R.I.P. General Motors (1931-2006)

[Jeff]

(...)

There are numerous laws in place to prevent price-fixing by manufacturers,
which is why the Monroney label lists manufacturer's *sugested* retail
price. I do not know how Saturn division is able to enforce a no-haggle
policy.

Saturn doesn 't set the price. Their dealers do. However, the dealers also
set a no-haggle policy. The Saturn Corp. can't.

Automakers cannot dictate cheaper prices for fleet sales but they can
offer fleet incentives to fleet purchasers of 5 or more vehicles.

I am sure a lot of dealers are willing to provide quantity discounts, as
well.

Automakers can dictate discounted prices for their employees at dealerships.
Most or all dealers agree to the discounted prices. I assume that the
dealers still make a fair profit on such sales, perhaps because of rebates
to dealers from the automakers.

<...>

Jeff

 

[Mike Hunter]

You should be buying stock if you think you can predict what the future
holds. We are taking about the real world of vehicle sales in the US. The
fact remains GM, Ford and Chrysler sold 54% of all the 16,500,000 vehicles
sole in the US in 2005. The twenty some import brand shared the 43%
balance. If buyers actually believed as you do that imports were a better
place to spend their money, they would have purchased their vehicles, rather
than a vehicle from GM, Ford or Chrysler

You are assuming a lot that is factually incorrect. Manufactures do not,
and can not, sell directly to anybody. To do so would be a violation of
federal and state franchise laws. Manufactures can only sell to dealers
and at the same price. Fleets buy far more trucks than cars and the imports
can not compete very well in the light truck market Some imports sell to
distribution centers and they sell them to dealers after they add equipment
if needed Nearly every manufacture tries to sell to fleets and offer a
discount to the dealer that sells more than five to one buyer. It is just
that the domestics and the Koreans are more successful at selling to
corporate and government fleets than the others. The discount average
around $600, hardly a huge discount. The fact that fleets prefer domestics
because the are the most cost effective in terms of the cost of accusation,
insurance, maintenance, repair, parts and replace. Imports are more
successful at selling to rental companies. Rental companies generally sell
off the 'product,' the cars, in a year or less. Contrary to what you
believe corporate fleets keep their vehicles, which are just one more 'tool'
used in the business, in service for five years or 300K because of federal
tax deprecation laws. As a result their vehicles generally receive far
better care and preventive maintance than does the average vehicle. No
manufactures, not even Ford, who controls the largest percentage of fleet
business sells more than around 15% ANNUALLY to fleets. The third quarter
dealers need the most new vehicles, the first quarter is when fleet get most
of their vehicles making the appear higher. What difference does it make
anyway as to who buys one product?

Indeed imports have been taking a larger share but the pie is much bigger,
averaging around 17,000,000 since 2000. Everyone like to refer to 'share'
and forget about not numbers. GM in the early fifties had around 50% of the
market. GM, Ford and Chrysler are generally selling as many or more today
as when the were three of eight US manufactures and the total sales were
only 6,000,000 vehicles. In the past ten years the domestics have been far
more successful, than the import. in growing market share where the growth
in vehicles sales has occurred, light truck including SUVs Teh top selling
vehicle in the US are not cars they are trucks and GM, Ford and Chrysler
are one two and three. Toyota any be one some day, They compete and build
vehicles at the bottom end, in the growing market in the third world where
GM, Ford and Chrysler lag behind. However today in the biggest and richest
world markets, like the US and Europe, Toyota lags behind. Teh Camry is the
number one selling car in the US but sales in its own country are dismal


mike hunt

 

[Mike Hunter]

Every manufacture is making good dependable vehicles today the only real
difference among them is style and price


mike hunt

 

[Jeff]

Honda does not make full-sized pickups. The only imports with full-sized
pickups for sale in the U.S. are Toyota and Nissan. Toyota has been in
the market for over 10 years with the T100 and first generation Tundra,
with the second generation Tundra going on sale in the fall.

You're right. I was thinking the Ridgeline is a full-sized truck. It is a
mid-size truck.

