Automotive News - February 25, 2008 - (Page 4)

4 • FEBRUARY 25, 2008 Hydrogen slips as a solution for the greening of autos Harry Stoffer hstoffer@crain.com Far to go Progress in fuel cell vehicle development vs. U.S. Energy Department goals STATUS (2006) TARGET (2015) WASHINGTON — Five years ago, President Bush predicted that “the first car driven by a child born today could be powered by hydrogen, and pollution-free.” That probably won’t happen, unless the next president and Congress revive Bush’s call for a national commitment to move fuel cell vehicles “from laboratory to showroom.” The U.S. Energy Department had said it wants to make enough r&d progress by 2015 that fuel cell vehicles could be deemed commercially viable. But a new report from the Government Accountability Office, a congressional watchdog agency, says that deadline must be pushed back. Fuel cell cost* $107/kilowatt of output Fuel cell durability 2,000 hours Fuel storage capacity 0.8 kilowatt-hours/liter Fuel storage cost $15-$18/kilowatt Fuel production cost** $4.40 Driving range 200 miles * Assuming production of 500,000 units a year **From renewable liquids, in gallon-of-gasoline equivalents Source: Government Accountability Office $30/kilowatt 5,000 hours 2.7 kilowatt-hours/liter $2/kilowatt Less than $3 (by 2017) 300 miles The initial timetable likely won’t be met for several reasons. It may have been too ambitious. Bush’s priorities have changed — his latest budget would trim hydrogen funding. Political gamesmanship and pork-barrel politics have hamstrung the federal hydrogen program. Auto executives lament what they call “technology du jour” — a tendency to keep seeking new cures for the automobile’s ills. In the past 25 years, the list has been topped by methanol, all-electric power, hybrids, fuel cells, ethanol and now plug-in hybrids, they say. The constant changes in priorities are “extremely disruptive and wasteful,” says John German, manager of environmental and energy analysis at American Honda Motor Co. Don Hillebrand, director of the Center for Transportation Research at Argonne National Laboratory, in Illinois, notes that gasoline prices are much higher now than in 2003. So govern- ment has looked for quicker ways to displace petroleum use, he says. 2 steps forward But government hasn’t given up on hydrogen, says Hillebrand, a former DaimlerChrysler AG executive. Indeed, evidence suggests government and industry spending on hydrogen has produced results. The GAO report says governmentsupported r&d helped cut the cost of mass-producing fuel cells from an estimated $3,000 per kilowatt of output in the early 1990s to about $107 in 2006. The Energy Department’s goals are $45 per kilowatt by 2010 and $30 by 2015. see HYDROGEN, Page 29 Kia to spend big to upgrade dealerships Kathy Jackson kjackson@crain.com Kia has set aside money to help its dealers build or renovate stores. The effort is part of a plan to boost the brand’s shaky image as it prepares to introduce several vehicles and pursue an ambitious sales target. So far, 150 dealers have agreed to redo their stores under the program, says Jim Hoostal, director of retail development for Kia Motors America. Hoostal says he hopes to get at least 300 stores on board by 2011. “We pay a formula to offset construction costs,” Hoostal says. “The support is based on the size of the facility. Ground-up stores get more than a renovation.” Kia budgeted the money last summer but began rolling out the program in full force this year. The plan was implemented under former Kia Motors America boss Len Hunt, who left the company Feb. 8 along with marketing chief Ian Beavis. But the upgrade remains intact. Kia’s Jim Hoostal: “We are focused on improving dealer profitability and sales per store.” Benny Yount, a Kia dealer in Hickory, N.C., says he got $300,000 to renovate his store. “They give you $300,000 for a renovation and $500,000 to build from the ground up,” Yount says. “Three hundred thousand dollars goes a long way. It allows you to go in and renovate or build new without a whole lot of restrictions. It accomplishes a unified look and the right environment for the customer.” Kia is paying its dealers to give their stores an appearance similar to this one, Perris Valley Kia in Perris, Calif. Hoostal says Kia wants a consistent exterior appearance and a clean interior look, with a reception desk, comfortable seating area and possibly other amenities such as a coffee bar. The program is voluntary, but Kia also is putting in place mandatory standards this year for the service and parts department. The standards require service departments to be large enough to handle all customers in the area. “We are focused on improving dealer profitability and sales per store,” Hoostal says. “These new programs should help us do that.” Kia wants to boost its annual U.S. sales to 450,000 units, a sharp increase from the 305,473 it sold last year. With new entries this year such as the seven-seat Borrego SUV and the sporty five-seat Soul compact, Kia believes it is headed in the right direction. Hoostal says about 50 percent of Kia’s 650 dealers have stand-alone see KIA, Page 29 Image campaign Kia is rolling out an image upgrade program for its dealerships. Here’s how the program works. Dealers Get an estimated $300,000 to renovate their stores Get an estimated $500,000 to build stores Must follow an approved design template A clean look The program is called Image Building Design Forum. A retail design firm in Dayton, Ohio, created the design template for the stores. Ford’s Hispanic ad campaign takes it to the mat Mary Connelly mconnelly@crain.com The Ford brand is grappling with the popularity of Mexican pro wrestling to sell cars and trucks to Hispanic consumers in California. A new Spanish-language ad campaign promotes four Ford vehicles: the Focus and Fusion cars, Edge crossover and F-150 pickup. As part of the campaign, each of the vehicles is paired with a Mexican wrestler, or luchador, to convey the vehicle’s features. The broader campaign includes TV and radio commercials, online ads and events in about 170 communities across the state. Ford says the campaign is the brand’s most far-reaching Spanishlanguage marketing effort. Hispanic consumers bought about one of every five new vehicles the Ford brand sold in California last year, the company says. In the first 10 months of 2007, the Ford brand retailed about 98,000 new vehicles in California, trail- ing Toyota and Honda divisions. Over the same period, Ford Motor Co. held an 8.4 percent share of California’s retail market, according to R.L. Polk & Co. Jim Farley, Ford Motor’s new marketing chief, is working with dealers to boost California sales. Ford brand’s Hispanic ad campaign, scheduled to run through the 2008 model year, is a key element of that push. “The Hispanic population in California is growing, and the forecast for the next several decades is for extremely rapid growth,” said Hal Dewsnap, Los Angeles regional manager for Ford Lincoln Mercury. “This is far and away the most coordinated campaign we have done.” Ford’s previous Spanish-language ad campaigns in California, dating back at least a decade, were “fragmented,” Dewsnap told Automotive News. If the campaign succeeds, Dewsnap said, Ford could extend it to other U.S. markets. Ford also is considering running the commercials on Englishlanguage TV and radio stations in California, he said. Ford brand’s Hispanic ad agency, Zubi Advertising Services Inc., of suburban Miami, created the California campaign. Ford declined to disclose the cost of the campaign. Ford shot the wrestling spots at an arena in Mexico City. Although the wrestlers are real, the campaign invented personalities for them that reflect the vehicles they promote. For example, the F-150 commercial features “Senor Piedra,” or Mr. Rock. Like the full-sized pickup, he displays strength and toughness. Dewsnap said wrestling “is a big part” of Hispanic popular culture. The TV commercials tested well among Hispanic consumers of both sexes and various age groups, he said. Ford began airing the California commercials last month. Dewsnap said an Internet tie-in will launch this spring.c Wrestler “Senor Piedra,” or Mr. Rock, advertises the Ford F-150.

