Apollo Group Inc. has agreed to pay $1.89 million to settle a federal lawsuit alleging discrimination against non-Mormon employees at its University of Phoenix Online division.

The amount of the settlement, which still requires court approval, is believed to be the largest in a religious-discrimination case brought by the Equal Employment Opportunity Commission, according to EEOC regional attorney Mary Jo O’Neill.

The class-action lawsuit, filed two years ago, covers 52 former enrollment counselors who charged that members of the Church of Jesus Christ of Latter-day Saints were favored in sales leads, promotions, tuition waivers and more at the for-profit school.

O’Neill said the EEOC’s investigation found that hiring and promotion practices based on religion were prevalent at the University of Phoenix, the nation’s largest private university, with more than 300,000 students in online and campus programs.

“We’re very, very pleased with the resolution,” she said.

In a statement, Apollo said it is “pleased to have resolved this matter.”

It noted that it did not admit any liability or wrongdoing as part of the settlement.

In a securities filing last week, Apollo said the amount of the proposed settlement would not have a significant adverse affect on the company. Apollo’s annual sales exceeded $3 billion in its latest fiscal year.

The consent decree, filed Friday and awaiting approval of U.S. District Court Judge Mary Murguia in Phoenix, includes provisions designed to prevent similar discrimination in the future.

Within 60 days of the signing of the consent decree, University of Phoenix Online is required to send a note to all supervisors, managers and employee relations personnel declaring “zero tolerance” for LDS favoritism or discrimination. If favoritism or discrimination is found, the manager who engaged in it will be immediately terminated, according to the consent decree.

“We’re very pleased that they agreed to that,” O’Neill said. “It’s a very strong provision.”

Other requirements outlined in the consent decree: the company must hire a diversity officer to monitor the company’s compliance with the settlement and provide equal employment opportunity training to, among others, managers and supervisors with hiring authority in the online division.

“We’re very hopeful they’re going to switch things around there,” O’Neill said.

Apollo’s statement said, “We are dedicated to providing a work environment in which our employees are treated fairly and with respect, and are recognized and rewarded based on their accomplishments.”

The EEOC will monitor University of Phoenix for four years to make sure it is complying with the terms of the agreement.

“We’ll be able to look at their hiring practices, we’ll be able to look at their promotion practices and their lead (distribution) practices,” O’Neill said.

The University of Phoenix and Apollo were long dogged by murmurs of Mormon influence. Apollo’s longtime chief executive officer, Todd Nelson, was active in the church, and the company was said to heavily recruit church members as enrollment counselors. Nelson resigned several months before the EEOC lawsuit was filed. He is now CEO of Education Management Corp., a Pittsburgh company providing career education.

In resolving the EEOC matter, Apollo has now put two major legal issues behind it this year.

In August, a U.S. District Court judge in Phoenix overturned a January jury verdict that found the company guilty of securities fraud related to its disclosures of a settlement with the U.S. Department of Education in 2004.

Derek Neighbors (left, Integrum Pragmatic Idealist) and Jade Meskill (right, Integrum Alpha Geek) work on the board in the Commons at Gangplank.

Competition may be king in the business world, but a group of Valley entrepreneurs says that “old-school” mentality also has created roadblocks for Arizona’s small technology startups.

They’re urging their peers to put collaboration ahead of competition with a recently formed technology incubator called Gangplank.

Web developers Derek Neighbors and Jade Meskill, founders of the Chandler-based facility, provide workspace, product consulting and financial support to early-stage software ventures in exchange for equity in the firms.

The facility, 325 E. Elliot Road, No. 34, also is the headquarters for five Web-development and marketing-related businesses, which serve as Gangplank’s anchor companies. A sixth anchor is expected to relocate there soon from SkySong, the ASU Scottsdale Innovation Center.

Gangplank’s focus on the startup community could be an economic boon for Arizona, where the unemployment rate has ballooned from 3.8 percent in September 2007 to 5.9 percent this September.

A 2007 study released by the U.S. Small Business Administration’s Office of Advocacy found that the creation of startups is the biggest determinant of gross state product, employment and personal-income growth.

For example, if the establishment of small businesses increased by 5 percent in a state, it would increase that state’s gross product output by 0.465 percent, the study said.

Neighbors and Meskill began offering space to existing Web-development and marketing firms about a year ago. In April, Gangplank began accepting project ideas from entrepreneurs.

The anchor firms, which combined employ about 30 workers, occupy their own suites inside the 5,000-square-foot facility. The project developers primarily work in an open room to promote collaboration among the participants.

“We’re really looking for those people who are pushing the envelope,” he said. “They’re not copying what anyone else has already done. They’re looking to be creative . . . and to stand out. . . . They want to be the next Google, the next Yahoo, the next Twitter, the next Facebook.”

While some business leaders lament the lack of investment dollars local technology companies receive in comparison to firms in neighboring states, Neighbors says a bigger problem for the startups he works with is not having access to expertise. Gangplank tries to address that need.

Neighbors and Meskill are funding Gangplank primarily with personal income. They are encouraging developers with product ideas to apply.

Here’s a look at four projects being developed at Gangplank:

AuthorityLabs.com

The Web site helps other Web site owners track where their sites rank in online search engines.

The site is currently in beta, or test, mode and is not available to the general public.

Once live, users will be able to enter their URL address. The program will spit back a list of recommended terms they should track to see where their sites rank when someone inputs those phrases in a search engine.

The site will generate revenue via a subscription fee, the cost of which has not been determined.

“We’re going to build a system that’s going to be able to handle not only the small-business client,” founder Chase Granberry said. “We’re also going to be able to handle the enterprise e-commerce business that wants to attract tens of thousands of viewers.”

DateDesigner.com

DateDesigner.com isn’t another eHarmony.com or Match.com.

Instead of pairing potential partners, the site lets people submit ideas for where to go and what to do on a date.

Users can submit restaurant and activity ideas. People can search for venue ideas by city and type of date (romantic, fun, adventurous, etc.).

“I came up with the idea three years ago after I got divorced,” said founder Beau Frusetta. “I started dating again and I had run into a lot of situations where I was dating different women, but I kept going on the same date. It just became very boring.”

Gangplank has provided Frusetta with about $15,000 in seed funding, he said. He debuted the first version of the site about three weeks ago.

Frusetta said he plans to sell banner advertising or listings to restaurants and other venues that want to be featured prominently on the site for future versions.

SimpleSeating.com

The Web-based program helps users build seating charts for weddings, banquets, dinner parties and other events.

