Automotive News - February 25, 2008 - (Page 8)

8 • FEBRUARY 25, 2008 advertising YOU’LL SEE MORE TRAFFIC IN DAYS WITH US THAN IN MONTHS WITH ANYONE ELSE. Chrysler firm on retrieving tools from Plastech Robert Sherefkin rsherefkin@crain.com OUR DEALERS ARE GROWING AND SO CAN YOU! DETROIT — Chrysler LLC isn’t backing down. The carmaker told two dozen backup suppliers to hang tough because it intends to recover equipment and move its business from Plastech Engineered Products Inc. despite an adverse court ruling, sources told Automotive News. The comments are an indication of Chrysler’s future plans in the wake of a U.S. Bankruptcy Court judge’s denial on Tuesday, Feb. 19, of Chrysler’s request to retrieve equipment immediately from Plastech. Judge Phillip Shefferly said such a move could harm Plastech’s efforts to reorganize under Chapter 11 (see editorial, Page 12). Late last week, Chrysler senior procurement manager Scott Roland convened about 40 supplier executives and Chrysler purchasing executives at the automaker’s suburban Detroit technical center. Two people at the meeting said Roland told them to hold on because Chrysler wasn’t done trying to get its tools back. Roland told supplier executives to continue planning for the transfer of equipment from Plastech and to be ready to move as soon as Chrysler gets access to its tools. Attendees said Roland did not tip his hand on Chrysler’s legal strategy. He said only that the tool recovery could take days, weeks or months — but it would happen. Chrysler spokesman Kevin Frazier declined to comment. The suppliers at the meeting are makers of plastic components that last month received a letter of intent stating they would get the Chrysler trim business now held by Plastech. Plastech, of suburban Detroit, supplies Chrysler with about 500 plastic parts. Chrysler accounts for about $200 million of Plastech’s $1.07 billion in annual revenue. c Loyalty/conquest: Power’s best, worst Kara DePaula DePaula Chevrolet Index shows domestic brands are struggling Mark Rechtin mrechtin@crain.com “With Zimmerman as a partner we have grown to be the #1 GM Dealer in Albany, NY.“ OVER 2000 DEALERS PROVE OUR ADVERTISING GETS RESULTS! ZIMMERMAN YOUR COMPLETE MARKETING PROGRAM! ACTIVATES & INTEGRATES Guerrilla TV Marketing Radio Hispanic Print Direct Mail Website Optimization Web Design Internet In-Store SAN FRANCISCO — Toyota, Lexus, Hyundai, Honda and Hummer are the industry’s strongest brands, according to a new set of ratings compiled by J.D. Power and Associates. The index, which measures 2007 loyalty and sales conquest data, suggests that Ford, Pontiac and Buick are in decline. Loyalty and conquest rates have long been benchmark measurements. Power’s New Customer Ratio blends the two categories, comparing the number of customers leaving a brand with the number of new ones coming in. “Loyalty is important,” Steve Witten, Power’s executive director of automotive research, said at the National Automobile Dealers Association convention here this month. “But without looking at the importance of conquest, it belies the true strength of the brand. When belowaverage loyalty makes up more than half your sales, that’s a brand in trouble.” Power says a measurement below 100 in its index indicates that a brand is losing existing customers faster that it can conquest new ones. Only consumers who bought or leased their trade-in vehicle as new are counted in the index. For instance, the Ford brand has a new-customer ratio of 44 percent. Hummer is keeping customers and luring new ones. A 2009 H3T is shown. Dodge, Chrysler and Jeep have low loyalty numbers and steal sales from each other, Power found. A 2008 Dodge Avenger is shown. while leaching sales to non-Chrysler brands. Something similar is happening at Mercury, Pontiac and Buick. A good rating can sometimes be deceiving. For example, Saturn has a 96 percent new-customer ratio, with a 54 percent loyalty rate that represents 47 percent of sales — all healthy numbers. But Power says Saturn owners defect primarily to Toyota, Honda and Nissan, while Saturn’s top three conquest brands are Chevrolet, Pontiac and Ford. Only 13 percent of conquests come from foreign brands. For a brand pegged as an importfighter, Saturn is not living up to its