Jeff

 

[Mike Hunter]

U-Haul stopped renting to Explorer owners because of Firestones tire
problem, not because there was a problem with the vehicle. The figure is no
where near 60%, and what possible difference does it make who buys ones
product?


mike hunt

 

[Jeff]

(...)

Jeff,
It's my guess that in the year 2010, the foreign car companies that you
mentioned will be sell as many pickups as Ford and GM sold in 2005.
Do you agree or disagree?
Jason

I disagree. I think it will take a lot more than four years before the
foriegn automakers overtake GM, DC and Ford in truck sales. The foreign car
makers have been here for 35 or 40 years, and they still don't sell more
cars than the big 2 + DC.

Jeff

 

[Mike Hunter]

I sold my Chrysler stock for around $30 a share, that I bought in the
seventies at around $3 , before they merged with MB.

Literally hundreds of car companies have gone out of business, or where sold
off, in the hundred or so years that cars were sold in the US. The only
stock that I lost money with was Studebaker and Pennsylvania Rail Road.


mike hunt

 

[Ray O]

Ray,
The most important thing that you stated was:

American car companies or dealers probably make sure they sell at least 5
or more vehicles so they can't grant special deals and discounts.

Do you mean they *can* grant special deals and discounts?

As a former employee of an automaker, I am familiar with its policies
regarding fleet and retail sales and dealer operations. Rental car
companies are a big portion of fleet sales but by no means the only source
of fleet sales.

 

[Ray O]

(...)


Saturn doesn 't set the price. Their dealers do. However, the dealers also
set a no-haggle policy. The Saturn Corp. can't.

I have not read Saturn's dealer agreement (what people often refer to as a
franchise agreement) so as I mentioned, I do not know how the no-haggle
policy works. I have read other dealer agreements, and have had attended
numerous seminars given by an automaker's legal department regarding the
avoidance of price fixing and violation of anti-trust laws.

From my understanding of the seminars I have attended, having a group of
dealers get together to determine pricing is a violatio of anti-trust laws.

From talking with a Saturn dealer, one of the big differences in the Saturn
dealer agreement is that Saturn Division assigns larger geographic markets
to a dealer so the dealer is responsible for sales and service for that
market instead of a single point. I a dealer has the market for Anytown
U.S.A., then the dealer is free to set the prices for all of the stores in
Anytown. I believe but cannot confirm that this is how Saturn is able
achcieve uniform prices in a market.

I am sure a lot of dealers are willing to provide quantity discounts, as
well.

Dealerships work on an allocation basis. The vehicles allocated to them for
retail sales are separate from the vehicles allocated to them for fleet
sales.

 

[Jeff]

You should be buying stock if you think you can predict what the future
holds. We are taking about the real world of vehicle sales in the US.
The fact remains GM, Ford and Chrysler sold 54% of all the 16,500,000
vehicles sole in the US in 2005. The twenty some import brand shared the
43% balance.

54% + 43% = 97%.

If buyers actually believed as you do that imports were a better place to
spend their money, they would have purchased their vehicles, rather than a
vehicle from GM, Ford or Chrysler

There are a lot of reasons why people choose a car to buy. And a lot of
people chose foreign makers.

You are assuming a lot that is factually incorrect. Manufactures do not,
and can not, sell directly to anybody. To do so would be a violation of
federal and state franchise laws. Manufactures can only sell to dealers
and at the same price. Fleets buy far more trucks than cars and the
imports can not compete very well in the light truck market Some imports
sell to distribution centers and they sell them to dealers after they add
equipment if needed Nearly every manufacture tries to sell to fleets and
offer a discount to the dealer that sells more than five to one buyer.
It is just that the domestics and the Koreans are more successful at
selling to corporate and government fleets than the others. The discount
average around $600, hardly a huge discount. The fact that fleets prefer
domestics because the are the most cost effective in terms of the cost of
accusation, insurance, maintenance, repair, parts and replace. Imports
are more successful at selling to rental companies. Rental companies
generally sell off the 'product,' the cars, in a year or less. Contrary
to what you believe corporate fleets keep their vehicles, which are just
one more 'tool' used in the business, in service for five years or 300K
because of federal tax deprecation laws. As a result their vehicles
generally receive far better care and preventive maintance than does the
average vehicle. No manufactures, not even Ford, who controls the largest
percentage of fleet business sells more than around 15% ANNUALLY to
fleets. The third quarter dealers need the most new vehicles, the first
quarter is when fleet get most of their vehicles making the appear higher.
What difference does it make anyway as to who buys one product?