Users can drop and drag attendees’ names on a chart. The program lets users link together the names of people that must be seated at the same table, simplifying the process of deciding where to place them.

The first version of the site has been out for about a year and a half and has made about $25,000, according to founder Steve Swedler.

He moved the program to Gangplank about three months ago.

The current version of the site is targeted at consumers. Sign-up is free to make charts for events with 50 or fewer people. Packages for planning events with more than 50 people cost $20 to $50.

With the site’s next version, Swedler plans to target to hotels and event-planning businesses.

GetWhuffie.com

“Whuffie” is the name of a social currency featured in the science-fiction book Down and Out in the Magic Kingdom.

In the book, the amount of currency people accumulate is based on what they contribute to others.

Gangplank participants are incorporating the concept into a software tool they plan to offer businesses to use on their Web sites. The program will allow customers to suggest ways to improve a company’s businesses. The businesses will be able contact specific customers if and when they incorporate their suggestions.

The product is still under development, but a bare-bones site is currently online.

In May, Treasury Secretary Henry Paulson watches as President Bush speaks to reporters in the Oval Office of the White House in Washington.

WASHINGTON – With the U.S. in its worst financial crisis in decades, one of the new president’s most important early decisions will be the selection of a Treasury secretary.

Here is a look at the job and some of the challenges the new Treasury secretary will face while managing the largest financial bailout in history.

Q: Besides having his signature on all the nation’s currency, just what does a Treasury secretary do?

A: The Treasury secretary serves as the president’s top economic adviser, responsible for overseeing the revenue functions of government. That includes collecting taxes through the agency that American’s love to hate — the Internal Revenue Service — and borrowing massive amounts of money to service the government’s $10.5 trillion debt.

The Treasury secretary, who currently earns $191,300 a year, is also the administration’s chief liaison with Wall Street and the international financial community.

Q: What kind of people get picked for the job?

A: The current occupant, Henry Paulson, is a good example of the type of person presidents like to choose. Paulson headed the investment bank Goldman Sachs at the time of his nomination, and the 32 years he spent rising to the top gave him plenty of expertise in how Wall Street works.

So far, there have been 74 Treasury secretaries — all men — starting with Alexander Hamilton in 1789. They were usually chosen for their ties to Wall Street, either as the heads of big financial companies or as corporate executives. Sometimes they have been members of Congress who headed committees that oversaw tax and budget policies.

Q: How does the job of Treasury secretary differ from that of chairman of the Federal Reserve, a post now held by Ben Bernanke?

A: Bernanke and other Fed officials manage interest rates, raising and lowering them to keep inflation under control and the economy moving forward. Bernanke has only one vote in monetary policy decisions, but his position as chairman gives him tremendous persuasive powers on the Federal Reserve Board.

The Treasury secretary helps formulate the administration’s policies on the budget, taxes and financial regulation. Paulson, for instance, played an instrumental role in developing and then winning passage for the $168 billion economic stimulus bill Congress passed in February.

Q: What role is the Treasury secretary playing in the current financial crisis?

A: Paulson has been the administration’s point person in developing the government’s response throughout the crisis, which began back in August 2007 with soaring defaults on subprime mortgages.

Paulson helped develop the administration’s response to rising mortgage foreclosures, an effort that critics have complained has been too limited in supplying help to people in danger of losing their homes.

He also was a key player in the decision to take over mortgage giants Fannie Mae and Freddie Mac in September and not to extend assistance to Lehman Brothers, which became the largest bankruptcy in U.S. history.

Q: How has Paulson been able to play such a major role in the current crisis?

A: The basic answer is that he enjoys the full backing of the president. Paulson refused to join the administration in 2006 until he received assurances from the president that he would have more influence in developing the administration’s economic policies than Bush’s first two Treasury secretaries — Paul O’Neill and John Snow. Both of those men were widely viewed as having little say in the formulation of administration policies.

The Treasury secretary’s powers grew dramatically with the passage of the $700 billion rescue package on Oct. 3.

Paulson and the people he selects to run the bailout program will be making decisions on which banks will get an infusion of $250 billion in direct purchases by the government of bank stock. He also is overseeing plans to buy bad assets off the books of financial institutions. Both programs are aimed at strengthening banks’ balance sheets so they can resume more normal lending and keep the country from falling into a deep, prolonged recession.

Q: Are there limits on the actions Paulson and his successor will be able to take in overseeing this massive intervention by the government in the economy?

A: The original three-page bill that Paulson forwarded to Congress did not have limits, but Congress created various oversight operations including a board chaired by Bernanke and audits by the congressional Government Accountability Office to provide checks and balances.

Q: Since Paulson has been so closely involved in the rescue effort, won’t it be disruptive when he leaves?

A: Some people think it could be and they have urged Paulson to consider staying in some advisory role at least for a period of time as the next administrations gets settled. However, Paulson has rejected those suggestions, saying he plans to leave government on Jan. 20 when the next president takes office.

Q: Does that make the next administration’s transition planning even more important at Treasury?

A: Yes. Recognizing this, Paulson has already set up office space and phones at Treasury that the next administration can begin using immediately after the election. He has also picked a transition team led by his chief of staff, Jim Wilkinson, to oversee the change in administrations.

Find in Mesa canal raises fears of higher costs to clean jammed intake pipes

Quagga mussels are originally from Africa.

The discovery of quagga mussels in a water-diversion channel east of Mesa raises the risk that the invasive mollusk could use the Phoenix area’s network of canals to spread farther into Arizona and possibly damage water-treatment plants.

The canals supply water for most Phoenix-area communities, at least two power plants, more than a dozen urban lakes and thousands of customers of farm and residential irrigation.

Salt River Project workers found 11 quagga mussels earlier this month and four more Wednesday on monitoring lines near Granite Reef Dam, where water is diverted into the canals.

Just one female quagga can produce 40,000 eggs in a breeding cycle and up to 1 million eggs in a year.

The thumbnail-size mussels pose no health risk to drinking water, but they can clog pipes, jam mechanical equipment, increase maintenance costs on water-distribution systems and alter riparian ecosystems.

How many mussels have made their way into the diversion channel or downstream is unknown, but finding even a few on a monitoring block is significant. The four found Wednesday had attached themselves to it after the block was last checked about two weeks ago.

“It means they are able to settle in our canals,” said Lesly Swanson, an environmental scientist for SRP. “We knew they had been coming in from the (Central Arizona Project canal) for a while. It’s really a question of why we haven’t found them sooner.”

Quaggas have colonized the lower Colorado River since they were discovered in the river in January 2007. Especially hard hit is Lake Havasu, the source of water for the CAP canal, which moves water to Phoenix and Tucson.