mission, Witten said. Mazda must conquest Then there’s Mazda, with a newcustomer ratio of 100 percent. But only 31 percent of Mazda’s existing customers buy another one, meaning the brand relies too much on conquest sales. A similar equation applies to Nissan, Power says. Luxury brands Acura, Cadillac, Saab and Volvo have trends seen as troublesome. Power says many of their conquests and defectors come and go from mass-market brands such as Toyota, Honda, Ford and Chevrolet. Meanwhile, Hummer is doing an effective job of reaching new prospects. It has a stunning 427 percent newcustomer ratio. And despite a limited product line, Hummer is retaining a strong 44 percent loyalty. Those loyal customers represent just 16 percent of sales. That shows strong conquesting and good future prospects for the brand.c That means it is losing twice as many existing Ford owners as it has new conquests coming in. Witten said about 53 percent of Ford owners buy another one, considered a healthy loyalty ratio. But that group represents 72 percent of the brand’s retail sales. “Ford is unable to conquest new customers,” Witten said. Toyota on top Toyota has a new-customer ratio of 267 percent, which means it is bringing in nearly three times as many new customers as it has old ones staying put. Toyota’s 65 percent loyalty rating is the industry’s best, yet represents just 41 percent of total sales. Its conquest sales are huge. Honda shows similar strong numbers. The Power data also track the brands defectors go to and the ones conquests come from. Sometimes that information is the most revealing. Chrysler, Jeep and Dodge show weak loyalty numbers. And they mostly conquest sales from each other, Calif. regulators shoot for 40-plus mpg by 2020 Harry Stoffer hstoffer@crain.com 1-888-878-ZADV zauto@zadv.com or visit www.zadv.com CALL OR E-MAIL THE AGENCY THAT WILL WORK FOR YOU 24/7 (SERIOUSLY) WASHINGTON — Auto industry leaders say they will have trouble persuading Americans to buy new vehicles that must average at least 35 mpg by 2020 — the standard set by a new federal law. But the industry faces the growing prospect of having to sell vehicles that average more than 40 mpg in much of the country by 2020. California regulators are preparing to expand the groundbreaking greenhouse gas emissions rules they adopted for the 2009-16 model years. Cars and trucks sold in the nation’s most populous state would have to average almost 44 mpg by 2020, according to a new analysis by the California Air Resources Board. At least 15 other states plan to adopt the California rules. Those states and California have about half the U.S. new-vehicle market. So the imposition of California-style rules effectively would dictate the kinds of cars and trucks sold everywhere, some experts say. The major presidential candidates — Republican John McCain and Democrats Hillary Clinton and Barack Obama — say they would allow states to enforce their own greenhouse gas rules, despite industry opposition. California’s vision For the first time, California regulators have projected a detailed fuel economy comparison of the state’s greenhouse gas emissions rules for new vehicles with the federal CAFE program 2016 2020 CAFE, applied to U.S. fleet Calif. standard, applied to U.S. fleet CAFE, applied to Calif. fleet Calif. standard, applied to Calif. fleet Source: California Air Resources Board 29.6 mpg 33.1 mpg 30.5 mpg 36.6 mpg 35.0 mpg 40.4 mpg 35.7 mpg 43.9 mpg Tougher standard These developments “probably would create a de facto national standard,” says Peter Welch, president of the California Motor Car Dealers Association. The mix of vehicles sold nationally is different from California’s — more trucks and fewer cars. As a result, the California air board says, applying the state’s rules across the country would require cars and trucks to average 40.4 mpg. Cars and the smallest light trucks would need to achieve 50.8 mpg. Other light trucks would have to average 33.5 mpg, the board staff estimates. That would amount to a 62 percent see CAFE, Page 29 http://www.zadv.com http://www.zadv.com

Table of Contents Feed for the Digital Edition of Automotive News - February 25, 2008

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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