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Automotive News - February 25, 2008 Chamco's 'consultant' is forced into limelight Group 1, Gulf States clash Dealer profit stuck in neutral Ghosn: Autos are in recession NHTSA investigates Toyota, Pontiac cars' windows The upside of upside down: Better belts Push buttons will alter interiors Schwarzenbauer leaves Porsche for Audi CSM: Cuts in auto output to ease in 2nd quarter Ford's Hispanic ad campaign takes it to the mat Hydrogen slips as a solution for the greening of autos Kia to spend big to upgrade dealerships GMAC: Office cuts won't affect dealers LaSorda: Chrysler's $700 million axle plant is 'going up' Toyota hybrid battery partner boosts output Buick may add a car below the LaCrosse Toyota could add 2 more small vehicles to U.S. lineup Calif. regulators shoot for 40-plus mpg by 2020 Loyalty/conquest: Power's best, worst Chrysler firm on retrieving tools from Plastech Former NUMMI exec applies Toyota ideas to aircraft industry Kozyra's resume reflects volatile supplier climate Obituaries Chrysler, Plastech now have chance to work together Do it the NADA way Hail, Geneva; spring must be near Volt's potential is unlimited The Volt is terrific; give GM a hand Beware of high tech running amok Teach reporters half full/half empty Dealer wants to view Conti exec: Inside, it's about the info Dealers Caddy chief's goals: Build on CTS, prestige, high-tech Geneva looks like another green scene Volvo XC60 system senses impact, hits the brakes Saab 9-1 concept awaits green light GM: Supply of vehicles to certify will stay steady Used-vehicle supplies up, prices down in Jan. Black Book plans daily updates Cars.com rolls out video service Manheim launches search tool Luxury sales channel is high on GM agenda GM seeks dealers' help with 5-point green plan Northwood offers dealer MBA Court rejects Chicago dealer's appeal Taxes distort Jan. sales in Europe Nissan to cut designers NHTSA studies window woes Bank: Autos easier to afford VW labor boss gets jail term Delphi sells 2 units Toyota Tundra had tough Jan. Chrysler's white knight: We're investors, not heroes Ford's 'Knight Rider' is Sync on steroids GMAC parties have lost a bit of their pizazz Global warming? It's a crock - but . . . Nardelli's NASCAR debut is a winner A frosty reception for the TSX

Automotive News - February 25, 2008

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