While Chrysler and GMAC are cutting out leasing altogether, Ford is just raising lease prices on its sucky-residual trucks and SUVs to make them "lease proof." The Wall Street Journal reports Ford officials sent a memo to dealers Monday that said "due to extreme losses Ford Credit is taking on off-lease vehicles, it will be necessary for Ford Motor Credit Company to adjust residuals mid-quarter on the following vehicle lines." The memo specifies the Ford F-150 and Super Duty pickups, and the Ford Explorer and Sport Trac SUVs. They're raising lease prices so high customers won't agree to the terms. [NB: We've predicted this de facto exit from leasing for GM.] Last week, Ford revealed that average auction values for 24- and 36-month lease vehicles were down $2.7k and $2.4k each, respectively. In its recent financial statements, FoMoCo wrote-off $2.1b for leasing losses. 

How can Dodge dealers offer trucks for 50 percent off of sticker price, as several have done in the past month? Money from the mother ship. Right now, Chrysler is offering up to $5k – $6k rebates to customers buying a Ram 1500. At the same time, ChryCo's kicking-in up to an additional $9.5k in "dealer incentives." The extra cash is a desperate move to clear th decks before the new Ram arrives; helping dealers to do what's got to be done to sell their moribund Rams without going out of business (ostensibly). So when you see a $35K Ram for $17.5K, Chrysler's subsidizing the bulk of the difference to the dealer. Great for generating dealership traffic, great for bargain hunters. Not so great for Chrysler's finances or future.

You may be wondering why the mainstream automotive press hasn't carried our story about GMAC's exit from the GM leasing biz. I've re-checked with my sources. Although there's a lot of confusion out there– at the corporate and dealer level– we stand by our story. In Canada, GMAC leases are dead. In the U.S., GM and GMAC will avoid a media shitstorm by "refocusing" its dealer finance products away from leasing. In that regard, GM will do whatever it takes to keep monthly payments roughly even on a finance versus a lease contract. They will promote longer term finance contracts with subvented rates on most lines, and combine that with "finance cash." Or they will offer customers cashbacks for use in cash deals or financing/leasing by third party sources such as a bank or finance company. (For example, a GM half-ton truck will receive zero percent financing for up to 72 months plus finance cash of $3K or a cashback incentive of $5,000.) We hear that GM will support leasing until Thursday night; the full changeover of finance/cash incentives will not hit until first thing Friday morning. (Just in time to get lost over the weekend, as usual.) Dealers speculate there will be a lot of fiddling with the incentive programs over the next few months to see what has the most customer appeal. But incentives there will be, and LOTS of them. [hat tip to you-know-who-you-are]

Last week, I pointed out that there are a lot of brand new trucks sitting on U.S. dealer's lots gathering dust. I illustrated the fact with an ad from a Dodge dealer selling Ram Quad Cabs for 50 percent off manufacturer's suggested retail price (MSRP). As bad off as Dodge is with their 160-day supply of Dodge Ram full-size pickup trucks, they didn't hold a candle to Nissan's 489-day supply of Titans. An email from Cleek tells us that a Nissan dealer in Rock Hills, SC took matters into his own hands this past weekend. He's advertised 45 percent off MSRP sale of pickups, vans and SUVs.  It looks like massively discounted truck clearance sales may be the wave of the immediate future. So far, the biggest discount we've see is 50 percent. How low do you think they'll have to go to clear inventory as the model year winds down and inventory piles up? How long before we see brand new pickups for under $10k? (God help light truck residuals.) Have you seen any dealers in your area offering huge discounts like these on trucks, vans and/or SUVs?

While some of TTAC's Best and Brightest adopt a "rot in Hell" stance regarding HUMMER's imminent demise, pity the poor dealers. Speaking with Automotive News [sub], HUMMER Sacramento store owner Mike Daugherty said $4-a-gallon gasoline took away about half his biz. The other half disappeared after GM announced it might sell the brand. Yup. In June, Hummer sales fell 59.3 percent to 2,072 units. Obviously, GM CEO Rick Wagoner knew his "strategic review" proclamation– and subsequent withdrawal of all corporate support– would scupper HUMMER. But underhanded bastard clever man that he is, Wagoner also realized that dangling hopes of a HUMMER buyer would keep the dealer payoff price down. Wagoner mentioned a mystery buyer at the time of the first knife thrust. Since then, GM's paying HUMMER dealers "advanced sales bonuses" and buying them out, hoping to avoid the blizzard of lawsuits that accompanied Oldsmobile's termination. On Friday, Rick twisted the knife again, repeating the HUMMER sales rumor. "We have some interested buyers," Rick said [via Reuters]. "And I can't tell you anything beyond that right now, but we are moving as fast as we can." Believe it or don't.

