Posted: 11 Feb 2010 01:56 PM PST

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By Associated Press

February 11, 2010 | 1:51 p.m.

HOUSTON (AP) — Auto dealership chain Group 1 Automotive Inc. said Thursday its loss narrowed in the fourth quarter as luxury car sales helped boost revenue at dealerships open at least a year for the first time in more than three years. But it warned that business will drop in the first quarter because of Toyota's decision to halt sales of recalled vehicles.

Quarterly revenue rose 4.1 percent for dealerships open at least a year, thanks in part to cost cutting and consolidation. That was the first quarter of growth since auto sales started to slow in the third quarter of 2006.

Group 1 said profit per vehicle improved to $2,030 as it sold more luxury cars. Luxury cars made up 29.5 percent of sales in the fourth quarter, up from 27 percent a year ago.

Same-store margins also improved 16.5 percent, with margins up in new and used car sales, parts and service and the finance and insurance segments.

Toyota Motor Co.'s decision to stop sales of eight popular models on Jan. 26 because of safety defects didn't affect Group 1's fourth-quarter revenues, but will have some effect this quarter. Thirty-eight percent of its 98 dealerships sell Toyota, Scion and Lexus vehicles. Nissan and Infiniti dealerships are second, at 12.6 percent.

Shares of both Group 1 and fellow dealer chain AutoNation Inc. fell in the wake of news that they will be hurt by Toyota's recalls. Group 1 shares dropped 6 percent to close at $28.41, while AutoNation fell 3 percent to close at $17.69.

The company said it lost almost $2 million, or 8 cents per share, in the last three months of 2009 versus a loss of $57.4 million, or $2.52 per share, a year ago. Overall revenue rose to $1.15 billion from $1.13 billion a year earlier.

Excluding write-downs and other one-time items, Group 1 earned $10.3 million, or 43 cents per share. Analysts polled by Thomson Reuters, who typically don't include special items in their estimates, expected a profit of 44 cents per share.

President and CEO Earl J. Hesterberg said the company is poised to "take full advantage of improvements in sales volumes as the recovery continues to unfold."

Overall U.S. auto sales dropped to 10.4 million vehicles in 2009, their lowest level in nearly three decades. Automakers have predicted they will rise to around 11.5 million vehicles in 2010 as the slow economic recovery continues.

For the full year, Group 1 earned $34.8 million, or $1.49 per share, in contrast to a loss of $48 million, or $2.03 per share, a year ago. Annual revenue fell 20 percent to $4.53 billion from $5.65 billion a year ago.

Group 1 also announced Thursday that Michael Welch, 35, has been appointed treasurer. Welch previously served as Group 1's operating controller. Welch replaces Kim Craig, who left the company for personal reasons.

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What You Get for $199 a Month - New York Times

Posted: 12 Feb 2010 12:47 AM PST

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For your money, you get a specific version — Model CP2F3AEW — of the base-trim 2010 Honda Accord LX on a three-year lease. It comes with an automatic transmission, a decent CD player, air-conditioning, cruise control, remote locking, power windows and power mirrors.

Sure, the car is just another anonymous corpuscle in the traffic stream; the engine has a mere 4 cylinders, the steel wheels have cheesy plastic covers and the only leather in the interior is your wallet. But $199 is the chump change you get back after you buy something for chump change.

If the cut-rate Honda isn't to your taste, you can find similar deals, on a national or regional basis, on similarly ordinary cars from Ford, Hyundai, Mazda, Nissan, Subaru, Toyota and Volkswagen. (The Accord offer is set to expire on March 1.)

Yes, the killer lease deals are back. But it's not quite 2005 all over again.

Leasing declined markedly last year as credit got tight and automakers cut their lease programs, though it has increased in the last few months, according to Joe Spina, an analyst who tracks the auto market for Edmunds.com. "And it's probably going to stay at the same level it is now for a while," he added. "But it's not going to take off to where it has been in the past."

One reason leasing has become more attractive is that as new car sales have dropped over the last three years, the supply of high-quality used cars has also declined. With the supply down, the values of used vehicles, both at wholesale auctions and on retail lots, have firmed up and residual values have risen.

With higher residual values — the projected value of the cars at lease-end — there is less depreciation for the lease to cover. That results in lower monthly payments.

Also contributing to the brighter leasing climate are low interest rates, the vast production capacity of assembly plants that build mainstream models like the Accord, automakers' desire to keep those plants busy and their willingness to subsidize the leases (a $2,000 "capitalized cost reduction" on the Accord for example).

"We mainly focus our leasing on what I call our five main products: Civic, Accord, CR-V, Odyssey and Pilot," said Steve Jaros, Honda's assistant vice president for sales in the Eastern region.