Indeed imports have been taking a larger share but the pie is much bigger,
averaging around 17,000,000 since 2000. Everyone like to refer to 'share'
and forget about not numbers. GM in the early fifties had around 50% of
the market. GM, Ford and Chrysler are generally selling as many or more
today as when the were three of eight US manufactures and the total sales
were only 6,000,000 vehicles. In the past ten years the domestics have
been far more successful, than the import. in growing market share where
the growth in vehicles sales has occurred, light truck including SUVs Teh
top selling vehicle in the US are not cars they are trucks and GM, Ford
and Chrysler are one two and three. Toyota any be one some day, They
compete and build vehicles at the bottom end, in the growing market in the
third world where GM, Ford and Chrysler lag behind. However today in the
biggest and richest world markets, like the US and Europe, Toyota lags
behind. Teh Camry is the number one selling car in the US but sales in
its own country are dismal

Toyota barely lags behind GM worldwide. And it is expected to be the #1
worldwide seller this year or next.

Jeff

 

[Mike Hunter]

A buyer must first apply to the manufacture for a fleet number, and meet set
standards, to receive the current fleet discount on those particular
vehicles on which a dealer can offer a fleet discount. Not all vehicles a
manufacture sells have a fleet discount and not even all models within the
brand. You see lots of cars in rental fleets that do not have a discount.
For instance, the V6 Mustang coupe is the only Mustang that has a $600 fleet
discount. No discount is offered on the V6 convertible or any GT. Contrary
to what many believe although corporate fleets buy the Grand Marquis and
Crown Vic they do NOT offer a fleet discount, not even the taxi... The
Police Interceptor model is the only CV discounted. Even
then it is limited to certain build weeks

Lack of capacity is BS, imports do not make the trucks that most fleets buy
and they have not been successful at getting much of the fleet car
business, except for rental car companies Toyota had a 100 day supply of
excess 2005 Camrys at the end of the model run late in 2005 and a they had a
120 day supply of 2006s when they introded the 2007 six months later. The
fact is Camry sales were the highest in the 2004 model year..

The whole fleet sales thing is just an excuse by the import buyers in an
attempt to justify why their favorite brand, that they think is so much
better than the next guys, does not sell as well as the domestics. What
difference can it possible make to a dealer, domestic or foreign, who
chooses to buy a vehicle from him?



mike hunt

 

[Ray O]

A buyer must first apply to the manufacture for a fleet number, and meet
set standards, to receive the current fleet discount on those particular
vehicles on which a dealer can offer a fleet discount. Not all vehicles a
manufacture sells have a fleet discount and not even all models within the
brand. You see lots of cars in rental fleets that do not have a discount.
For instance, the V6 Mustang coupe is the only Mustang that has a $600
fleet discount. No discount is offered on the V6 convertible or any GT.
Contrary to what many believe although corporate fleets buy the Grand
Marquis and Crown Vic they do NOT offer a fleet discount, not even the
taxi... The Police Interceptor model is the only CV discounted. Even
then it is limited to certain build weeks

Toyota uses the # R.L. Polk registrations to an operator determine if the
operator qualifies as a "fleet" and get a drop ship code.

Lack of capacity is BS, imports do not make the trucks that most fleets
buy and they have not been successful at getting much of the fleet car
business, except for rental car companies Toyota had a 100 day supply of
excess 2005 Camrys at the end of the model run late in 2005 and a they had
a 120 day supply of 2006s when they introded the 2007 six months later.
The fact is Camry sales were the highest in the 2004 model year..

Apparently, times have changed since I was in the business.

