Automotive News - March 9, 2009 - (Page 27) FEBRUARY 9, 2009 • 27 S&P, Moody’s cut Toyota ratings TOKYO — Standard & Poor’s and Moody’s Investors Service cut their ratings on Toyota Motor Corp. on Friday, Feb. 6, after Toyota said it expects a $4.95 billion operating loss for the fiscal year ending March 31. (See story, Page 25.) It will be Toyota’s first annual operating loss in seven decades. S&P cut long-term credit ratings for Toyota and its affiliates from AAA to AA+. Moody’s cut its top-notch Aaa senior unsecured long-term ratings on Toyota by one level, to Aa1, Reuters reported. from Ford Motor Co., a Geely spokesman said last week. Earlier media reports, citing sources, had said Ford was in preliminary talks to sell its Volvo car unit to Geely. A spokeswoman for Ford in China declined to comment. JOBS Dismal decade cuts Detroit 3 jobs by half continued from Page 1 Production will come back, but the jobs won’t. It’s never going to be what it once was. “ Sales will come back in America. GM to retool European sales ZURICH, Switzerland — General Motors is restructuring sales, marketing and after-sales operations in Europe to give the Opel, Chevrolet Europe and Saab brands more autonomy. The change will make each brand more responsive to market conditions, Brent Dewar, GM Europe’s head of sales and marketing, told Automotive News Europe. Alain Visser will be vice president of Opel with responsibility for promoting the brand. Wayne Brannon will become vice president responsible for Chevrolet sales in Europe. Jan-Ake Jonsson, now managing director of Saab, will add responsibility for Saab’s marketing and sales in Europe. GM’s sales in Europe, including Russia and Turkey, fell 6.5 percent to 2.04 million units in 2008 compared with 2007. GM, FAW discuss project SHANGHAI — General Motors is holding discussions with Chinese automaker FAW Group to form a partnership for light commercial vehicles, a GM China spokesman said last week. He gave no details. GM now makes light commercial vehicles in China in a venture with SAIC Motor and Liuzhou Wuling Automobile. GM also has a car joint venture in Shanghai with SAIC, China’s largest automaker. FAW, one China’s three biggest automakers, operates carmaking ventures with Volkswagen AG and Toyota Motor Corp. Tenneco reports loss, cuts jobs DETROIT — Supplier Tenneco Inc. reported a big quarterly loss last week and said it will close three plants and slash 1,100 jobs. Tenneco also said it will cut the pay of its top 50 executives by an average of more than 60 percent. The Lake Forest, Ill., company had a net loss of $298 million in the fourth quarter, compared with a loss of $72 million a year earlier. Geely: No plans to buy Volvo SHANGHAI — Chinese car manufacturer Geely Automobile Holdings has no plans to buy Volvo spokesman Tony Sapienza. But they may be reluctant to retire voluntarily in the midst of the weakest economy in decades. To some extent, the losses work to the advantage of the Detroit 3, says Kim Hill, associate director of the economics and business group at the Center for Automotive Research in Ann Arbor, Mich. The companies have been trying to shrink to match current market shares. The problem, Hill says, is that it’s difficult to figure out what that share will be when the market stabilizes. “You can’t have month after month of double-digit sales drops and not be laying people off,” Hill says. “The question is: Is it temporary, or is it long-term?” In a study last February, the Center for Automotive Research predicted that in 2011, U.S. hourly employment for the Detroit 3 will be 145,160. That encompasses 33,420 at Chrysler, 43,540 at Ford and 68,200 at GM. “But now all bets are off,” Hill says. “These were all predicated on a sales market that we’re not sure we’re going to get back to.” Rubenstein says that even if the U.S. market were to return to 16 million vehicles, auto industry employment, and employment at the Detroit 3, never will return to the peak JAMES RUBENSTEIN Federal Reserve Bank of Chicago ” levels seen at the beginning of the decade. Fewer workers needed Productivity gains and the growth of foreign brand manufacturing in the United States mean fewer Detroit 3 employees will be needed in the future, he says. That’s why any talk of job protection among the Detroit 3 is not about saving all the jobs that exist at the moment, but trying to minimize the impact and save suppliers. The good news, Rubenstein says, is most vehicles sold in the United States will be assembled here. What’s up for grabs is who will build those 10 to 15 million vehicles. “Sales will come back in America. Production will come back, but the jobs won’t,” Rubenstein says. “It’s never going to be what it once was.” While the Detroit 3 cut back, some foreign brand automakers continue to add jobs in North America. Kia Motors Corp. is hiring about 2,500 workers for its assembly plant in West Point, Ga., where production is scheduled to begin in November. But the Detroit 3 are not alone in cutting jobs. Nissan, Mercedes