|
|
 |
| Wednesday, November 12, 2008 |
|
|
LATE & BREAKING NEWS
WHOLESALE PRICES TUMBLE IN OCTOBER:
Wholesale used vehicle prices (on a mix, mileage, and seasonally adjusted basis) fell 6% in October. It was, by far, the largest single-month decline in the Index's 14-year history. The Manheim Used Vehicle Value Index stood at 104.2 in October, representing a decline of 8.5% from a year ago. The stall in wholesale activity in October was a direct outcome of the unprecedented slowdown in retail activity that resulted first from the turmoil in retail and wholesale financing, and then from the sharp weakening in the labor market and consumer confidence. Although there were no signs of improvement as October progressed, the magnitude of the shift downward suggests that this may be a quick correction with respect to wholesale pricing. Click here to read more.
ManheimConsulting.com, November 7, 2008
AIDES: OBAMA SUGGESTED MORE HELP FOR AUTO INDUSTRY:
President-elect Obama suggested to President Bush that the administration immediately provide extra help to struggling U.S. automakers, aides to the Democrat say, in their first face-to-face meeting since Election Day. Obama's aides said the president-elect brought up the issue with Bush during their two-hour White House talks on Monday, expressing his view that action is needed now, not just to help the U.S. companies but also the broader economy, because of their enormous reach. Obama raised the idea of an administration point person on autos with a portfolio aimed at improving the long-term health of the companies. Bush repeated his position, recently stated by staff, that he is open to helping the automakers.
Associated Press, November 11, 2008
Videos & Voices of Significance This Week
|
|
=========================================Advertisement=========================================
| |
This Week: Michael Cimato |
|
Michael Cimato
National Sales & Relationship Executive
Fiserv Automotive
mike.cimato@fiserv.com
|
From 1987 - 1992 Michael Cimato was the National Remarketing Manager for Marine Midland Automotive Finance Corporation, and from 1993 to 1994 he was Regional Sale Manager for Marine Midland Bank. He joined Remarketing Services of America, Inc. in 1994 and was Client Relationship Manger for Remarketing and Rental Car Strategies. Michael's responsibilities included the day to day operations of the Remarketing, Lease Maturity Management and Rental Car Contract Management service products with specific emphasis on internal and field operations and Client Relationship Management.
Michael has 20 years of experience in the automotive finance industry and is currently Sales and Relationship Executive with Fiserv Automotive Solutions, Inc.
Explain BPO or Business Process Outsourcing for us.
Business Process Outsourcing was a solution that came together when we merged the Legacy Lemans and the Legacy Remarketing Services of America. The combined company is able to offer an end-to-end automotive solution that provides technology and services from the origination of a loan to collections, remarketing, recoveries, lease termination management on lease and loan portfolios and all of the ancillary services along the line.
What goes on Amherst now in terms of loans and leases. Is this the main operating center for automotive finance processing and administration?
Our clients can subscribe to the entire end-to-end technology and/or servicing solution of our offering or they can choose pieces that best fill holes and needs within their own organization. We offer a highly customizable private label program that best meets each individual client’s needs. It is transparent to the end consumer. Our client – the bank or finance company – has complete exposure and access to us at any time. They can come in and audit us or do so from their desktops. Most importantly, from the consumer perspective we provide seamless integration. The consumer never knows that they are talking to folks in Amherst, New York or to their local bank.
Have any of your clients ever brought their people to the Amherst operating center and said, we would like to house these people here? Do you use your own people?
The individuals working in our facilities are all Fiserv employees. When we sign a new client, we provide our employees with client-specific training. The client is very involved in the implementation of the process. We cover every detail when it comes to the consumer care experience, including any current marketing plans or initiatives that the bank or finance company has in place for their own employees. If they want us to answer the phone with the slogan of the month, we will answer the phone with that slogan. They are highly involved with the integration, as we are an extension of their staff. We just happen to be at an off-site facility.
Your presentation to a major finance company would be that you can literally introduce large economies by taking some of the administrative support functions, collections, loan processing -- you can actually become their loan and lease processing center?
Absolutely. We fill any gaps they may have or we can support the entire process, cradle to grave.
Of the clients that are here, what percentage of them are BPO users?
A large percentage of our client base subscribes to portions of our services such as our lease termination and remarketing services. Additionally we have about 12 to 15 that subscribe to the end-to-end solution.
Let's talk about resale and remarketing of the vehicles that come off lease and that are repossessed. How does that work?
The process hasn't changed in the 20 years that I've been involved in this, but the way we manage the process has changed a great deal. Where in the past we would hand-write and fax everything and fill out title applications by hand, now we have built seamless integration not only to our clients but to all of the vendors. The big move for us was the integration to all of the auction chains and supporting state DMV forms online within our system. We have taken a great deal of the manual labor and the heavy lifting that we used to do and created a more consolidated and efficient process so the data flows more freely. It has made us more competitive, efficient and improved overall productivity.