The whole fleet sales thing is just an excuse by the import buyers in an
attempt to justify why their favorite brand, that they think is so much
better than the next guys, does not sell as well as the domestics. What
difference can it possible make to a dealer, domestic or foreign, who
chooses to buy a vehicle from him?



mike hunt

Most Toyota dealers were not successful at fleet sales for several reasons.
Dealers who were around when demand far outstripped supply had little
experience in competing with the domestic nameplates for fleet sales, and as
Mike often points out, Toyotas used to be priced higher than a comparable
domestic vehicle, and in some cases, still are. I don't foresee Toyota
making serious inroads in the U.S. fleet business any time soon, and even at
the corporate level, becoming a fleet sales manager is not the road to the
fast track up the corporate ladder.

 

[Lee Florack]

The whole fleet sales thing is just an excuse by the import buyers in an
attempt to justify why their favorite brand, that they think is so much
better than the next guys, does not sell as well as the domestics. What
difference can it possible make to a dealer, domestic or foreign, who
chooses to buy a vehicle from him?

It would be very helpful if you'd either bottom-post or in-line
post. When you top-post it becomes virtually impossible to figure
out who you're responding to.

As for your statement (above).... what will you say when Toyota
becomes the number one selling car manufacturer in the US either
this year or next?


BTW, I don't own any Toyota vehicles. I own a Honda CRV and an Acura RL.

 

[Jason]

Toyota uses the # R.L. Polk registrations to an operator determine if the
operator qualifies as a "fleet" and get a drop ship code.


Apparently, times have changed since I was in the business.


Most Toyota dealers were not successful at fleet sales for several reasons.
Dealers who were around when demand far outstripped supply had little
experience in competing with the domestic nameplates for fleet sales, and as
Mike often points out, Toyotas used to be priced higher than a comparable
domestic vehicle, and in some cases, still are. I don't foresee Toyota
making serious inroads in the U.S. fleet business any time soon, and even at
the corporate level, becoming a fleet sales manager is not the road to the
fast track up the corporate ladder.

It's also possible that Toyota makes more money by selling cars to people
than by fleet sales. One of the other posters pointed out that Toyota is
having a difficult time producing as many cars as they would like to
produce. They need to build some more factories. These could be two of the
reasons that Toyota is not making serious inroads in the U.S. fleet sales
business.
Jason

 

[Jeff]

(...)

It's also possible that Toyota makes more money by selling cars to people
than by fleet sales. One of the other posters pointed out that Toyota is
having a difficult time producing as many cars as they would like to
produce. They need to build some more factories. These could be two of the
reasons that Toyota is not making serious inroads in the U.S. fleet sales
business.

Or their dealers make more money by selling directly to the public rather
than fleet sales. Toyota and Honda dealers are able to charge MSRP more
often than American car dealers. After all, according to top-posting Hunt,
all cars have to be sold by dealers.

The Ford Crown Vic is a preferred car for police and taxis. They are better
suited to police work than most of the imports. And police like the RWD. I
see them every day in NYC and in other places. The Lincoln Town Car is the
preferred car for limos in NYC and surrounding communities. And governments
often like to buy cars from American manufacturers.

Plus Avis and Hertz were owned by American car makers. So they used to buy a
lot more from their owners. (Avis and Hertz are no longer owned by the car
makers.)

Jeff

 

[Ray O]

It's also possible that Toyota makes more money by selling cars to people
than by fleet sales.

No, dealer cost is the same for fleet and retail deliveries. As Mike
stated, manufacturers, including Toyota, make the same money whether the
vehicle is delivered to a fleet of to a retail customer.

One of the other posters pointed out that Toyota is

having a difficult time producing as many cars as they would like to
produce. They need to build some more factories. These could be two of the
reasons that Toyota is not making serious inroads in the U.S. fleet sales
business.
Jason

When I was a Toyota employee, the demand for Toyota was greater than their
ability to deliver vehicles to dealers in the U.S. so automotive fleet sales
were not a high priority. We were encouraged to develop fleet sales of cab
and chassis and cargo vans, where supply was greater than demand. At that
time, there was a limited market for small cab and chassis, something which
seems to still be true, and Toyota's cargo van was designed for use in
Japan's crowded urban streets and was ill-suited for commercial use in the
U.S.

