Category: TA-Automotive

Automotive Industry Analysis and Presentation: State of Illinois Financial Forecast Forum

PA-Market and Industry Analysis, Project Profiles, TA-Automotive

The Illinois City/County Management Association, Illinois Government Finance Officers Association and the Northern Illinois University Center for Governmental Studies Civic Leadership Academy holds an annual financial forecast forum for municipal leaders and financial officers from throughout the state. The day long forum for 2009 attracted more than 50 attendees, and feature speakers from the federal reserve, the banking, retail, and real estate sectors, as well as a presentation on the automotive industry by AEG’s Scott Watkins.

Our presentation addressed: the global nature of the automotive industry and overall economic slowdown; what the automotive industry in the State of Illinois region looks like and how it has changed in recent years; how the industry slowdown might impact automotive operations in the state; the current and forthcoming issues that will further challenge the automotive industry and regional economies that strongly depend on automotive industry employment; and the need to automotive dealership contraction and how that will impact communities throughout the country.

The presentation was delivered to the over 50 attendees of the forum at Northern Illinois State University’s Naperville, Illinois campus. After the presentation AEG consultant Caroline Sallee joined Scott Watkins to address questions from the audience.

The Cost of Bailout Versus Bankruptcy Among the Big 3

PA-Strategy and Business Valuation, PT-Reports, TA-Automotive

Our experts have closely followed the ups and downs of the automotive industry, providing clients with detailed information to help them understand and plan for the resulting changes. Our industry analysis is designed to provide timely, concise, and relevant information that can help any organization—from professional investors, to retailers, to governments—understand the rapid change in the industry, and how restructuring in the industry may impact their own sales, revenues, customer base, and more.  

In October, November, and December of 2008, our experts provided clients with a series of reports updating them on the economic relaities facing the automotive industry. AEG then teamed up with BBK, Ltd. in order to produce the first comprehensive analysis of the taxpayer costs of the Federal bridge financing requested by the auto manufacturers, compared with the likely costs of a bankruptcy declared by one or more of the same manufacturers.

Taxpayer Cost of Federal Financing of Auto Manufacturers Compared with Likely Costs of Bankruptcies in Industry

PT-Reports, TA-Automotive, TA-Franchised Businesses

 

Automation Alley's First Annual Technology Industry Report: Driving Southeast Michigan Forward

PA-Market and Industry Analysis, PT-Reports, TA-Automotive, TA-Community and Economic Development

Automation Alley’s First Annual Technology Industry Report: Driving Southeat Michigan Forward

Location Advantages for an Auto Supplier Exchange Firm

Featured - Expertise, Mixed-Use, PA-Public Policy and Economic Analysis, Project Profiles, Retail, TA - Market Entry, TA-Automotive, TA-Real Estate-Residential

Patrick L. Anderson, Ian K. Clemens

AEG conducts market research to determine the best location for Covisint.

Interstate Commerce Clause & Taxation Analysis: Multinational Industrial Firm

PA-Public Policy and Economic Analysis, Project Profiles, TA-Automotive

Our client was one of the United States leading engineering and manufacturing companies, specialized in water and wastewater treatment and industrial processes, defense electronics and services, electronic components such as connectors and switches, and a wide range of other industrial products.

When our client sold a subsidiary that provided components to automotive manufacturers, the State of Michigan charged the firm with a very large Single Business Tax (“SBT”) liability. The SBT is a value-added tax (VAT), unique within the United States, though common in Europe and Canada. For a suit filed against the State of Michigan, we prepared a report and affidavit which described how the application of the tax in this manner would violate the Commerce Clause of the United States Constitution. For the report, we:

-Reviewed value-added taxation in general

-Reviewed Michigan’s SBT in particular

-Reviewed the past interstate commerce cases relating to taxation and state actions violating interstate commerce

-Summarized the structure of the auto industry

-Analyzed how the application of the Michigan SBT in this matter infringed interstate commerce, was contrary to the purpose of the SBT, and resulted in perverse tax treatment of this company and, potentially, many others.