Are you able to take a lease vehicle coming off lease and put them into that channel and can you take a loan repo and put it into that channel? How does that work?
It was interesting because it has been very slow to be accepted from the dealers’ perspectives. Our dealer friends happen to be creatures of habit. Acceptance of the technology has grown in the last two to three years. As the manufacturers are all moving towards those upstream channels -- Smart Auction and OnLane -- more and more dealers are starting to participate as they see some of the premium vehicles going up on those sites. The process is pretty simple and seamless. We end up sending files on a daily basis to hosts, they post the vehicles and they are up there for a minimum of 24 to 48 hours. They cycle very quickly. Our issue is having cars on the ground depreciating. Our goal is to sell as many in that upstream channel prior to auction as possible, maximizing the price and minimizing expenses. We are never going to replace that brick and mortar auction and we continue to use them in combination with virtual sites.
You work with your bank and acceptance corp. clients to determine which vehicles are going to be sold upstream and then those vehicles that do not sell upstream or in that online environment, then you consign them to a physical auction and track the sale to its conclusion and render it in accounting?
Correct. We post the lease cars as soon as they are grounded and we have exhausted attempts to sell the vehicles to the grounding dealer. We post vehicles immediately to the online channels. If the lease cars don't sell in 48 hours, we initiate a move to a brick and mortar auction. Our clients have been very hesitant to post repossessions directly to the web and most, if not all, have chosen to run them through auction first, secure that commercially reasonable bid and then if they are no-sales, post them to the sites between brick and mortar sale dates. It doesn't seem like anyone wants to be the first one to be challenged on the commercially reasonableness of an online repossession sale that hasn't run through the brick and mortar auction first.
Are you seeing growth in the use of the Internet to remarket cars?
It has been steady growth. Five years ago, it was not widely accepted. Dealers were slow to take it up. The generation that is coming into the business now is growing up on computers and the web. Some of them don't leave their desktops when they shop now. The growth has been exponential over the last three years – it has been a real boom. The providers have done a really good job in making it easy to do. When the cars go up on the sites you can be confident that they've been through a series of tests to ensure that they meet certain requirements. If you buy the car and something is wrong with it, you have a reasonable ability to return it without issue.
What is the biggest challenge that automotive finance companies have and dealers in remarketing, and how is Fiserv solving that problem?
One of the biggest challenges the lenders have is there has always been this struggle between the originations and the back end. They have always been pointing fingers at each other about losses. One of the things that I've always preached with my clients is to take the data from the back end and use it to support the front end. Drive credit policy off of what you know today. If you have a segment of vehicles that you are experiencing huge losses on, reevaluate your lending policies on those types of vehicles. If large pick-up trucks with the eight cylinder engines is where you are struggling, do you change your credit policy or advance policies to support what is happening on the back end? I don't know that they've always used the back end data to support the credit policy. It has been a challenge through the years and I don't know that enough financial institutions really use that back end data.
To deal with the SUV and big vehicles, what is your assessment of that situation? How bad is it and are funders and dealers able to solve that problem?
It has been a challenge, but in the last two to three months the SUV has actually made an up-take in sales results. I know from first-hand experience because I was out looking for one for myself thinking it may be a bargain buy. I realized very quickly and we did some analysis that showed the truck and SUV segment picked up. Late last spring we saw an increase of voluntary surrenders from consumers that were stretched on high lines and big SUVs. When the gas price began to soar, we saw a surge in that product. Dealers began to take those vehicles in trade and once they sold that inventory, they started migrating back to the auctions again. That was in June, July and August so the prices of those vehicles are starting to pick up in advance of the winter seasonal increase. That was a pleasant surprise for the last three months.
|
=========================================Advertisement=========================================
| SIGNIFICANT NEWS |
News digested 11/03/2008 -- 11/07/2008 |
|
|
|
|
=========================================Advertisement=========================================
|
|
|
=========================================Advertisement=========================================
|
|
Industry Conferences Coming Up |
5th Annual OPIS Site School
San Francisco, CA, November 12 - November 13, 2008
Green Car Conference & Exhibition
Novi, Michigan, November 13, 2008
OPIS Ethanol & Biodiesel Management University
Chicago, IL, November 19 - November 21, 2008
Women's Automotive Association Professional Achievement Award
Los Angeles, CA, November 20, 2008
LA Auto Show
Los Angeles, CA, November 21 - November 30, 2008
Visit Calendar of Industry Events for More Information on These Events
http://www.automotivedigest.com/calendar.asp?mod=calendar
Return to top
|
|
Press Releases Worthy of Read |
This Week's FEATURED Industry Press Releases
Click here for more Industry Press Releases!
