service TrueCar. “Today’s consumers value a nicely equipped vehicle as much as they do a low cost of ownership. Automakers are getting better at providing all the modern conveniences consumers come to expect for more of their models, resulting in higher overall prices hence improved profitability.”

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Are Subprime Buyers Saving the Auto Industry?

Loans up, defaults down.

by on Sep.07, 2012

More subprime buyers are finding loans again.

Last month’s unexpectedly strong automotive sales numbers run counter to most other recent U.S. economic trends and buoy hopes the nation will escape a double-dip recession.

While a variety of factors appear to be propping up automotive demand – despite earlier forecasts of a slowdown – one key reason for the sales surge appears to be increasing availability of financing, especially for so-called subprime buyers.

During the depths of the recession, when U.S. new car sales slipped to a crushing 10.5 million low in 2009, even those with the best credit scores found it difficult to get financing and leases all but vanished.  Now, however, the financing situation has turned around.

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In fact, there were more subprime loans written in the second quarter of 2012 than in the period before the nation’s economic collapse, according to financial tracking firm Experian Automotive.

But is that posing the risk of future problems down the line, especially if the continuing high jobless rate leads to higher loan defaults?

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Big Year for Used Cars

Short supply of “near-new” vehicles could drive prices up in 2012.

by on Jan.03, 2012

Used car sales reached nearly 39 million last year, triple new car volumes.

Americans bought nearly 39 million used vehicles in 2011, more than three times the number of new cars, trucks and crossovers sold last year.

But with demand threatening to outstrip supply – especially for “nearly new” vehicles – buyers saw prices rise sharply, a trend likely to continue through 2012, according to CNW Marketing.

“We saw a lot of people whose existing cars were just tired so, after two years of pent-up demand, that finally led to a surge of used car sales last year, and especially in November and December,” said CNW chief Art Spinella.

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Used vehicle sales totaled 38,792.169 for all of 2011, according to CNW research, up 5.2% from the prior year.  December volume surged 11.98%, to 3,142,513.

The year, as a whole saw a surge in private party, or consumer-to-consumer, sales, especially in the final months of 2011.  Shoppers and sellers have increasingly turned to free online services such as Craigslist.org to make the connection, along with fee-based services such as AutoTrader.com.

Dealers have also been using the Internet to boost their business, and according to CNW, December saw 73.1% of available used cars listed online compared to 69% a year earlier.

Since the economic recession began in 2008, there has been a notable shift in the marketplace, many traditional new car buyers migrating to the used vehicle market, according to Spinella.  Even as the economy – and, in turn, the new car market – has begun to recover, many are still opting for previously owned products.

That reflects the emphasis on value, higher prices for new cars and limited credit availability.

Spinella noted a “new phenomenon we’ve only since about 2008 (where) a lot of buyers who would normally choose a new car are going for what we call “transitional used cars.”  These are vehicles they expect to keep only until their personal financial situation improves and they can get back into a new car, he explained.

But there’s a problem for such buyers.  In years past, they might have opted for what the industry likes to call “nearly new” vehicles – cars that have just come off short-term, 1, 2 or 3-year leases and are in near-new condition, often backed by like-new warranties.

But because most lenders cut down on leases in recent years – many halting leasing entirely – there are far fewer of these vehicles available right now.  That has helped drive up prices on used cars overall, and relatively new models in particular.

During much of 2011, used car prices hit record levels.  They dipped about 1% in December, but Americans still spent about $28.2 billion on used vehicles last month, up from $25.6 billion a year earlier.

“And that trend will certainly continue,” predicted Spinella, though, on the positive side, he noted that many lenders are beginning to loosen up credit again for used car customers.

Chinese Auto Financing Business Booming

GMAC-SAIC sets record monthly contract volume.

by on Sep.14, 2010

World's largest auto market soon to be largest finance market as well?

Traditionally the new vehicle market in China was dominated by cash transactions. However, the Chinese desire for vehicles bought on credit might not be all that different than elsewhere. GMAC-SAIC Automotive Finance Co., Ltd. (GMAC-SAIC) today announced that it booked a monthly record for retail contacts in August, or more than 18,000 retail contracts in August.

China of course is the world’s largest auto market. GM and its joint ventures sold a record 1,826,424 vehicles in China in 2009.  GM ended 2009 number one among global automakers for the fifth consecutive year. With Chinese sales of 1,567,411 units through August 2010, GM is on track to remain number one in 2010.

The joint venture between Ally Financial Inc., Shanghai Automotive Group Finance Co., Ltd. and Shanghai General Motors Co. Ltd.,  has now  signed more than 109,000 retail loan contracts during the first eight months of 2010, which exceeds the 2009 full year total. Chinese industrial policy requires automakers to establish joint-ventures with local companies and reinvest profits in China.

“We are very pleased with yet another year characterized by strong business growth. Surpassing 100,000 retail contracts at this point of the year represents a significant milestone for not only us, but for the whole automotive finance industry in China,” said Rick Livingood, general manager of GMAC-SAIC.