Well, finally. The Blue Oval Boyz promised to unveil a new product plan for their Mercury brand on the same day their financials were revealed. Nope. I guess FoMoCo didn't want to steal the "thunder" of the press release re: the 2010-or-bust-and-maybe-even-then Mexican-built (but Euro-style) Ford Fiesta and Focus. Anyway, enough scene setting (it was a dark and stormy car market). Here's Mercury's new theme song, as sung by Derrick Kuzak, Ford's global product chief, [via The Detroit News]: "Ford Motor Co. will reposition Mercury as an entry-level premium brand that will support Lincoln [which] will no longer get any smaller vehicles, as had been planned, while Mercury will only get smaller cars and crossovers." In practice, the Sable dies, the Mercury Mariner and Milan live (with hybrid versions) and the brand gets a new, new-Focus-based sedan as and when. MA Lincoln Mercury dealer Chris Lemley responded to the revelations from the bowels of the Faint Praise Department. "Not only is some product news better than no product news, but some Mercury strategy is better than not having one." How great is that?

In General Motors Death Watch 182, I reported on GM's decision to squeeze a little more blood from the stone known as U.S. sales, by raising their product prices by 3.5 percent across the board. I pointed-out that Toyota could eat some more of GM's market share simply by NOT raising their prices or, God help Motown, lowering them. I predicted that ToMoCo would raise their prices, to maintain profitability and avoid any possibility of an anti-transplant backlash. And so they have. The AP [via The International Herald Tribune] reports that Toyota will up prices by a little over one percent– except for the hot-selling Prius (up 2.2 percent or $500). The timing is curious; the news arrived on the same day that GM lowered and extended its employee pricing. In any case, it's clear that Toyota is treading carefully, refraining from delivering the killer blow that's well within their power. They're leaving that for The Big 2.8 themselves.

Today's New York Times reveals the not-so-startling news that Wall Street's Big Swinging Dicks are not so big and not so pendulous this year. "A review of the latest statements from the largest financial companies based in the city shows that they intend to hand out about $18 billion less in pay and benefits in 2008 than in 2007… It would mean about $10 billion less in taxable income and several billion dollars less to be spent on apartments, furniture, cars, clothing and services. For many investment bankers and traders, year-end bonuses traditionally account for at least three-fourths of their income. But the downshifting of the Wall Street lifestyle has already begun." The general economic downturn is starting to take its toll luxury car sales, with Lexus down 29.8 percent in June, down 14.7 percent for the year. But is it possible? Could Porsche's $127k base Panamera land with a thud? Will Ferrari actually be heading for that moment in their history when they have, gulp, inventory?  

GM's June sales stats were on the catastrophic side of dire. But they would have been a lot worse if not for the automaker's end-of-the-month zero percent fire sale. So… July. Now what? This time Marketing Maven Mark LaNeve is going all Amway on us (minus the multi-level marketing). He's hoping the automaker's [remaining] workers will spread some octo-branded love to a family member, friend, casual acquaintance or anyone with a pulse, really. The Wall Street Journal reports that GM employees can give one employee discount away between now and the end of July. "During this challenging period for people across the country, there's no better time than to talk up our great products and give someone you know an additional incentive to buy GM," LaNeve's intercepted email opined. The current shitty challenging U.S. new car market is "the perfect opportunity to pass this on" an unnamed (what is it with the WSJ and anonymous sources?) GM spokesfolk added. Yes, OK, but HOW MUCH? Seems the Journal forgot to mention this little factoid. We reckon it's about three percent off dealer invoice. Anyone? Bueller? 

Just kidding. Toyota wouldn't say that, what with Motown's implosion about to force the transplants to paint themselves as nativists. But even if they aren't saying it, they're doing it. The Nikkan Kogyo [via Automotive News, sub] reports that the Japanese automaker is shifting non-Prius production out of its Tsutsumi plant to build as many gas – electric vehicles as they can (presumably without working their employees to death). No question: ToMoCo's going Hell for leather. Last year, they sold 281,300 Priora. With these changes, they'll be cranking-out at least 480k units. By the time a single example of GM's Hail Mary-shaped plug-in electric – gas hybrid hits the streets, Toyota will be building their fuel-sipper stateside. ToMoCo will have amped-up (so to speak) worldwide Priora production to 1m unit p.a. Whilst shunning the grammatical consensus on Prius pluratization established by TTAC's Best and Brightest, AN reports that Toyota built "320 Priuses in China last year." What's that all about? 