|
|
People Going Places |
| WHO: | Gary McQuillen |  |
| WHERE: | AIM Parts |
| WHAT: | AIM Parts has named Gary McQuillen as its new General Manager. For the past 11 years, McQuillen served as VP of Manufacturing for AIM. McQuillen has over 40 years of experience in the remanufacturing industry. Prior to joining AIM, he spent 19 years as plant manager at World Generator Company in South Holland, IL.
|
| | READ ABOUT MORE PEOPLE! |
|
|
What Industry Leaders are Saying |
|
Experian: SUVs and Pickups Still Riding High:
- "Understanding the regional differences in the vehicles that are currently on the road is a critical component of success in the aftermarket by helping those businesses make smarter decisions on how and where they provide their services and parts." -- Mark French, national aftermarket sales manager, Experian
Sourced From: AutoRemarketing, November 5, 2008
Return to top
|
|
Elite Wheels Vehicle Reviews |
|
2009 Lincoln MKS: New luxury car offers the latest in connectivity
Return to top |
| 1) Experian: SUVs and Pickups Still Riding High |
Situation
- Experian Automotive AutoCount Vehicles in Operation database finds pickups, SUVs in operation steady from 2007
- Pickup trucks account for 20.57% of all vehicles in operation, SUVs 11.42%
- Highest proportion of 8-, 10-, 12-cylinder vehicles in TX w/ 29.37%; lowest in NY w/ 15.93%
- CA has fewest flex-fuel vehicles w/ 1.26%, MI most w/ 3.84%
- 26.91% of vehicles in TX are pickups; TX also has most RWD vehicles w/ 36.86%, PA has fewest w/ 9.51%
- PA has most 4WD vehicles w/ 33.54%, FL has fewest w/ 10.30%
|  2009 Ford F-150 |
Significant Points
- Sales of new pickups, SUVs have dropped as buyers opt for smaller vehicles
- But even w/ higher fuel prices, new, used pickups and SUVs still consistently strong as a leading category on the road
- Experian: Understanding of number of vehicles in operations important to firms like aftermarket suppliers, service operations
- Also important to understand regional differences
Read Quotes
Click Here for Full Digest and Source Article:
Sourced From: AutoRemarketing, November 5, 2008
Return to top |
| 2) Big Losses for GMAC, Auto Finance |
Situation
- GMAC reported 3rd Q net loss of $2.5B, compared w/ $1.6B net loss same Q last year
- Primarily due to large loss at Residential Capital division
- GMAC Auto Finance reported 3rd Q net loss of $294M
- Compared w/ $554M income same Q 2007
- Lower used-vehicle prices, weaker consumer and dealer credit blamed
|  |
Significant Points
- Losses, valuation adjustments on assets held for sale also played role
- Originations have been limited to match funding sources
- Non-essential operations are being removed
- New-vehicle financing originations down to $11.3B in retail and lease contracts in 3rd Q
- Down from $14.5B in retail and lease contracts in 3rd Q of 2007
Read Quotes
Click Here for Full Digest and Source Article:
Sourced From: Subprimenews.com, November 6, 2008
Return to top |
| 3) Edmunds.com: Incentive Spending Off in October |
Situation
- Incentive spending fell off in Oct, says Edmunds.com
- Average OEM incentive was $2,648 per vehicle
- That's up 21.6% from year ago, but down 8.7% from Sept
- And far below record average incentive of $3,146 in Sept 2004
- Toyota, Honda incentives getting attention because they're especially good deals
|  |
Significant Points
- Average Oct incentive for Detroit-3 was $3,718 per vehicle
- Average Oct incentive for European makes was $2,866 per vehicle
- For Japanese brands, average Oct incentive was $1,495 per vehicle
- Korean makes had average Oct incentive of $2,417
Read Quotes
Click Here for Full Digest and Source Article:
Sourced From: AutoRemarketing, November 4, 2008
Return to top |
| 4) Ford Making Progress in Return to Profitability |
Situation
- Ford posted narrower 3rd Q net loss
- Helped by $2.3B gain from writing off retiree health costs being transferred to union-run trust
- Burned thru $7.7B in cash during quarter amid tumbling US sales and restructuring costs
- Cut hourly work force by 2,600 during quarter; total number of headcount reduction now 7K
- Third-quarter net loss narrowed to $129M from $380M from a year ago
- Total revenue fell 22% to $32.1B, w/ auto revenue dropping 23% to $27.8B
|  |
Significant Points
- New questions about Ford's ability to survive
- Whether Ford will be able to find a way to secure new financing
- Ford will cut another 10% of N American salaried personnel-related
- Reduce capital spending in number of areas including product development
- Continue exploring potential sale of non-core assets including Mazda