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GM Back in Auto Financing with AmeriCredit Buy

Cash transaction creates a new captive finance company at General Motors to provide more vehicle loans and leasing.

by on Jul.22, 2010

Is Whitacre creating his own empire, just as he did at SBC, in effect reassembling AT&T ?

General Motors Company and AmeriCredit Corp. (NYSE: ACF) today announced they have entered into an agreement for GM to acquire AmeriCredit, an independent – and more importantly successful – auto finance company in an all-cash transaction valued at about $3.5 billion.

The acquisition creates a new GM captive financing arm that will enable GM to provide potential customers with more credit options. GM claimed it would not change its current incentive plans in the U.S., which are among the industry’s highest. If true, this means that taxpayers would not incur increased costs from more of the kinds of subsidized financing that auto companies often use to bolster sales.

Thus far this year GM sales are not increasing as fast as the overall market. Auto companies continue to incur loses because of overly optimistic residual values for returning lease vehicles.

GM said it needs to provide financing to “non-prime” customers – 40% of the U.S. population but only 4% of its current car buyers – who are remain pariahs in the credit markets despite lavish taxpayer financed bailouts of Wall Street firms and big banks that totaled almost a trillion borrowed dollars  – and were designed to free up credit, according to the Obama Administration.

Under the terms of the agreement approved by both companies’ boards of directors, AmeriCredit shareholders will receive $24.50 in cash for each share of stock held as of the closing date, which is due by the end of the fourth quarter of 2010, pending various conditions, including the approval of AmeriCredit shareholders

GM’s proposed purchase price is about a 25% premium over AmeriCredit’s closing share price on Wednesday. AmeriCredit has traded for as high as $26.49 a share this year.

“Adding AmeriCredit to our team will improve our competitiveness in auto financing offerings, and I am very pleased to have them on board,” said GM Chairman and Chief Executive Officer, Ed Whitacre about the Texas based financing company.

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Following Your Money!

GM claimed it will maintain its relationship with Ally Financial, the renamed GMAC, which is and now an independent taxpayer-owned company that provides retail and wholesale financing to GM and Chrysler Group. Currently GM has 57% of its transactions in the retail prime market through Ally and other banks, above the industry average of 53%.

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Auto Dealers Excluded from Wall Street Reform Bill

Dealers and lobbyists head off regulation. Senator Byrd’s death now threatens the entire bill, in face of Republican opposition.

by on Jun.28, 2010

NADA was unhappy that Wall Street reform legislation would “unfairly increase federal regulation over dealerships."

President Obama suffered a political defeat late last week from members of the National Automobile Dealers Association, who successfully had themselves excluded from the financial regulations that are proposed to stop the reckless practices of Wall Street that caused the ongoing Great Recession.

Dealers who provide their own funds for loans would have been treated just like banks, credit unions and other auto lenders under the bill.

NADA was unhappy that what started as Wall Street reform legislation would “unfairly increase federal regulation over dealerships and potentially eliminate dealer-assisted financing.” (See NADA Fighting Wall Street Financial Reform )

The White House, Pentagon, the Department of Treasury and other consumer interest groups fought strongly to regulate auto dealers.

Among other things, the bill would create a new Bureau of Consumer Financial Protection, and curb abusive practices such as ‘bait and switch” where one interest rate or down payment is advertised, but much higher ones substituted.

There are also rules governing other questionable ploys, such as the failure to pay off liens on trade-in vehicles, or conditional loan agreements. These are all reasonable propositions say consumer advocates.

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Follow the $$$

However, the largely Republican members of the National Automobile Dealers Association, who have spent more than $3 million lobbying in “pay to play” Washington since last year, successfully defended their interests.   (more…)

Car Advertising: Reading the Fine Print

If a deal sounds too good to be true, it is too good to be true.

by on May.17, 2010

"Auto dealer-lenders offering transparent and fair financing products to their customers should welcome these reforms."

As the spring selling season arrives, so does a proliferation of car advertising, with seemingly the same resilience and growth as the dandelions that survive each winter and take over your lawn.

In the ads, dealers promise low interest rates, high trade-in allowances and free or low-cost options, among other enticements. If only the promises were true at face value and without their many qualifications.

Right now the U.S. Senate is wrestling with the details of a contentious financial-regulation bill (S 3217), which would create a new Bureau of Consumer Financial Protection, and curb abusive practices such as ‘bait and switch” where one interest rate or down payment is advertised, but much higher ones substituted.

There are also rules governing other questionable practices, such as the failure to pay off liens on trade-in vehicles, or so-called conditional loan agreements where terms can change. These are all reasonable propositions in the view of consumer advocates.

The National Automobile Dealer Association is lobbying to have car dealers exempt from some of the proposed reforms, claiming not to do so would “unfairly increase federal regulation over dealerships and potentially eliminate dealer-assisted financing.” (See NADA Fighting Wall Street Financial Reform)

The debate has become so contentious that President Obama issued a statement directly taking on the dealers.

“Claims by opponents of reform that this legislation unfairly targets auto dealers are simply mistaken.,” Obama said. “The fact is, auto dealer-lenders make nearly 80% of the automobile loans in our country, and these lenders should be subject to the same standards as any local or community bank that provides loans. Auto dealer-lenders offering transparent and fair financing products to their customers should welcome these reforms, which will make their competitors who don’t play by the rules compete on a level playing field.”