Mike pointed out that the days supply of the Camry is over 100 days at the
end of the 2005 and 2006 model years. From a Toyota dealer's point of view,
60 to 90 days is good, more than that means that they have to carry
inventory longer and less than that means that they do not have a good
selection of vehicles to choose from.

There seems to be a feeling that Ford and GM's high numbers of fleet sales
is a bad thing, and that is incorrect. From the manufacturer and dealer's
point of view, fleet sales provide incremental sales and profits. In order
for a dealer to sell a car, he has to purchase from the automaker and in
most cases, hold it in inventory while incurring flooring charges or tying
up cash. Small mom and pop dealers often do not have the financial
resources to purchase hundreds or thousands of additional vehicles above
what they retail each month, hire a fleet manager, and so they do not
actively pursue the fleet market.

 

[Gordon McGrew]

Where did you get the numbers?

Jeff

The Yahoo stock market pages have "Historical prices" on the side bar
menu. Click on it and download it to a spreadsheet for easier
reading.

Here is the page for Honda:

http://finance.yahoo.com/q/hp?s=HMC

The Adjusted Price tells you what your basis would be if you had
invested on that day and reinvested the dividends.

 

[Mike Hunter]

I would say what a sad day for America, when the American consumer helps in
creating a situation where other Americans, including their own children and
grand children, have so many fewer jobs available were they can make a good
living.

If we American keep exporting our jobs, as fast as we are today, the only
skill their children will need is how to say, "Do you want fries with that?"
or "Welcome to WalMart."

mike hunt

 

[dizzy]

It would be very helpful if you'd either bottom-post or in-line
post. When you top-post it becomes virtually impossible to figure
out who you're responding to.

"Mike" is a troll. I'd recommend filtering him.

 

[Jason]

No, dealer cost is the same for fleet and retail deliveries. As Mike
stated, manufacturers, including Toyota, make the same money whether the
vehicle is delivered to a fleet of to a retail customer.

One of the other posters pointed out that Toyota is

When I was a Toyota employee, the demand for Toyota was greater than their
ability to deliver vehicles to dealers in the U.S. so automotive fleet sales
were not a high priority. We were encouraged to develop fleet sales of cab
and chassis and cargo vans, where supply was greater than demand. At that
time, there was a limited market for small cab and chassis, something which
seems to still be true, and Toyota's cargo van was designed for use in
Japan's crowded urban streets and was ill-suited for commercial use in the
U.S.

Mike pointed out that the days supply of the Camry is over 100 days at the
end of the 2005 and 2006 model years. From a Toyota dealer's point of view,
60 to 90 days is good, more than that means that they have to carry
inventory longer and less than that means that they do not have a good
selection of vehicles to choose from.

There seems to be a feeling that Ford and GM's high numbers of fleet sales
is a bad thing, and that is incorrect. From the manufacturer and dealer's
point of view, fleet sales provide incremental sales and profits. In order
for a dealer to sell a car, he has to purchase from the automaker and in
most cases, hold it in inventory while incurring flooring charges or tying
up cash. Small mom and pop dealers often do not have the financial
resources to purchase hundreds or thousands of additional vehicles above
what they retail each month, hire a fleet manager, and so they do not
actively pursue the fleet market.

Ray,
One of the other posters indicated that dealers can give special deals
(low prices) for the fleet owners that lease 5 or more cars at the same
time. The point was that Ford and GMC grant those special deals but Honda
and Toyota would not provide those same deals. If the poster was correct,
that could be one of the reasons why most the owners of fleets lease Ford
and Chevy cars instead of Honda and Toyota cars. I know that when I rented
a car--almost every car on the lot was a Ford or Chevy. The city that I
live in leases lots of cars and all of them are Fords or GM vehicles. Was
the poster correct in relation to the special deals mentioned in my first
sentence?
Jason