and Mitsubishi plants in the United States also offered buyouts to workers last year. In 2008, the biggest job cuts came at Chrysler, which slashed its hourly work force by 27.5 percent and its salaried work force by 33.5 percent. Chrysler’s total North American employment dropped 31.1 percent to 52,581 in 2008 from 76,332 in 2007. Ford reduced its hourly work force by 18.4 percent and its salaried work force by 7.8 percent. Its total work force dropped 15.5 percent to 75,200. GM cut the least. The automaker does not break down its North American employment by hourly and salaried positions. But it reduced U.S. hourly head count by 20.5 percent and its U.S. salaried head count by 7.8 percent. It estimates its total North American labor force fell 11.5 percent to 123,000. c stock watch Manufacturers BMW-ADR Daimler AG Fiat S.p.A.-ADR Ford General Motors Honda-ADR Hyundai-ADR Nissan-ADR PSA-ADR Renault-ADR Suzuki-ADR Toyota-ADR Volkswagen-ADR Closing price Feb. 6 Closing price Jan. 30 Weekly percent change 52-week high 52-week low FLOORPLAN Cost of inventory continues to soar continued from Page 1 Floorplan fixes Lenders are placing new restrictions on the loans they make to dealers for inventory financing. Some banks and captive finance companies are Canceling floorplan credit lines Auditing floorplan accounts more frequently Raising interest rates on inventory loans Accelerating repayment schedules for aged inventory declined to say how many Mazda dealers it is floorplanning. Steve Oliver, a Mazda dealer in Kansas City, Mo., has not found a new floorplan lender. As a result, he said, Ford Credit is giving him until Feb. 26 to liquidate his vehicle inventory. “The only choice I have is to surrender my franchise,” Oliver said. Under Mazda’s franchise agreement, the company would have to buy back his new vehicles and parts, he said. $28.10 31.96 25.50 1.94 2.84 25.23 6.68 6.21 18.80 18.50 15.45 69.38 68.95 Closing price Feb. 6 $23.66 27.99 25.50 1.87 3.01 22.66 6.68 5.98 16.99 25.90 14.70 63.51 64.47 Closing price Jan. 30 18.8% 14.2 – 3.7 –5.7 11.3 – 3.9 10.7 –28.6 5.1 9.2 7.0 Weekly percent change $58.95 87.61 34.85 8.79 27.84 36.40 17.25 18.92 80.90 108.75 27.05 117.59 232.30 $21.05 24.00 14.15 1.01 1.70 17.35 6.68 5.83 14.76 18.50 11.85 55.41 43.00 Retail Groups Asbury Automotive Group AutoNation Group 1 Automotive CarMax Lithia Motors Penske Auto Group Sonic Automotive 52-week high 52-week low $4.41 11.38 10.78 9.28 3.34 8.47 2.01 $3.58 9.28 9.97 8.27 3.06 7.42 2.03 23.2% 22.6 8.1 12.2 9.2 14.2 –1.0 $18.00 19.59 30.24 21.99 14.88 23.58 21.71 $1.75 3.97 4.34 5.76 1.53 5.04 1.37 Suppliers Biggest weekly swings from among the Automotive News top 150 suppliers to North America whose stocks are traded in the United States Closing price Feb. 6 Closing price Jan. 30 Weekly percent change 52-week high 52-week low Winners BorgWarner Inc. Hayes Lemmerz Int. Stoneridge Inc. Cummins Engine Co. Cooper Tire & Rubber Teleflex Losers ArvinMeritor Tenneco Inc. American Axle TRW Automotive $21.05 0.11 2.33 28.25 5.50 54.00 $1.31 1.71 1.04 3.00 $16.88 0.09 1.96 23.98 4.67 53.18 $1.75 1.84 1.09 3.09 24.7% 22.2 18.9 17.8 17.8 1.5 –25.1% –7.1 –4.6 –2.9 $55.99 4.05 19.36 75.98 20.80 68.23 $18.11 30.41 25.00 29.56 $15.00 0.07 1.41 17.70 3.67 40.00 $1.11 1.31 0.95 2.06 Information obtained as of 4:30 p.m. on Friday, Feb. 6, 2009. Because of a lag in the reporting of trades the closing prices disclosed above may differ slightly from the eventual closing prices. ADR = American Depository Receipt Compiled by PricewaterhouseCoopers, Intraweek data provided by Comstock. Powered by Stockgroup Capital One Auto Finance, of suburban Dallas, withdrew from the floorplan business in New York and New Jersey at the end of 2008, affecting 18 to 20 dealerships. The lender continues to finance inventories for dealerships in Texas and Louisiana, spokesman Steven Thorpe said. World Omni Financial Corp., of Deerfield Beach, Fla., which operates the finance arm of Southeast Toyota Distributors, raised floorplan rates last month for 104 dealers. Earl Stewart, a Toyota dealer in North Palm Beach, Fla., said his floorplan interest rate has increased from 2.2 percent to 4.7 percent. Stewart said the higher interest rate would cost his dealership an additional $25,000 a month. He said he plans to switch his floorplan account to a bank. World Omni President Frank Armstrong said the company had to raise rates to keep up with “skyrocketing” costs without dropping floorplan accounts. “If you can find a lender to provide floorplan cheaper, that’s up to you,” Armstrong said. “We’ll be there for the dealers who don’t have alternatives.” Ford Motor Credit Co. canceled floorplan loans for 92 stand-alone Mazda dealerships in January. The Ford captive said it wants to focus on the core brands it serves. Chase Auto Finance is writing retail vehicle loans and leases for Mazda dealers but says it is providing inventory loans “case by case.” The bank current recession
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