Once mussels showed up in the canal, SRP officials knew it was only a matter of time before they moved into the urban channels.

SRP will take a closer look at canal walls in the coming months during annual maintenance, when lengths of the waterways are drained for several weeks.

The utility plans to meet with its municipal customers to discuss how they can protect the treatment plants. The biggest fear is that mussels could attach themselves to intake pipes and block the flow of water into a treatment plant. That would increase maintenance costs at a time when municipal budgets are strained.

“We hope we never get to that point,” said Brian Moorhead, an SRP environmental scientist who focuses on the urban canals. “If we do, we start to lose capacity all over the system.”

On the lookout

Moorhead checks a series of monitoring lines in canals every two weeks. He uses concrete blocks and plastic plates attached to ropes or chains.

On Wednesday, he pulled a line up in the diversion channel at Granite Reef.

“We’ve got one here,” he said, carefully wiping away sediment to expose a single mussel. A moment later, he said, “here’s another one.”

Once quaggas establish themselves, counting them is nearly impossible. At Parker and Davis dams on the lower Colorado, workers have scraped away 3- or 4-inch layers of mussels on an iron gate as tall as a man.

Most communities say they are aware of the threat and have begun taking steps on their own, though few have begun to calculate the added costs if mussels fill pipes.

“We have equipment in place that would prevent the mussels from entering the (treatment) plants,” said Mike Phillips, a Scottsdale spokesman. “We’re working with SRP and CAP to see what we can do to control the mussels.”

Mesa officials are examining a range of possible responses, spokesman Ian Satter said, including mechanically scrubbing pipes and other surfaces or dosing water with chlorine earlier in the process.

Water for SRP’s residential-irrigation system does not pass through treatment plants, flowing instead directly to homes in pipes and smaller canals. Although it’s unlikely residents would ever see quaggas in their backyards, the mussels could choke pipes or gum up the gates used to divert water.

Halting infestation

Water from SRP and CAP canals also helps fill 14 of the 16 urban lakes located in Phoenix city parks and occasionally replenishes Tempe Town Lake.

Town Lake was stocked earlier this year with red-ear sunfish, a species sometimes known as shellcrackers and a predator of shellfish, said Nancy Ryan, Rio Salado Project manager. Biologists don’t yet know if the sunfish can control a quagga infestation.

Scientists also are unsure about how the mussels may change the chemistry or ecology of a small urban lake in a desert climate. Most recent studies focused on the Great Lakes, where mollusks from Eastern Europe were first discovered in this country.

“There will be some consequences,” said Larry Riley, a biologist with the Arizona Game and Fish Department. “Whether they will be dire ecological consequences is difficult to predict.”

Riley said conditions in the smaller urban lakes can be controlled. His agency works with parks departments to maintain sport-fishing populations and can advise communities if conditions start to change.

Other solutions may emerge, such as a specific microbial toxin that would target quaggas. A California company is preparing to offer such a product, known as a biopesticide.

The most effective approach is to slow the spread of quaggas on boats and other watercraft. Most scientists believe the first mussels that settled in the Colorado River arrived on a boat that had been in an infected lake in the upper Midwest.

“Taking a few simple steps to clean, drain and dry gear can help a lot,” Riley said. “By not paying attention, someone could make a mistake that threatens our waters.”

The IRS issued an estimated $1.6 billion in potentially fraudulent tax refunds during the 2006 and 2007 filing seasons, far more than the agency initially acknowledged, a government audit reported Thursday.

The questionable payments resulted from breakdowns that left the IRS without its chief computer defense against fraud in 2006, plus limited investigative resources, the audit by the Treasury Inspector General for Tax Administration reported.

“This problem is becoming unmanageable,” the audit said.

Unless the IRS cracks down, it could issue more fraudulent refunds, burdening “honest taxpayers whose tax dollars are being used to support this criminal activity,” the audit warned.

Auditors recommended a long-term effort that balances growth in tax refund fraud and other investigative priorities with IRS staffing resources.

Calling the report’s tone “misleading,” Eileen Mayer, head of the IRS Criminal Investigation Division, wrote that the agency examined and stopped more than $2 billion in fraudulent refunds during the two years.

Many suspicious tax returns involve small amounts and would produce a “relatively low dollar return” if the agency pursued deep investigations of each one, said IRS spokesman Terry Lemons, adding that the result would be a “loss for the nation’s taxpayers.”

In all, auditors estimated the IRS issued $894 million in potentially fraudulent tax refunds during processing year 2006, the year the agency’s Electronic Fraud Detection System, a vital safeguard, was shut down pending the start of an upgraded computer.

That’s roughly four times higher than the IRS’ estimate in late 2006, when USA TODAY reported the agency had been warned about potentially “catastrophic” problems with the new system, which, due to problems, was unavailable for the entire year.

The tax agency re-started the old computer system in 2007, and initially flagged tax returns totaling more than $1.2 billion, the audit found. But, faced with staffing and other limitations, the IRS used a dollar threshold and other screening to exclude more than 500,000 of those returns from additional checks, the audit found.

Further investigation would have identified $742 million in potentially fraudulent refunds, auditors said.

“The IRS’ attitude that fraudulent refunds below a certain dollar amount are not worth pursuing is troubling,” said Sen. Charles Grassley, R-Iowa, the ranking minority member of the Senate Finance Committee.

Sen. Max Baucus, D-Mont., the panel chairman, “expects the IRS to do everything it can,” to stop refund fraud, said spokesman Daniel Virkstis.

PRESCOTT – A federal judge has blocked many nighttime operations at a Lowe’s home improvement store in Prescott after neighbors complained of excessive noise.

The temporary restraining order bars the store from loading or unloading materials, using its outside speaker system, or doing construction work between 10 p.m. and 6 a.m.

U.S. District Court Judge Frederick Martone issued the order after a hearing on Thursday. It also requires the store’s bay doors to be closed during some nighttime activities and requires trucks to shut off their engines if they will idle for more than five minutes.

A group of residents living in the adjacent Prescott Canyon Estates sued Lowe’s for damages they allege they have suffered since the store opened. Also, a huge retaining wall next to the new store partially collapsed in December 2007 and workers are preparing a major repair project.

“I’m happy to hear the judge did go in our favor,” said homeowner Linda Schwab, one of 12 plaintiffs who filed the suit in July. “If we can have some continuity, then at least I’m not brought out of my sleep.

The residents’ lawyer, Gil Shaw, told the judge they had been subjected to disruptive practices for months and the disturbances are affecting their quality of life.