- Lost potential source of funding when Kirk Kerkorian said he would sell his stake
Read Quotes
Click Here for Full Digest and Source Article:
Sourced From: Wall Street Journal, November 7, 2008
Return to top |
| 5) Mechanical, Collision Repair Industries Expect Increased Business |
Situation
- Inaugural Automotive Service & Repair Week (ASRW) included late-night talk show format panel
- Panel expected consumers to keep cars longer forcing some dealerships to close
- Older cars expected to increase demand for repairs
- More government regulation of insurers also expected
|  |
Significant Points
- Standardizing labor rate guides expressed as common goal of mechanical and collision shops
- Panel agreed that Database Enhancement Gateway (DEG) showing progress in fixing problem
- CARS and NACE Chairmen predicted closer future relations addressing this issue
Read Quotes
Click Here for Full Digest and Source Article:
Sourced From: Auto Body Repair News, November 6, 2008
Return to top |
| 6) Missing the Creature Comforts in Big Cars |
Situation
- Move to smaller cars still strong, even as gas prices have dropped to about $2.40/gallon from $4.05 in July
- But some buyers miss comfort of large vehicle
- They regret tradeoff of creature comforts, space, safety, privacy, insulation
- Compacts tend to be basic, w/ less power options
|  Toyota Yaris |
Significant Points
- Sales of compact cars like Honda Fit, Nissan Versa, Toyota Yaris up 28% through end of Sept compared w/ same period last year
- Sales of midsize cars like Toyota Camry, Honda Accord, Chevrolet Malibu flat
- Sales of large SUVs down 36%
- Some people w/ 2 SUVs keeping 1, replacing other w/ smaller car
Read Quotes
Click Here for Full Digest and Source Article:
Sourced From: Wall Street Journal, November 5, 2008
Return to top |
| 7) Report Paints Bleak Picture of Auto Industry without Detroit |
Situation
- Report by Center for Automotive Research details job losses/economic impact of 2 scenarios:
- All 3 Detroit automakers cease operations in 2009
- And if Detroit automakers contract by half, likely involving 2 automakers going out of business
- In both scenarios, impact devastating for jobs, income, US tax base and consumer spending
- About 3M jobs in US economy would disappear if GM, Ford, Chrysler cease operations
- Another 1.7M+ "spin-off" jobs would be lost as a result of their demise
|  |
Significant Points
- For every auto company manufacturing job lost, 5 other jobs in economy are lost
- Vehicle production by foreign automakers building vehicles in US fills void
- Report expected to be widely circulated in Washington, DC
- Used as evidence to support auto industry bailout by federal government
- Implications for pension funds and obligations of Pension Benefit Guarantee Corp
- Under harshest of the scenarios, consumers' choice would be extremely limited
Read Quotes
Click Here for Full Digest and Source Article:
Sourced From: Edmunds Auto Observer, November 5, 2008
Return to top |
| 8) Finalists Named for 2009 Green Car of the Year |
Situation
- Green Car Journal names 5 finalists for 2009 Green Car of the Year Award
- 5 finalists: BMW 335d, Ford Fusion Hybrid, Saturn Vue 2 Mode Hybrid, smart fortwo, VW Jetta TDI
- Winner to be announced Nov 20 at Los Angeles Auto Show
|  2009 Smart fortwo |
Significant Points
- Award designed to reward environmental responsibility
- To qualify as nominee, vehicles must "raise the bar in environmental performance," says Ron Cogan, editor and publisher of Green Car Journal
- Increasing number of green cars being introduced into marketplace
- Trend will continue as automakers reinvent themselves
Click Here for Full Digest and Source Article:
Sourced From: AutoRemarketing, November 3, 2008
Return to top |
| 9) Cash-Strapped GM Backs Out of Merger Talks |
Situation
- GM warns cash crisis by mid-2009 if no help from feds
- Company just reported $2.5B quarterly loss
- Overall sales down 45% in Oct; trucks, SUVs even worse
|  |
Significant Points
- GM dropped merger talks w/ Chrysler; will focus on liquidity
- Wants to raise $5B in cash; already looking for $15B
- Cash, liquidity position at $16.2B; GM needs $11B-$14B in cash
- Forecasts 11.7M 2008 vehicles sales in US, 12.7M in 2009
- Cost-cutting apparently not enough; all automakers looking for help
- Wants federal help or loans from European banks
Read Quotes
Click Here for Full Digest and Source Article:
Sourced From: Wall Street Journal, November 7, 2008
Return to top |
|
|
|
Michael Cimato, National Sales Executive for Fiserv Automotive, on how business process outsourcing lets dealers focus on succeeding.
