Automotive News - January 14, 2008 - (Page 1) autonews.com ® JANUARY 14, 2008 Entire contents © 2008 Crain Communications Inc. All rights reserved. $155/YEAR; $5/COPY Dealers are thinking recession Stores pinch pennies, scramble to adopt survival strategies Jamie LaReau jlareau@crain.com Battening down To prepare for a downturn, dealers are Ordering fewer new vehicles Stocking more used cars Acquiring fewer dealerships Trimming inventories about predicting the future. This month, stock prices of the six big publicly traded dealership groups In dealers’ minds, the recession is already here. Around the country, auto dealers are hunkering down for a rocky 2008. And that mind-set is getting support from the stock market, which is all all hit 52-week lows. And analyst Robert Barry of Goldman Sachs has lowered his industry sales forecast for the year to 15 million units. That would be a sharp decline from 2007, when U.S. sales dropped 2.5 percent to 16.2 million units. And it would be the worst year since 1995, when sales totaled 14.8 million. The Detroit 3 have slashed firstquarter production plans, and nervous dealers are preparing for the worst. Dealerships are: Resisting factory pressure to order more new cars and trucks. Stocking more used cars, which carry bigger profit margins than new vehicles. Making lower offers to customers on trade-ins. Adopting cost-cutting ideas — even minor ones such as turning store lights off at night or hiring one receptionist to handle several showrooms. see RECESSION, Page 39 The $2,500 car: How Tata did it To help Tata Motors produce a $2,500 car, suppliers made everything smaller and lighter. Could such “Gandhian engineering” be a model for designing low-cost cars in the United States? | PAGE 3 | VW said to set sights on site in South April Wortham awortham@crain.com Styling in Detroit It’s not all big trucks and fuel-sippers at the Detroit auto show. Debuts this weekend included these stylish rides: top right, the convertible version of the V-10-powered Lexus LF-A roadster; lower right, the Lincoln MKT crossover; and, below, the Dodge Zeo electric car. Coverage begins on Page 20. Live coverage is at www.autonews.com. Lincoln MKT Lexus LF-A As Isuzu shrinks, new dealers sign up Isuzu sales are shrinking, with no new product on the way. But the company is beating the bushes for new dealers — and is finding some takers. Who’s signing up, and why? | PAGE 4 | Volkswagen AG is closing in on the South as the location of a second North American factory, according to sources familiar with the project. The Carolinas and Georgia are leading candidates to produce vehicles for the United States and Europe. “The executive committee and supervisory board haven’t yet made the final decision,” a VW insider told Automobilwoche, the German sister publication to Automotive News. Because VW wants a big plant open by 2011, the automaker is believed to be considering only sites of 1,000 acres or more that are available immediately for heavy industrial development. North Carolina has two such sites. One is a 1,688-acre parcel less than a mile from I-95 near the city of Rocky Mount, east of Raleigh. Two months ago, says retired farmer Dale Bone, who owns more than 1,000 acres of the site, someone approached his real estate agent about the land. “All I know is I’m selling it to a bunch of Germans,” Bone said, adding that he had not met the buyers. The deal is scheduled to close Jan. 28, he said. The Rocky Mount site is four hours south of VW’s future North American headquarters in Herndon, Va. It would give VW easy interstate access to German auto suppliers servicing BMW’s Spartanburg, S.C., factory, five hours away, and the MercedesBenz factory in Vance, Ala. A U.S. source told Automotive News that VW also is eying land in Anderson, S.C., 45 minutes west of BMW’s plant. c David Barkholz contributed to this report Ford, L-M dealers earned more in ’07 Ford’s Jim Farley says fewer Ford and Lincoln-Mercury dealers lost money last year, and dealership profits were up after several years of decline. | PAGE 6 | On the Web Dodge ZEO This week at www.autonews.com: Monday: U.S. Big-buck trucks defy sales trend Pickups sag, but top-end models get pricier, stay popular Amy Wilson awilson@crain.com dealers can take part in Automotive News’ annual dealer attitude survey at autonews.com/08dealersurvey. Monday: Live coverage of F-150: Big changes for ’09 ➤ 28 scheduled to be unveiled Sunday and will go on sale in fall, is the most luxurious F-150 ever, company executives boast. It targets wealthy urban buyers, many of whom don’t haul heavy loads but want to make that style statement — even if it costs $50,000. The move upward illustrates an oddity of the pickup market. Even as sales of full-sized pickups — especially the F series — are falling, sales of high-end Ford models are rising. “Personally, I think that we could go higher,” said Patrick DETROIT — Ford Motor Co. executives, who are rolling out the Platinum series F-150 at the Detroit auto show, say they don’t know where the ceiling is for luxury pickups. The F-150 Platinum, which was NEWSPAPER The $50,000 F-150 Platinum will be the most luxurious F-150 ever. Schiavone, Ford’s design director of North American trucks. “Honestly, I see TRUCKS, Page 39 Detroit auto show press conferences, including Lincoln, GM, Toyota, Chrysler and Mazda. Tuesday: The Society of Automotive Analysts meets in Detroit to discuss the year ahead; Johnson Controls and Denso hold press conferences at the Detroit auto show. Wednesday: Inforum, a business group for women, holds breakfast to discuss green car technology. All week: Get live updates of Detroit auto show news at www.autonews.com/detroit. http://www.autonews.com http://www.autonews.com http://www.autonews.com http://www.autonews.com/08dealersurvey http://www.autonews.com/detroit
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