“The harm is irreparable,” he told Martone. “Once you lose a day, you can’t get it back.”

Lowe’s lawyer John Harris acknowledged several instances where contractors worked after 10 p.m., but said for the most part no work takes place at night.

“Lowe’s is doing nothing more than operating its business,” Harris said. “These claimed noises are what the law calls ‘mere trifles.”‘

Martone noted that “this problem was likely caused by the unfortunate decision by the City of Prescott to allow Lowe’s to put a store of this sort” next to a residential neighborhood. But he said the homeowners had suffered real injury and issued his order pending further hearings on the suit.

Auto sales have dropped drastically in Arizona, and lots are filled with vehicles, especially gas-guzzling trucks.

Charting the rise and fall of car and truck sales is a simple way to gauge the health of the economy.

When we feel good about our prospects, we buy.

When fearful, we hold back.

This year, a huge run-up in gas prices was followed by weeks of financial crises. Combined with uncertain job prospects and declining wealth, it created one of the toughest markets in decades.

Vehicle sales have dropped so sharply that one analyst wonders how many people are just going to hold on to their vehicles until they fall apart.

In September, taxable sales of new and used motor vehicles were down 29.8 percent from a year earlier, the Arizona Department of Revenue reported Thursday.

The skid in sales puts pressure not only on automakers, auto dealers and their employees, but on state and local governments, which count on the sales-tax revenues.

Arizona auto dealers are fighting back, offering deals that include incentives of up to $10,000 on some vehicles and zero-percent financing. Prices have fallen back to levels of five or more years ago, especially on pickup trucks. And dealers emphasize that credit still is available.

Although it will be awhile before October vehicle-sales numbers are reported, some evidence indicates that the incentives are working.

Postponable purchase

This decade, vehicle sales have run about 16 million to 17 million units a year. J.D. Power and Associates, a marketing-information services firm, predicts sales will fall to about 13.6 million units this year and 13.2 million units in 2009.

That’s approaching a “scrappage rate,” or a basic market where most purchases are just replacements for vehicles that are ready for the junkyard because they got too old or were destroyed in an accident, said Bob Schnorbus, chief economist with J.D. Power in Detroit.

Reasons for the slide in auto sales include gas prices, declining consumer confidence, the credit crunch and a manufacturers’ trend away from offering leases.

Schnorbus said the slowdown can be traced to early in the decade, when manufacturers offered major incentives and boosted sales of new cars and trucks so much that many people didn’t need to buy vehicles for a while. In mid-decade, manufacturers started cutting back on fleet sales and leases because they decided neither was that profitable.

Knox Ramsey, a veteran of the auto industry and president of the Valley Auto Dealers Association, said he has seen a link between auto sales and consumer-confidence surveys for the past 40 years. “There are more parallels with those two than anything else,” he said.

On Tuesday, the U.S. Conference Board reported its monthly Consumer Confidence Index had reached an all-time low.

Economic shifts

The drop in vehicle sales is affecting a broad part of the U.S. economy.

Motor-vehicle sales account for about one-fifth of all retail sales, according to the National Automobile Dealers Association.

The slowdown and decrease in vehicle sales-tax revenues is a major reason that state and many city budgets are in trouble, forcing service cuts and layoffs. If the trend toward less expensive, more fuel-efficient vehicles – think Prius vs. Hummer – becomes permanent, sales-tax revenues may not immediately recover in an upswing.

First to feel pain

In Arizona, vehicle sales have been falling for 20 months. This year, they began sinking at an accelerated rate.

Mike Breyfogle, general manager of Tempe Dodge, said the Arizona declines in 2007 were telling everybody where the economy was heading.

“My take is that the sales side of the car business has always been the first to feel it getting tight,” he said.

Some stores have closed, including two Bill Heard dealerships in Scottsdale and two AutoNation Inc. stores: Power Pontiac/Buick/GMC in Scottsdale and Power Chevrolet in west Phoenix. Dan Grubb Ford in Phoenix consolidated with Pioneer Ford in Goodyear.

Dealers say they are surviving by reducing inventory as best they can and controlling expenses.

Although there have been some high-profile closings, the number of dealerships has increased, according to the Arizona Motor Vehicle Division. In mid-October, there were 2,488 dealerships in Arizona, compared with 2,468 in fiscal 2003-04, the MVD said.

Ramsey said the number of dealers reflects growth in the Phoenix area, especially along the new freeways.

Latest challenge

Sales of motor vehicles have been falling nationally since 2005, just about the time the housing market crested, according to J.D. Power.

Then, as consumers confronted falling home prices and mortgage issues, gasoline prices began rising to the $3-a-gallon level late last year, then surpassed $4 a gallon in the spring before falling back.

Customers not only stopped buying gas-guzzlers but began trading for more efficient cars or bought second vehicles.

In some ways, that spurred purchases. Monte Yocum, general manager of SanTan Honda Superstore in Chandler, said he had his best sales month of the year in July.

But Nathan Riggs, finance and insurance manager at Berge Ford in Mesa, said some customers lost thousands of dollars on trade-ins because they owed so much on the vehicles being traded.

Carlos Gonzalez, 29, and his wife, Ivonne Medina, 27, of Maricopa, tried to trade in a 2008 Nissan SUV for a Honda sedan but decided it would be cheaper to keep the SUV.

“They wanted to take the car and for us to pay them another $10,000,” Medina said.

Credit crunch

Just as gas prices began falling, freeing some cash for consumers and easing worries about higher-mileage cars, credit markets tightened.

GMAC Financial Services, financing arm of General Motors Corp., said this month that it would finance purchases only for buyers with credit scores of 700 or higher.

Steve Moore, general manager of Peoria Pontiac GMC Inc., said: “Banks are just looking harder at anyone with less-than-stellar credit. It just makes it more difficult to do business.”

But Ramsey said most buyers aren’t going to be affected by credit restrictions. About 73 percent of auto sales are already to people with scores of 700 or higher, he said.

Commercial sales to businesses are facing tougher credit obstacles than consumer sales, Breyfogle said. “On the commercial side, we (Tempe Dodge) had 12 deals last month (September) we couldn’t fund.”

Great deals

If you have a job, good credit and confidence, it’s a great time to buy.

“The prices for a lot of our new stuff, you’re talking five- and 10-year lows on almost everything,” Breyfogle said. “I have new (Dodge) Ram pickups selling for $1,000 less than I sold them in the mid-1990s.”