Over the last two to three years, amid rising gasoline prices, uncertainty about new vehicle sales and unstable used-car valuations, Honda and other automakers pulled back from leasing. "It made all the manufacturers rather conservative on where they were going to place their residual values," Mr. Jaros said. "So we wanted to give time for the market to stabilize and gasoline to stabilize so we could get a better feel for where the market was going, and then slowly get back into leasing. And that's what we've done."

Read the fine print in ads for a special promotion lease, however, and a big change is apparent: high credit scores are mandatory. Forget hazy language about offers being contingent "on approved credit." On its Web site, Honda reserves the $199 Accord deal to customers who qualify for the American Honda Finance Corporation's "superpreferred credit tier."

While there are other offers for potential lessees with less than glistening credit scores, the best deals are usually reserved for customers with scores of about 710 or higher.

Leasing remains, as always, subject to negotiations, just like buying a car outright. And it's a negotiation between the customer and the dealership, not the manufacturer. DCH Honda of Oxnard in Oxnard, Calif., for example, recently advertised new Accord LX sedans for $179 a month. The dealership used Honda's national offer as a starting point, but cut the car's purchase price to lop off an additional $20 a month.

"We're being competitive," said Christian Allen, one of the dealership's sales managers. "It's a matter of doing something to attract customers. Very rarely does the customer coming in do exactly what the dealer is advertising."

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Obama urges Toyota, rivals to act on defects - YAHOO!

Posted: 11 Feb 2010 11:50 PM PST

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TOKYO (AFP) – US President Barack Obama said Toyota and its rivals have a duty to act quickly on safety complaints, in his first public remarks on the mass recalls that have battered the Japanese giant's reputation.

"Every automaker has an obligation when public safety is a concern to come forward quickly and decisively when problems are identified," Obama said in an interview with Bloomberg BusinessWeek Magazine, due to go on sale Friday.

"We don't yet know whether that happened with Toyota. That's going to be investigated," he said. "My hope is that, moving forward, all automakers recognise that their brands are at stake when it comes to safety issues."

Obama said the Japanese giant was likely to recover from its crisis, which has left the company staring at recall-related costs of at least two billion dollars and triggered a plunge in its share price.

"Obviously, Toyota has been an extraordinary automaker for a very long time, and I suspect that they will continue to be, despite this recent glitch," he said.

The Japanese giant, facing accusations in the United States that it dragged its feet in responding to a series of safety problems, said its president Akio Toyoda had put off a visit to Washington until around early March.

It declined to say whether Toyoda -- under pressure to face US lawmakers over the recalls -- would miss a February 24 congressional hearing into the quality issues that have tarnished the company's once-impeccable reputation. Related article: Toyota to disclose all vehicle flaws

"The president was planning to go to Washington as early as February 10 but was forced to change it due to heavy snow. At the moment he plans to reschedule it to around early March," company spokeswoman Mieko Iwasaki said.

The top Republican on a House committee looking into the company's handling of dangerous defects said Wednesday he would ask the panel's chairman to invite Toyoda to take part in the February 24 hearing.

US Representative Darrell Issa said US lawmakers were eager to "hear directly" from the Toyota chief about his company's woes.

Toyota, the world's biggest carmaker, has been accused in the United States of being too slow to act on the accelerator and brake problems behind the recalls of more than eight million vehicles worldwide.

The firm said it was considering new measures to improve its disclosure on quality improvements, after the Yomiuri newspaper reported Toyota plans to disclose all flaws it fixed following complaints from drivers.

Toyota is believed to potentially be the first major automaker to disclose all information on problems with its cars, including minor flaws such as difficulty in closing doors or shifting seats, the report said.

Toyota faces a host of class action lawsuits in the United States, where Transportation Secretary Ray LaHood vowed Wednesday to hold the firm's "feet to the fire".

The House Committee on Oversight and Government Reform had set a hearing for February 10, but put it off because of a winter storm lashing Washington and an intervening congressional recess next week.

Toyota's North America president Yoshimi Inaba is scheduled to appear at the February 24 hearing. Further congressional hearings on the matter are also scheduled for the following day and on March 2.

The Asahi Shimbun reported Friday that Toyoda planned to face the US Congress but was waiting for a formal invitation before making a firm decision.

A federal court hearing in San Diego next month will aim to group legal action involving 22 law firms across 16 states involving Toyota vehicle owners chasing financial compensation as a result of the crisis.

Toyota faces more potential trouble after US authorities said they may investigate some models of its best-selling Corolla after receiving more than 80 complaints that its steering veers off-centre at high speeds.

Toyota shares gained 2.1 percent to 3,460 yen, continuing to recover some lost ground after plunging by more than 20 percent in about two weeks.

In another blow to the image of Japanese car makers, Honda on Wednesday recalled more than 400,000 vehicles to fix airbags that it said can explode and spray out potentially deadly metal shards.

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