“We simply cannot let lobbyist-inspired loopholes and special carve-outs weaken real reform that will empower American families. I urge the Senate to continue to defeat the efforts of special interests to weaken protections for all American consumers,” said Obama.

Questioning Pricing

You don’t have to wait for the debate in Washington to sort itself out. A quick phone call will go a long way toward saving you the time of a disappointing and time-consuming dealership visit where you will find that there is the fine print restricting the offers. You should also check with the local Better Business Bureau about the firm’s reputation.

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NADA Fighting Wall Street Financial Reform

Trade group opposes regulation on car dealer lending practices.

by on May.12, 2010


Car dealers arrange for almost all auto financing. 

While the U.S. Senate tousles over the details of the contentious financial-regulation bill (S 3217), the National Automobile Dealer Association is lobbying to have car dealers exempt from some of the proposed reforms.

Among other things, the bill would create a new Bureau of Consumer Financial Protection, and curb abusive practices such as ‘bait and switch” where one interest rate or down payment is advertised, but much higher ones substituted.

There are also rules governing other questionable practices, such as the failure to pay off liens on trade-in vehicles, or conditional loan agreements. These are all reasonable propositions in the view of consumer advocates.

Nonetheless, NADA is unhappy that what started as Wall Street reform legislation would “unfairly increase federal regulation over dealerships and potentially eliminate dealer-assisted financing.”

Maybe so, but a Republican sponsored amendment to exempt car dealers from the proposed reforms was trounced last week, and it looks like car dealers will be included in the final version of the bill when it comes up for vote next week. Dealers who provide their own funds for loans will be treated just like the banks, credit unions and other auto lenders under the bill.

This has not stopped NADA from continuing to oppose the legislation since car dealers arrange for almost all of auto financing.

“Burdensome regulations would drastically increase the cost of a car loan and make it harder for consumers to qualify for credit,” NADA claims. “This hurts a family’s ability to find affordable transportation to meet their needs, particularly low-income families who do not have relationships with financing organizations.”

NADA has also issued a pole that claims support for the financial reform bill drops from 70% percent to 41% “when consumers learn that current legislation could make it more challenging and expensive to get auto credit,”

Well, as in all poling, how you ask the question determines the response.

Consider the poll:

Initial: “There is currently a bill before the U.S. Senate that focuses on changing the nation’s financial laws. Among other things, this bill would create a new Bureau of Consumer Financial Protection.”

Statement 1: “This financial reform legislation would allow the government to regulate auto dealers who simply provide customers with options from local lenders, making it more challenging and expensive to get financing through a car dealership.”

Statement 2: “This bureau could also dictate to auto dealers how they pay their employees.”

Given this language, are you surprised that NADA claims that support for the bill drops from 70% to 41% or that 65% of respondents would support an amendment to ensure that auto dealers can continue to provide dealer-assisted financing?

What would happen if we asked the respondents whether they are in favor of the government ignoring shady financial practices from whatever source that will increase your costs and run up the national debt?

“What this poll shows is that consumers don’t want Congress to limit their auto finance options,” said NADA Chairman Ed Tonkin, a dealer from Portland, Ore. “And it should come as no surprise. The public wants Congress to focus on Wall Street bankers, not Main Street auto dealers.

We will see.

Fear of Credit Problems Cost 800,000 Lost Sales During First Quarter

Qualified shoppers steering clear of showrooms

by on Apr.16, 2009

There's more money for car loans out there than many buyers realize, says a new report indicating up to 800,000 potential sales were lost during the first quarter of 2009.

There's more money for car loans out there than many buyers realize, says a new report indicating up to 800,000 potential sales were lost during the first quarter of 2009.

As many as 800,000 new car buyers steered clear of showrooms, during the first quarter fearing they’d be turned down for a loan, reveals a new report.

There’s little doubt that a lack of credit is hurting the overall American economy, and car sales, in particular.  But just the fear of credit problems could keep the automotive market depressed, even after lenders loosen up, says CNW Research, in its Retail Automotive Summary.

As much as a quarter of those who could have qualified for a car loan, even under the stricter guidelines enacted during the credit crunch, believe they couldn’t get financing and have steered clear of the market, CNW research found.  That comes to anywhere between 400,000 and 800,000 lost sales.

Considering the average new vehicle now costs $27,500, that works out to as much as $20 billion in lost revenues.  And based on recent market shares, that would translate into perhaps as much as $4 billion for General Motors alone, a figure that would have helped, though likely not have averted, the company’s current financial crisis.

“There are always new-car intenders who believe they can’t get an auto loan and thus drop out of the market before completing an application,” explained CNW director Art Spinella.  “But the lack of proactive loan offers in the past year caused a goodly number to simply not ask.”

Complicating the auto sales crisis even further, CNW calculated that a minimum 200,000 more potential buyers were shut out of the market during the first quarter of 2009 by “tight-fisted banks and other lending institutions” that may have gone even beyond the requirements of current, tightened lending rules.

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