Chris Guerrero, principal at SanTan Ford in Gilbert, said the F150 pickups may have a dealer price of $32,000 to $34,000, but after incentives, the price drops to about $22,000 to $24,000, comparable to six or seven years ago.

“We are having one of our better truck months compared to the last four to five months,” he said. “Now that incentives are better than they ever have been, people are taking advantage.”

Libby Krum, spokeswoman for the American International Automobile Dealers Association, said Toyota’s offer of zero-percent financing appears to be drawing buyers.

“The truth is, most people can qualify for credit. It’s not quite so bad as people make out,” she said.

2.5% less money sent back home by migrants in U.S.

MEXICO CITY – Mexican migrants living in the U.S. took advantage of a weakening peso and sent home more money in September, but the central bank said Wednesday that remittances will still fall an estimated 2.5 percent this year.

Total remittances in 2008 are expected to be $23.5 billion, down from $24 billion last year, Bank of Mexico President Guillermo Ortiz said. It would be the first yearlong decline since record-keeping began 12 years ago.

Remittances reached $15.5 billion in the first eight months of 2008, down 4 percent from the same period a year before.

Ortiz said they rose 0.2 percent in September to $1.9 billion as the peso weakened from 10.2 to 11 to the dollar. But August saw a decline of 12 percent, the sharpest one-month drop ever.

Remittances are Mexico’s second-largest source of foreign income, after oil exports.

They began to drop early this year as the U.S. economy slowed and the U.S. government increased border security and deported immigrants in record numbers.

Also Wednesday, the central bank announced a “swap” accord with the U.S. Federal Reserve and the central banks of Korea, Brazil and Singapore. Under the deal, the countries will have access to $30 billion in credit until April 30. Ortiz said Mexico was not immediately planning on dipping into the funds.

The accord comes after weeks of precipitous falls by the peso, including to new record lows against the dollar, as investors flee to dollars to meet obligations abroad.

The peso was trading at 13.1 to the dollar Wednesday afternoon, a healthy jump from 13.4 on Monday and from a brief brush with 14 to the dollar on Oct. 23.

The central bank twice offered $400 million in dollar reserves at auction on Wednesday, but received no offers.

In a bid to boost the sagging peso, the bank has been offering $400 million in reserves at auction each day at the previous day’s closing price plus 2 percent, drawing bids only when the peso’s losses exceed the difference.

The central bank has sold about 15 percent of its foreign currency reserves to support the peso in recent weeks.

Mexico’s stock market also showed signs of recovery Wednesday, with the key IPC index closing up 2.8 percent at 19,157.

Dustin Reid, senior currency strategist at ABN Amro in Chicago, said the peso remains so volatile that “you could easily see 10 percent on either side of current levels.”

On Monday, the central bank announced a plan to shore up domestic financial markets by buying back as much as 150 billion pesos ($18 billion) in government debt related to a 1990s bank rescue and obtaining $5 billion in financing from international organizations.

Waste Management Inc., the nation's largest trash hauler, said Thursday its third-quarter profit rose nearly 12 percent, helped by higher revenue in its recycling business and fuel surcharges.

Waste Management’s third-quarter profit rose nearly 12 percent, aided by price increases and fuel surcharges, and the nation’s largest trash hauler expects that garbage removal won’t suffer like other businesses in a global slowdown.

The company raised fees for services such as drop-offs of garbage bins at construction sites. That helped offset the lower volume of trash hauled away because of reduced business activity. Waste Management Inc. also benefited from adding charges for fuel used in its garbage trucks.

“During an economic downturn when volumes are declining it becomes more important to maintain pricing discipline,” Chief Executive Officer David P. Steiner told analysts in a conference call following the earnings announcement Thursday.

Even with a 1 percent price increase, the Houston-based company can lose between 3 percent and 5 percent of volume and still increase profit, he said. Price increases include the difference between rising prices and reductions, charges such as container drop-off fees and other factors.

Quarterly volume dropped by 3.2 percent, partly due to the contracting economy and also because it has raised prices, but the decline was less steep than the 3.8 percent and 3.9 percent drops in the second and first quarters, respectively.

Analyst Brian J. Butler of FBR Capital Markets said Wednesday that waste haulers are lifting prices, betting that business volume will more than likely rebound as the economy improves.

“You can lower the price to keep (volume), but it’s a losing proposition,” he said. “You’re doing the same work for less money.”

Haulers imposed fuel surcharges earlier this year as gas prices skyrocketed and are now benefiting as gas prices pull back, he said.

Analyst David Feinberg of Goldman Sachs wrote in a note to investors that Waste Management’s slowdown in volume decline was “a positive.”

“Given the current economic environment, we are encouraged by WMI’s continued pricing power and stabilizing volume declines,” he said.

Steiner told analysts that with more than $3 billion in public sector business and a strong presence in residential trash hauling, “we expect to get through a recession much better than other industries.”

Quarterly net income totaled $310 million, or 63 cents per share, up from $278 million, or 54 cents per share, a year earlier. Revenue climbed 3.6 percent $3.52 billion.

Analysts surveyed by Thomson Reuters expected earnings per share of 62 cents on revenue of $3.52 billion.

Shares rose $1.84, or 6.2 percent, to end at $31.44.

Waste Management withdrew its $6.73 billion bid to acquire smaller rival Republic Services Inc. on Oct. 13, saying the move would not be prudent because of the current economic turmoil, including the tougher market for borrowing.

The decision ended a 3-month takeover struggle that began in July when Waste Management first offered to buy Republic Services, the nation’s No. 3 trash hauler, and continued when Waste Management sweetened its takeover bid in August.

The moves were seen as an effort to derail an earlier deal between Republic Services and Allied Waste Industries Inc., the second-largest player in the industry.

Shareholders of Republic and Allied Waste are scheduled to vote Nov. 14 on the deal in which Republic, based in Fort Lauderdale, Fla., is buying Phoenix-based Allied in an all-stock agreement that was valued at $6.07 billion when it was announced in June.

If the deal goes through and is approved by regulators, it will emerge as a new and much larger competitor to Waste Management.

Combined, Waste Management-Republic would have been a nearly $16.5 billion-a-year enterprise, dwarfing Allied, which reported 2007 revenue of about $6.1 billion.

Company officials said they expect to buy assets that may be divested from Republic and Allied as the two companies combine operations.

Verizon Wireless has been ordered to sell assets, including those in Arizona, before a planned merger with Alltel Corp.

WASHINGTON – The Justice Department wants Verizon Wireless to sell assets in 22 states before merging with Alltel Corp. in a $28 billion deal to create the largest wireless carrier in the United States.

