Current Affairs: The Turmoil in the Domestic Automobile Industry

How the Insolvencies of Manufacturers affect You and Your vehicle(s)

This is NOT the time to postpone larger repairs!

Chrysler already sought bankruptcy protection on April 30th, 2009 - within less than one month, wholesale and consumer retail part suppliers drastically decreased availability, prices went up for the available parts, leaving many parts to be only available through dealerships (at even higher prices). Many dealerships also reduce the inventories to save capital cost, and face long back-order times for some parts. As with all larger Chapter 11 insolvencies, this situation will last several years, resulting likely in discarded or sold brands, and a significant reduction in dealerships (meaning also: smaller base for available dealer-only parts).

10 JUN 2009: Chrysler / Jeep / Dodge Assets are now part of a newly formed company with FIAT [Fabbrica Italiana Automobili Torino (English: Italian Automobile Factory of Turin)] - in the US only known for this. After the Euro-parts mix with Mercedes prior, we will now apply Euro-Labor Rates of $95 instead of rate for Domestic vehicles at $79 to compensate for the extra knowledge & skill sets required to work on European vehicles.

At the end of 2009, parts availability is still sparse, and at a higher cost.

On Monday, June 1st, 2009, GM sought Chapter 11 protection, resulting in the same situation as the Chrysler / Dodge / Jeep insolvency - only on a much larger scale, and affecting many more vehicle owners. Despite the planned “quick-rinse” approach, as a primarily Government-owned entity, it will predictably and realistically take years to abandon brands, find after-market 3rd party manufacturers to pick up the parts supply at reasonable costs. The cut in dealerships (40%-60% expected - 1,100 out of about 6,000 dealerships in the United States had their contract cancellation letter already in mid-May) and the insecurities surrounding such a wide-ranging failure will result in higher parts costs, delayed availability, and waiting time at independent repair shops.

The Hummer brand is being sold to an unknown manufacturer in China (02 JUN 2009).

GM Europe was sold on May 29th, 2009, to the Russian Sberbank and Austrian-Canadian Magna, which already manufactures the export models of the Jeep Grand Cherokee and Jeep Commander, the Euro-Model of the Chrysler 300C, the BMW X3, The Mercedes G-Class, the Saab 9-3 Convertible, and soon the Aston Martin Rapide - among many sub-components for a variety of other brands. Magna and the Russian Manufacturer Gaz will be cooperating making new vehicles from the former GM Euro Brands for different markets. Magna also completely developed the first generation of the Audi TT, the Audi A6 Allroad Quattro, the Mercedes G-Class, the BMW X3, and the Saab 9-3 Convertible. Magna already owns Steyr-Daimler-Puch. Update: GM USA cancelled the sale in November 2009, and now has to pay back large sums GM Europe (Opel) received after the bankruptcy from the German Government and Tax Payers.

With manufacturer’s warranties voided or hard to enforce, and approximately half of the dealerships to go away, why would you want to pay the high parts and labor costs of the (former) dealer’s service department?

Ford is facing the same issues the other US manufacturers face, and Chrysler succumbed to.

Why it makes a difference for you,
if your Vehicle Manufacturer has changed hands several times

Jaguar changed hands, as did Land Rover - just to name two brands, which we very often repair. New Owners naturally look for the best deal and easiest implementation efforts to make their newly acquired brand cost efficient and profitable.

Ford Motor Co. sold Jaguar and Land Rover to India-based Tata Motors (NYSE: TTM) for $2.3 billion in 2008. Jaguar Land Rover is based in Conventry, United Kingdom.

In Jaguars, you find Ford Transmissions, ZF Transmissions, and Mercedes (!) Transmissions and Drive Trains, just to pick one mechanical area. Now owned by a company in India, we expect the mix of parts and suppliers to grow much wider.

Land Rovers also have parts from many different manufacturers; in many we find BMW parts during BMW’s tenure in ownership. Many after market parts do not properly fit, parts from the few dealerships are extremely expensive and often special-order only, and proper documentation is scarce. The added extra efforts in repairing Land Rover / Range Rover vehicles have caused us to raise Labor Rates to $125 / hour for this brand, which is among the highest rates we charge for specialty work - and yet, it is still a bargain for Land Rover Owners!

With many of the current domestic brands being discarded or sold (see above), the same parts mix & match approach is likely to happen to many of these brands.

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