Before the report was presented in court, the State made an acceptable settlement with our client, based partially on the record established by our report.

Market and “Good Cause” Analysis: Mercedes-Benz Dealership – Chicago Area

PA-Expert Testimony and Litigation Economics, Project Profiles, TA-Automotive, TA-Franchised Businesses

Case Study:
Market and Good Cause Analysis
Mercedes-Benz Dealership – Chicago Area

The attorneys for a franchised dealer of Mercedes-Benz USA operating in the Greater Chicago Area retained Anderson Economic Group after Mercedes-Benz USA appointed a new dealer within the “Area of Influence” of their client. Anderson Economic Group was tasked with evaluating the effects of the new dealer on the current dealer’s operations, and analyzing the market before and after the introduction of another dealership.

We completed an expert report that began with an evaluation of the fundamental rationale of the franchise relationship and the responsibilities of both parties. The report continued with a detailed analysis of sales data, the pattern of sales as distance from the retail outlet increases, the geographic and demographic characteristics of the changed market areas, the concentration of Mercedes-Benz dealers in other cities, and the likely effect of the new dealer on the sales of the existing dealer.

The analysis concluded that there was not “good cause” under the Illinois Statute for the appointment of a new dealer in the area. Our report rebutted contrary reports submitted by USAI and Price Waterhouse Coopers, and also commented on a report submitted by RL Polk.

After submission of the report, Patrick Anderson was deposed on its contents. Mercedes-Benz later settled the case by allowing the Plaintiff to sell the dealership to a new owner that would be given a chance to relocate, and also allowing the Plaintiff to open a new dealership in a more favorable market.

Market and Franchise Law Analysis: Michigan Honda Dealerships

PA-Expert Testimony and Litigation Economics, Project Profiles, TA-Automotive

Case Study:
Market and Franchise Law Analysis
Michigan Honda Dealerships

The attorneys representing three franchised dealers of American Honda in Michigan retained Anderson Economic Group after American Honda appointed a new dealer within the primary market areas of their clients. Anderson Economic Group was tasked with evaluating the effects of the new dealer on the existing dealer’s sales, service, and other revenues, as well as the impact on profitability and market value.

We completed an expert report that began with an evaluation of the fundamental ratio­nale of the franchise relationship, and the responsibilities of both parties. The report continued with a detailed analysis of sales data, the pattern of sales as distance from the retail outlet increases, the geographic and demographic characteristics of the changed market areas, and the likely effect of the new dealer on the sales of the existing dealer. We then completed a valuation and damages estimate that translated the lost sales into tangible figures for the court. Patrick Anderson and Victor Wrotslavsky were deposed on the contents of the report.

Site Selection for Luxury Auto Dealer: Nationwide Automotive Group

PA-Market and Industry Analysis, PA-Strategy and Business Valuation, Project Profiles, TA - Market Entry, TA-Automotive, TA-Franchised Businesses

 

 

Our client was a large auto group that operates franchises that include Mercedes-Benz, Porsche, Lincoln-Mercury, Mazda, Honda, Ford, Chrysler, Dodge, and Jeep in markets around the country.

Our client was awarded a desirable luxury vehicle franchise in one of the largest metropolitan areas in the United States. The manufacturer provided our client with a market report that suggested sites away from the growing population and high income areas. The group retained Anderson Economic Group to conduct a thorough site-selection analysis, including a site visit, analysis of prospective sites, demographic trending, past auto sales analysis, and projected sales for select locations.

Our analysis was conducted in three stages, each adding additional information and revising the list of potential candidates. Sites were screened based upon geography, road network, population, household income levels, projected growth in income-qualified households, luxury vehicle registrations in the nearby area, and the location of competitive dealerships and their statutory protest zones.

Basing our findings on the location of income-qualified buyers, we recommended a final cut of two prospective sites. One was selected on the basis of factors including income growth, population growth, historical sales of luxury vehicles, and the impact of competitor locations.

Automotive Market Study and Sales Assessment: Metro Detroit Automotive Dealers Association

PA-Strategy and Business Valuation, Project Profiles, TA-Automotive

Metro Detroit