Government lawyers joined seven states in a lawsuit filed Thursday to block the merger if Verizon fails to do so.

Otherwise, the Justice Department said, the deal would hurt competition, drive up consumer prices and likely produce a lower-quality network.

“The divestitures required are necessary to protect wireless customers and are among the most extensive required by the department in a wireless case,” Assistant Attorney General Thomas O. Barnett said in a statement.

To win regulators’ approval, Verizon must sell assets in 100 areas, including the states of North Dakota and South Dakota and large portions of Colorado, Georgia, Kansas, Montana, South Carolina, Utah and Wyoming.

Verizon also must sell assets in Alabama, Arizona, California, Idaho, Illinois, Iowa, Minnesota, Nebraska, Nevada, New Mexico, North Carolina, Ohio and Virginia.

Customer Maribel Valadez shops at the Fresh & Easy Neighborhood Market in the Eagle Rock section of Los Angeles. The 10,000-square-foot market is part of a growing trend of small-format stores that are popping up all over the country as grocers cope with rising costs and limited capital.

PORTLAND, Ore. – Grocery stores, like consumers’ food budgets, are shrinking.

This month Wal-Mart Stores Inc. opened four pilot Marketplace stores in Arizona that are half the size of a traditional supermarket.

Supervalu-owned Jewel-Osco is testing its own small-format store in Chicago known as Urban Fresh. Safeway trialed its version in Southern California. And Whole Foods has said it is scaling down the size of its new stores.

The format has worked for some companies, such as Trader Joe’s, for years. But the idea is spreading as grocers are coping with rising costs and limited capital and find themselves pressed to find more profitable formats. It’s part of increasing competition with existing small stores and British company Tesco PLC, which launched its first small Fresh & Easy store about a year ago and now has nearly 100 around the West.

“It’s safe to speculate that a lot of the growth in the grocery business in the years ahead is going to be focused on these small stores,” said Bill Bishop, a food retailing consultant at Willard Bishop Consulting.

While the companies testing out the smaller stores wouldn’t release details on their performance, for grocers the format mean lower overhead costs and fewer — but often higher-margin — products. For consumers, they mean quicker shopping trips to nearby stores with more tailored choices.

Gary London, 55, an economist, shops at the Fresh & Easy in San Diego’s Point Loma neighborhood three or four times a week, usually after calling his wife, Ceci, 36, on the way home from work to decide what’s for dinner.

Ceci London says the selection is limited — she can’t find certain cleaning supplies, for example — but the couple likes the small packages and low prices. They estimate the prices are 30 percent below Vons, where they previously shopped.

“They don’t have everything, but they have 80 percent of what you need on a daily basis,” Gary London said.

“These are like the old (U.S.) neighborhood markets of 40 years ago,” he said.

Experts say most grocery store trips are small ones, to pick up a few items.

Bishop estimates the small-format store can cut the average grocery trip from an average of 20 minutes to less than 10. And there’s the “shopability” factor: Not everyone wants to choose from a wall of ketchup.

The small-format stores seem to have mastered the mix of high-end items with low-priced steals.

Trader Joe’s for example, has long drawn people with its deals on fresh tuna or sea salts. Now Wal-Mart’s new stores, which seem to be the antithesis of its ubiquitous “supercenters,” are offering local produce within days of harvest and more than 200 of its wine selections sell for under $10. And many of the small stores focus on ready-to-eat prepared foods, which can be sold at a higher margin.

“We really took a lot of things the consumer is going for, although the consumer may be pausing for more value today, they are still time-starved and looking for solutions,” Jeff Noddle, chairman and CEO of Supervalu told investors during a conference call to discuss its most recent quarterly earnings results.

Lisa Foster, 42, a registered nurse, hasn’t shopped for groceries anywhere else since Fresh & Easy opened in her San Diego neighborhood in August. The selection is limited but that’s fine with Foster — she likes the coupons at checkout and the smaller sizes so she doesn’t waste food.

“I don’t really care if they don’t have 500 brands of mayonnaise or 500 brands of salad dressing,” she said after ringing herself up for a carton of ice cream and a $2 bottle of Chardonnay.

Fresh & Easy spokesman Brendan Wonnacott said it’s a market Tesco has looked at for about 20 years.

“The main thing was to listen to what consumers felt they needed: something that is easy to get to, simple and offers everything you need at low prices,” Wonnacott said.

Tesco keeps costs low with limited packaging, simple stores, tightly controlling what products it puts on its limited shelf space and using a small number of distribution centers to serve its stores, which run about 10,000 square feet.

The median supermarket size was 47,500 square feet last year, according to the Food Marketing Institute, although some run much larger.

Jewel-Osco, which puts most of its emphasis on prepared foods at its Lincoln Park site and caters to busy professionals, says the format is “just in response to some of the lifestyle needs of consumers.”

But all are centered around exploiting the idea that less is more, which is increasingly important as consumers scale back on spending and limit driving, as most are based in neighborhood settings.

“The bigger stores have probably gotten themselves to the point where they are full of a sufficient fraction of merchandise and they are not growing and not producing the full margin potential, they are not profitable,” Bishop said.

He said the number of areas where the big store is the ideal business model is shrinking, so companies must come up with a more viable business model.

“United Airlines took out 60 percent of their capacity,” Bishop said. “Why wouldn’t they (grocers) limit their capacity too?”

Associated Press Writer Elliot Spagat in San Diego contributed to this report.

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Grocers with smaller-sized stores

Many grocery chains facing rising costs and limited capital are testing smaller stores, which may be a more profitable format. Some of the grocers that have smaller-sized stores are:

• Wal-Mart Stores: Marketplace stores in Arizona

• Jewel-Osco: Urban Fresh store in Chicago

• Safeway: The Market in Long Beach, Calif.

• Tesco: Fresh & Easy stores in California, Arizona and Nevada

• Trader Joes: Stores in select markets across the country

• Whole Foods: Says it will scale down the size of its new stores

NEW YORK — A number of financial institutions, including Capital One Financial Corp. and SunTrust Banks Inc., have announced they will receive funds under the Treasury Department’s capital purchase program.

But what started as an effort by the federal government to spur lending has transfigured, some analysts contend, to a much more grandiose undertaking that will essentially weed out the weak banks from the strong.

As part of its $700 billion financial rescue package passed in September, the government announced plans earlier this month to pour $125 billion through stock purchases into nine large financial companies: JPMorgan Chase & Co., Bank of America Corp. (including Merrill Lynch & Co.), Citigroup Inc., Wells Fargo & Co., Morgan Stanley, Goldman Sachs Group Inc., Bank of New York Mellon Corp. and State Street Corp. Another $125 billion is now being made available to other banks.