There's been much ado about GM's quiet launch of the 36mpg iteration of the Chevy Cobalt, both in the autoblogosphere and in promotional, warm-n-fuzzy TV spots (much like the  made-of-unobtanioum Chevy Volt). But the XFE isn't listed on the  "Shopping Tools" portion of the Cobalt microsite, nor on gm.com's "Find A Vehicle [any vehicle]" page. So I rang-up a friendly Chevy dealer who was embarrassed by his XFE-gnorance. Once he appreciated the model's existence, he said he didn't have any, there were none in Houston, and there was zero product information. "That must be a 2009 model," he countered. When I mentioned the XFE's web page on the 2008 Chevy website (sans XFE photos, BTW), there was a brief  pause. "They don't give us information as quickly you can get it." Well that sucks.

The Big 2.8 have been having something of a problem with vehicle depreciation over the last few years, thanks to fleet sales, over-production and the fact that the general public doesn't value their products as highly as the transplants'. Automotive News [sub] reveals the not-so-shocking fact that the same principle applies to Motown franchises. "Dealer and property developer Bruce Toll owns and operates two auto malls in suburban Philadelphia. He says a domestic brand dealership, including its real estate, that might have sold in his market for $4 million a few years ago would be lucky to fetch $500,000 today." Ouch. "When Detroit 3 dealerships sell at all these days, many bring only the value of their real estate and parts inventories. 'Blue sky' — the intangible value of a franchise — is often virtually nil for a Detroit 3 store." Double ouch. For some reason, speculation that the D2.8 may file for bankruptcy or kill brands is depressing prices. Depressing as in eliminating. "Sheldon Sandler, an investment banker in Skillman, N.J., specializes in working with big auto retailers to buy dealerships. He says his company, Bel Air Partners, 'won't bother' with Detroit 3 dealerships. 'They are just worth parts,' Sandler says.

As a privately held company, Chrysler doesn't have to tell anyone anything. But in an enterprise as vast and well-charted as the American automobile industry, you can run, but you can't hide from market reality. Automotive News [AN sub] raises an interesting question: why is "fast moving" ChryCo asking its dealers to pre-order products five months in advance? In a July 3 memo to store owners, Chrysler claimed demand for its Belvidere-built products had 'skyrocketed.' Really? While Patriot sales were up 5.5 percent in June, Caliber sales tumbled by 43.6 percent, and the Compass crashed 38.8 percent. Apparently, "Chrysler is taking aggressive actions to realign our product volumes to coincide with market demand." Really? Chrysler killed Belvidere's third shift in March; it's currently running on two shifts with overtime. Would orders in hand inflate Chrysler's worth to a potential buyer? Anyway, buried in the article: an assertion [by AN] that "Chrysler is trying to stick to its guns on slashing unprofitable fleet sales." According to ChryCo, they've cut fleet sales by 20 percent. In truth, even the rental fleets don't want the cliff face depreciation cars, SUVs, minivans and pickups (despite a recently revealed, post spin-off, long term contract with Thrifty). And the automaker's retail/fleet mix is getting worse, not better. AN reckons fleet sales account for about 35 percent of Chrysler's total– not including dealer fleet sales.

"[Cutting-back on U.S. light truck production] shows that Toyota is just as fallible as anybody else,” said Joseph Phillippi, a principal of AutoTrends Consulting. “They’re human after all.” Well gee, who'd a thunk it? I guess former Detroit News cheerleader (now ace New York Times scribe) Bill Vlasic couldn't resist putting the boot in, as the Brits would say. To be fair, the article is extremely fair in its assessment of the relative impact of the SUV/pickup truck extinction on the Big 2.8 vs. Toyota. And we get another glimpse of what makes Toyota the Automaker in Front. “By using this downturn as an opportunity to develop team members and improve our operations, we hope to emerge even stronger,” claimed Jim Wiseman, ToMoCo NA's external affairs Veep (sounds sexier than it is). Happy talk? "They have piles of cash and are as flexible as any company in the industry,” said analyst Maryanne "Where's GM's Sense of Urgency?" Keller. “This is probably a good thing for Toyota because, in their history, they have shown that adversity is what makes them stronger.” Not to mention the fact that doing less badly than your competition is the same as doing better. 

Did you miss out on the chance to reserve a Challenger SRT-8 during the pre-production feeding frenzy? Don't worry– they're still available. It turns out the "sold out" production run wasn't. While many of the first 6.4k built were pre-sold, "a quarter of the cars were set aside for dealer orders." The Detroit News reports they're available at some dealers; in fact, one Michigan dealer has nineteen of them for sale. Jim Simpson, sales manager at Dick Huvaere's Richmond Chrysler Jeep Dodge, said "I wish I had 50 of them." So far he's sold one; he currently has two on the lot with 17 more expected later this month. A quick scan of inventory at Dodge dealers in the metro Atlanta area turned up five on dealer lots. So if you're interested, you might be able to find one in your area too. Or you can wait a few months until dealers have milked the "market price adjustment" and they're willing to talk turkey (so to speak) to get them off their lots.