Automotive News - March 9, 2009 - (Page 1) autonews.com ® FEBRUARY 9, 2009 Entire contents © 2009 Crain Communications Inc. All rights reserved. $159/YEAR; $5/COPY Retail sales: Dismal but steady Nervous execs find comfort in stabilized rate Amy Wilson awilson@crain.com DETROIT — In a sign of how far industry expectations have dropped, an annual retail sales pace of around 8.5 million vehicles has become a comfort of sorts for desperate auto executives. In January, automakers sold only 656,881 light vehicles in the United States, for an annualized rate of 9.8 million vehicles. That’s the lowest annualized rate since August 1982 — an abysmal result caused in large part by collapsing fleet sales. The silver lining? Retail sales have held steady for about four months. Ford Motor Co. executives noted that January marks four straight months of a retail sales rate near the 8.5 million-unit annual rate. That could mean the retail market January sales story, tables ➤ 20-21 finally has hit bottom. But it’s way down from 2007, when U.S. retail sales — excluding fleets — ranged up to 13.5 million units. “We’re heartened to see it stabilize — although stabilizing at an awful level,” said Ken Czubay, Ford vice president of U.S. sales and marketing. uary’s stable retail sales were encouraging but said the economy still needs a boost. Easier consumer credit is the industry’s top need, said Mike DiGiovanni, GM’s executive director of global market and industry analysis. “People are coming in wanting to buy vehicles, and they are being turned down,” DiGiovanni said. “We have to break and thaw the credit markets for consumers who want to see SALES, Page 26 TIM RUE Recovery? General Motors executives said Jan- Dealer’s suit: Nissan torpedoed my store Ray Dixon’s Nissan store in California now sits empty behind a padlocked, rusting gate. His lawsuit alleges Nissan broke promises and killed a potential sale. | PAGE 4 | CREDIT CRISIS GM dealers’ near-death experience ➤8 19 Jaguar dealers lose floorplan ➤ Tight credit squeezes dealerships’ inventories Donna Harris dharris@crain.com As credit stays tight, lenders are canceling some auto dealers’ credit lines to buy new vehicles, raising interest rates on inventory loans and demanding that dealers put more equity into their businesses. Other floorplan lenders are not taking new clients at a time when many dealers are seeking new finance sources, an Automotive News review suggests. Banks and automakers’ captive finance companies say tighter credit standards are necessary responses to the auto industry’s painful recession. But some dealers say the loss of their floorplans — or costly new restrictions on them — could force them to close. “Dealers are under a lot of pressure,” said Michael Charapp, a lawyer in suburban Washington who represents dealers. “I’ve never seen them so scared.” Jobs drain Total North American employment for Chrysler, Ford and GM has tumbled since 2005. 400,000 Recession delays Ford van plan The economic skid has pulled down one of the four pillars of Alan Mulally’s global platform plan. Ford’s next-generation Transit commercial van, scheduled for 2011, has been delayed. | PAGE 8 | DETROIT 3 WORK FORCE 350,000 300,000 250,000 0 '04 '05 '06 '07 '08 Sources: Chrysler, Ford, General Motors Hourly employment in Detroit 3 plants plummeted last year. More losses loom in 2009. In Chicago, familiar themes get new twist This year’s Chicago Auto Show is more re-do than debut. Variants of familiar models dominate. | PAGE 14 | Squeeze play Among recent cutbacks in floorplan lending: Sovereign Bank, of Boston, has told its 200 dealership clients in eight Northeast states that it is phasing out its floorplan lending. Sovereign spokesman Carl Brown Jr. said the bank wants to focus on other business lines and is concerned about “ongoing economic uncertainties, particularly in the automotive industry.” see FLOORPLAN, Page 27 A decade of anguish for Detroit 3: 250,000 jobs vanish since 2000 April Wortham awortham@crain.com It’s official: North American employment at the Detroit 3 has been cut in half in this dismal decade. That’s more than 250,000 jobs in eight years — vanished. And it doesn’t count jobs that have disappeared at suppliers or dealers. Most of the losses have come since the middle of the decade. Since 2005, General Motors, Ford Motor Co. and Chrysler LLC have shed about 142,000 jobs. Last year the Detroit 3 cut 53,551 jobs in North America or almost 18 percent of their combined work force in the region. And the trend isn’t abating. “When we talk about job protection, we’re not talking about saving all the jobs that exist at the moment,” says James Rubenstein, a consultant at the Federal Reserve Bank of Chicago. “It’s about mak- ing sure at least some jobs are left. Any number is better than zero.” Hourly buyouts Most of the Detroit 3 jobs lost in 2008 were U.S. hourly positions eliminated through buyouts similar to those offered last week by Chrysler and GM. What impact the latest round of buyouts — and those likely to come — will have on 2009 employment is difficult to say. For example, GM currently has about 22,000 hourly employees who are eligible to retire, says see JOBS, Page 27 On the Web This week at autonews.com: Monday: Will Nissan be the latest Japanese automaker to forecast a fiscal-year loss? Third-quarter earnings will be reported. Wednesday: Ford resurrects a performance version of the Taurus. News and photos from the Chicago Auto Show. NEWSPAPER http://www.autonews.com http://www.autonews.com
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