Several of the banks that have received preliminary approval from the Treasury for investments have said they plan to use some of the money for acquisitions, including SunTrust and Regions Financial Corp., both of which expect to receive about $3.5 billion apiece. Even smaller institutions, like Seattle-based Washington Federal Inc., which announced a $200 million commitment from the government, plan to deploy some of the money to expand its retail franchise through acquisitions.

Many analysts believe the investments are being doled out to the strongest financial institutions, with the aim of spurring consolidation among banks and protecting the government from having to salvage some of the industry’s weakest players.

“It appears to us that these ‘gifted’ banks will receive the capital whether they need it or not, as they will likely do the cleanup on behalf of the Fed and the Treasury by acquiring weaker institutions,” wrote Morgan Keegan & Co. analyst Robert Patten in a research note late Friday.

In what was the first instance of a bank using its investment from the government to make an acquisition, Pittsburgh-based PNC Financial Services Group Inc. said Friday it plans to acquire National City Corp. for $5.58 billion. PNC said it had received $7.7 billion in cash through selling stock to the government under the program.

Fox-Pitt Kelton analyst Andrew Marquardt believes a distressed sale was National City’s only option after it became apparent that the Cleveland-based bank would not receive approval to participate in the government’s program.

“Our understanding is that a key reason for National City to sell in the same week that it reported third-quarter results was that National City management became aware that it was highly unlikely to be able to participate in the TARP capital purchase program,” Marquardt wrote in a note to clients.

Critics of the program contend that the government will in effect wind up handpicking which banks win and which lose.

Assistant Treasury Secretary David Nason said Monday that the administration’s major aim is to stabilize the financial system and that stronger institutions will be in a better position to make loans and support the overall economy.

The emphasis on acquisitions makes sense, said Jason O’Donnell, senior research analyst at Boenning & Scattergood, but there are also significant ramifications.

“While on the whole it’s positive in terms of its implications for improving capital, improving lending,” O’Donnell said, “it is likely to have the unintended consequence of separating the winners and losers, which is normally a process that the free market is engaged in.”

And while further consolidation could very well lead to improved lending, it may take longer to achieve, said John Jay, senior analyst at Aite Group, a Boston-based financial services research firm.

Meanwhile, the smaller institutions that don’t get any government support will wind up walking around with a big target on their back, he said. “If they’re not given any type of government help, that is a pretty explicit statement on where they stand,” Jay said.

Among the banks to receive approval for government funds are Capital One ($3.55 billion), Fifth Third Bancorp ($3.4 billion), BB&T Corp. ($3.1 billion), KeyCorp ($2.5 billion), Comerica Inc. ($2.25 billion), Northern Trust Corp. ($1.5 billion), Huntington Bancshares Inc. ($1.4 billion), First Horizon National Corp. ($866 million), City National Corp. ($395 million), Valley National Bancorp ($330 million), UCBH Holdings Inc. ($298 million) and First Niagara Financial Group Inc. ($186 million).

DES MOINES, Iowa º It’s decision time again for workers as many companies offer employees the annual opportunity to change insurance choices and make other benefit selections.

Open enrollment season can be stressful because it requires decisions to be made that can’t be changed for another year unless you have a major life change like a marriage, divorce or a child.

For many, it’s simply easier to leave things the way they are.

Benefits consultant Hewitt Associates says its research shows more than 60 percent of workers will simply default to the choice they made the previous year. That might be unwise. If you don’t choose, your employer may do it for you in a way that saves it the most money but might not be best for you.

Many companies are beginning the practice of moving employees who don’t make choices into default health care plans, which likely carry high deductibles, said Sara Taylor, head of open enrollment at Hewitt. In a few cases, companies have dropped coverage for workers who never look at their plan.

“The thinking is, this is an important and costly benefit and if you aren’t going to pay attention to it and at least look at it, you obviously don’t need it that much,” she said.

Workers should put as much thought into benefits choices as they would into buying a big-screen T.V., a car or any other big-ticket item.

“They need to do their research, comparison shop and then select the options that will not only enable them to maximize their benefits dollars, but also best meet their needs and the needs of their families,” she said.

Hewitt says employees’ total health care costs — including employee contribution and out-of-pocket costs — are projected to be $3,826 in 2009, up 8.9 percent from $3,513 in 2008. The increase is more than double the rate of inflation and expected salary increases, which average about 3.7 percent.

When you’re starting to evaluate your coverage, you may want to look at your life insurance coverage, whether to increase it and who you’ve listed as beneficiaries. Also take a look at dental, vision and disability insurance coverage.

If nothing else, you should at least look at your health care coverage and consider starting a health savings account or a flexible spending account. Such plans can save you money on your taxes and can help control rising health care costs, Taylor said.

The accounts are set up with money taken out of your pay before taxes, which means you’ll face a lower tax bill. The money in the account may be used for a range of health expenses such as outpatient consultations, diagnostic tests and co-payments. In some cases expenses not covered by the primary health care plan such as chiropractic care or dental care may be paid for out of the accounts.

What’s more, you should start saving for retirement in a 401(k) account if you don’t already and assess your contribution level if you do.

Here are seven tips to help you face the decisions that come with open enrollment:

1. Do your homework and seriously evaluate all benefit options and weigh them against your specific needs.

Carefully look over your benefits selections from last year and assess what worked and what didn’t. Did you put enough money in your flexible spending account, or did you tap that pool of cash well before the year’s end? Were the doctors you saw covered under your plan? How much did you spend in copays and other out-of-pocket costs? Most employers provide access to past medical and dental claims that can help you estimate what your future costs might look like.

2. Think about any life changes that may affect the benefits you select this year. Are any of your dependents no longer eligible for coverage? Asking yourself these questions will help you determine what adjustments you may need to make in your benefits selections.

3. Use the tools available to you. Many employers offer health care cost estimators that allow employees, to comparison shop for health insurance by evaluating two or more health care plans at a time. Users can compare monthly premiums, co-payments, deductibles and coinsurance payments. However, just 9 percent of employees used those tools in 2007, according to Hewitt.

4. Read the fine print. More employers are changing the rules of the annual enrollment process, and it’s up to you to make sure you fully understand if and how those rules may affect you.

5. Assess your family’s needs. More companies are requiring employees to pay a bigger portion of the cost of coverage for their dependents, either by increasing payroll contributions for dependent medical coverage or by charging higher contributions for spouses or partners. You should assess whether your spouse or partner can get coverage under an employer plan. It may be more cost-effective for each of you to take coverage under your own employer health plan if that option is available.

