New Cars and the Stimulus Bill

The recently enacted Federal Stimulus Bill will give tax incentives for the purchase of new vehicles. These tax credits can still be combined with the previously existing $1,300 tax deduction for any 2009 Jetta TDI or Sportwagen TDI. Here's how it works:

Effective 2/17/09-12/31/09

Deductible taxes: State or local motor vehicle sales (use tax) or excise taxes imposed on the purchase of a NEW motor vehicle.

Who qualifies? Individuals with modified adjusted gross income of less than $125,000 or joint-filers making less than $250,000 in 2009. The deduction is allowable for the alternative minimum tax.

What New vehicles qualify? Any new vehicle under 8,500 lbs GVW of any model year. Only the first $49,500 qualifies for the full deduction.

For example:

A person purchasing a 2009 VW Touareg for $45,000 would pay $3,474 in taxes if they lived in the city limits of Denver. Hypothetically if they were in a 30% tax bracket they would save $1042 in federal taxes and additionally more on their Colorado state income taxes.

Emich up in down market

Despite the troubling economic times Emich VW triumphed in January. In a new vehicle market that was down 37% to the lowest figures in 27 years Emich VW was up 56% year over year. We were also able to increase used vehicle sales and parts sales by over 17%. The service department was flat year over year which is truly a testament to their execptional level of service creating loyal customers.

Great January!

Congrats to John Morse and the Parts Department for being one of the top 10 performing VW parts departments in the nation. Dave Guttenberg and the used car department should also be recognized for finishing 9th in the nation for Certified Pre-Owned VW sales. Chris Kelley and the new car department was once again number one in the region for new Volkswagen sales.

To a successful 2008

Emich VW finished as the 20th largest Certified Pre-Owned VW dealer in the nation. We also completed the year as one of Generation VW's Best. Actually finishing 7th in the nation as a Dealership. We are also sending three employees to the VW Guild event in Las Vegas. Congratulations Dave Guttenberg (Sales Manager), John Morse (Parts Manager), and Karl Riedell-Reynolds (Parts Associate). Dave Guttenberg has also won a trip for two to Cabo San Lucas for being the 4th ranked Sales Manager in the country for 2008. Congrats!

Parts #30 in USA for 2008

Congratulations to the parts team for being ranked 30th in the nation by selling just short of $2,000,000 parts in 2008. This was a huge increase from the previous year.

State of the Automobile Industry

I predict that 2009 will be even harder for the auto industry than 2008. The reason I think this is the major changes we are seeing in the credit markets. In previous years creditors loaned customers thousands of dollars more than vehicles were worth. With great credit it was possible to borrow almost twice the vehicles value or easily 140%. Now these creditors have began to realize serious loses with the contracting economy and staggering job losses. They are also having a hard time borrowing at decent rates based on their increased lose ratios. Within the last month we have seen rates jump several points and advances shrivel to below 100% of the vehicles value. This has made it difficult to finance anybody with a trade-in which they owe money on. In previous years lenders extended loan terms to 84 plus months and allowed for large advances in terms of loan to value. Therefore these customers have paid more interest and less principle during the first years of the loans. This coupled with the lowest used car values in recent history has created greater inequity for customers who have not paid off their current vehicles. Now if they want a new vehicle banks have reduced allowed terms, increased rates, and decreased the amount they will finance in terms of loan to value (LTV). Literally overnight some banks have gone from a 130% LTV advance policy to 100%. That is the difference between a customer being able to finance $6000 in inequity or $0 on a $20,000 vehicle. Some banks are now even charging up to 3% to finance up to 120% LTV which was a minimal amount a year ago. In the long term these policies are not bad because they will put customers in a better equity position than what was allowed previously. However this year many people who are used to financing vehicles with trade-ins for $0 down might have to fork over more down payment than expected. With swelling new vehicle inventories the manufactures are going to have to figure out a way to loosen credit with their captive finance sources. Just wait a week and this will probably all change....

Luckly VW has a large customer base that lease vehicles. They will be insulated from this phenomenon because the lease company assumed the risk of the future value of their vehicle. Therefore they will not have inequity at a time when used vehicle values are at their lowest and lenders are tightening up.

#1 for 2008

Hats off to the Sales Department for being the top new VW dealer in CO, NM, and UT for 2008. They also finished within the top 25% in the nation for Customer Satisfaction. I am still waiting for the final parts and service numbers, but those departments also had a tremendous 2008. Keep up the hard work!

Congratulations to the Emich Team!

November was a tough month in the auto industry, but the Emich VW team proved all the critics wrong. The sales department delivered two more new vehicles than in November of 2007 when the auto industry was down 37% as a whole. They were also the top VW dealership in UT, NM, and CO by over 20%. The parts department was the 23rd largest purchaser in the United States, and the Service Department continued their high customer satisfaction rankings holding strong in the top 25% for the year.

Fox 31 Interview

Click the link below to see text and video of the Fox 31 interview with Fred Emich IV.

http://www.myfoxcolorado.com/myfox/pages/Home/Detail;jsessionid=A7B38102E2F2CA507D48326C751972EE?contentId=7998790&version=1&locale=EN-US&layoutCode=TSTY&pageId=1.1.1&sflg=1

Support Federal Loans to US Automakers

Please support federal loans to the Big 3 US Automakers. At first I thought that Chapter 11 Bankruptcy was the way to go for the Big 3, but after seeing the possible consequences I have changed my mind. Unless it a perfectly prepackage Bankruptcy there is too much risk if even one of the Big 3 file Ch 11. The job losses would be tremendous, the suppliers would have to file Ch 11 soon after, the Federal Pension Guaranty Corporation would have to cover hundreds of billions of dollars of pensions, billions of dollars of health care benefits would be lost for hundreds of thousands of employees and retirees, and the US could fall into double digit unemployment spirally the economy into a serious depression.

The claims that the Big 3 do not make vehicles that the people want are unfounded. GM is still the most popular manufacturer in the United States. Yes, they sold more cars than Toyota in 2007. Ford has produced the first Hybrid SUV (Ford Escape Hybrid) and Chevy will be the first major manufacture to offer an electric vehicle (Chevy Volt). The problem is that the Big 3 have been handcuffed with major liabilities imposed on them by the United Auto Workers (UAW) for higher wages, pensions, health care, and other benefits. While the Big 3 have been paying out $29/hour for unionized autoworkers plus hefty benefits Toyota, Honda, Nissan, and others have been allowed to bring there production from oversees into southern states with no import taxes and instead hand outs to entice them. These companies do not have unionized workers either. This gives foreign manufactures an unfair advantage to produce vehicles in the USA. The Big 3 are not in trouble because they do not make the right products, but because the US has allowed foreign manufactures to come in and produce vehicles in the US at a much lower cost because they do not have to offer the same pensions, health benefits, or wages that domestic manufactures do.

So please tell Congress to support loans to the Big 3 or we could endure an economic depression not seen since the 1930's. Why should we give hand outs to foreign manufactures and not support the backbone of American industry the Big 3?