6. Consider participation in health and wellness programs like smoking cessation, weight management or physical fitness. It could improve your health and cut back on the amount you spend by potentially hundreds of dollars a year.

7. Take advantage of tax-free benefits like flexible spending accounts and dependent care spending accounts. Hewitt says only 23 percent of workers put money in a flexible spending account this year and just 3 percent contributed to a dependent care spending account. Such accounts could save hundreds of dollars a year.

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On the Net

Hewitt Associates: www.hewitt.com

Life and Health Insurance Foundation for Education:

www.lifehappens.org

Despite falling interest rates, a growing number of consumers are paying the same — or even more — to borrow on their credit cards.

The majority of credit cards on the market have variable, or floating, rates. Theoretically, that means that as the Federal Reserve lowers its federal funds rate — the latest cut took place this month — card holders should also see their borrowing costs fall.

In reality, though, banks often set a “floor” that credit card rates can’t fall below, and in many cases, that floor has already been reached, analysts say.

Wells Fargo, HSBC, Discover, SunTrust, PNC and National City have a floor on at least some of their credit cards. Wachovia, meanwhile, limits how far its penalty interest rate —applied to consumers who pay late twice in a row — and cash advance rate can drop. But the bank imposes no minimum interest rate on credit card purchases.

Others, including Bank of America, American Express and U.S. Bank, say they have no floors on credit card rates. Chase and Citigroup, meanwhile, declined to disclose whether they have this policy.

Imposing a floor on credit card rates allows the bank to “continue lending even in challenging environments,” says Todd Morgano, a spokesman for National City.

But such interest rate restrictions mean that borrowers with good credit may not see their rates fall below 10 percent while those with bad credit may not see rates lower than 20 percent, says Greg McBride, a senior analyst at Bankrate.com.

Even without such policies, banks are historically slow to pass along interest-rate reductions. Since August 2007, the Federal Reserve has cut rates by 3.75 percentage points, but the average credit card rate has fallen by only 1.4 percentage points, to 13.9 percent, according to Justin McHenry, research director at IndexCreditCards.com.

Issuers have also become more aggressive about tacking on fees and raising borrowers’ rates — as high as 32 percent — for the slightest misstep, such as going over the limit or paying late.

Joseph Ridout, a spokesman for Consumer Action, an advocacy group, believes the rate increases are banks’ attempt to “make up” for ballooning mortgage losses.

“Credit card issuers don’t have to follow the same rules as other lenders do,” Ridout says. “They can really change terms of your contract as they want.”

Borrowers with good credit who aren’t getting the benefits of interest-rate reductions should consider changing lenders even though their credit scores may temporarily drop, McBride says. “If you can find a card that cuts your interest rate and helps you (with) debt reduction, it’s worth it,” he notes.

NEW YORK – Toyota Motor Corp.’s Scion brand topped the list of most reliable cars in Consumer Reports’ annual vehicle reliability rankings released Thursday, as Asian automakers continued to crowd the top of the magazine’s rankings.

Meanwhile, Chrysler LLC vehicles saw their scores fall sharply from 2007, while Ford Motor Co.’s nameplates gained ground over their Detroit rivals.

“Scion has a portfolio of three fairly small, fairly well equipped vehicles,” said David Champion, director of Consumer Reports’ auto test center. “It’s a basic form of transport, but put together well.”

The study compiled responses from Consumer Reports readers for more than 1.4 million vehicles this spring, using the results to predict reliability of 2009 models. The results are closely watched by automakers because of their influence on car buyers.

In this year’s study, Honda Motor Co.’s Acura and Honda lines ranked right behind Scion, followed by the Toyota nameplate and Toyota’s luxury brand, Lexus. Asian names occupied all of the magazine’s top 10 slots, with a domestic automaker not appearing on the list until No. 11 with Ford Motor Co.’s Lincoln brand.

Toyota spokesman Xavier Dominicis said Toyota was pleased to see Scion — which just launched two 2008 models, the xB and the xD — top the list.

“Generally speaking, when a vehicle first launches, that’s when you’re more apt to have any issues that need to be worked out, and this is a vehicle that came right out of the gate and earned this praise right away,” Dominicis said.

Champion noted that Ford nameplates have pulled ahead of their Detroit rivals this year, with nearly all Ford products carrying average-or-better rankings, with the exception of some of its truck-based vehicles. In addition, the Ford Focus sedan has been vastly improved since its 2000 debut, Consumer Reports said, and the car was ranked No. 4 for most reliable family vehicles.

“Ford’s vehicles, especially their car-based vehicles, have all been exceptionally good in terms of reliability year after year,” Champion said.

Mark Fields, Ford’s president of the Americas, said the rankings are further affirmation of the changes the company has made to improve its vehicles, particularly in drive quality, electrical function and quietness.

“Being neck and neck with Toyota and Honda is satisfying for us,” Fields said. But he added that topping General Motors Corp. and Chrysler LLC isn’t enough. “We have our eye squarely on becoming the leader in the industry.”

Consumer Reports called GM cars a “mixed bag,” with bright spots being the redesigned above-average Chevrolet Malibu. The Buick Lucerne V-8 and Pontiac G6 are also came in above average, but a quarter of GM models came in below average.

Chrysler vehicles, on the other hand, clustered near the bottom of the rankings, with nearly two-thirds of its lineup below average. The Chrysler Sebring was Consumer Reports’ worst-rated car, coming in at 283 percent below average.

“I believe the introduction of some of their new models were not fully developed, and they hadn’t worked out all the bugs before they came up,” Champion said.

He said recent changes at Chrysler may have contributed to poor quality ratings. Germany’s Daimler AG sold an 80.1 percent stake in Chrysler to private equity firm Cerberus Capital Management LP last year. Now, Cerberus appears to be in talks to sell the automaker, possibly to GM.

Chrysler spokeswoman Beverly Thacker said the automaker was dissatisfied with its performance and will work “aggressively to improve every aspect of customer satisfaction.”

“We do have pockets of success that demonstrates we can meet our customers’ expectations,” Thacker said in a statement. “The Dodge Caliber and Jeep Patriot were rated above average.”

To calculate its reliability ratings, Consumer Reports averages the overall reliability scores from readers for the most recent three model years. If a model has fewer than three model years, than it uses data from as many years as are available.

Consumer Reports’ reliability issue is scheduled to hit newsstands Nov. 11. The magazine is published by the nonprofit Consumers Union, based in Yonkers, N.Y.