Automotive News - April 14, 2008 - (Page 43)

APRIL 14, 2008 • 43 Toyota, GM recall 660,000 vehicles for window flaws WASHINGTON — Toyota Motor Sales U.S.A. Inc. and General Motors are recalling more than 660,000 vehicles built for the 200304 model years to repair side window hardware. The recall involves nearly 540,000 units of the Toyota Matrix and Corolla and nearly 123,000 Pontiac Vibes, the companies said Wednesday, April 9. Dealers will replace bolts that hold driver and front passenger door glass in vehicles equipped with power windows. Toyota said the bolts may loosen and detach. Small suppliers feel the pain of axle strike Robert Sherefkin rsherefkin@crain.com DETROIT — General Motors appears to be weathering the strike, but its supply base is under siege. Large Tier 1 suppliers are feeling the pressure, but smaller private companies are most at risk as the strike against American Axle & Manufacturing Holdings Inc. moves into its second month. Small suppliers may lack the customer diversity and may not have the resources to back them up as revenue declines and bankers grow wary. An example: Ryobi Die Casting Inc. (USA) builds powertrain parts for GM. So the Shelbyville, Ind., company called on its staff to take voluntary layoffs, a spokeswoman confirmed. The impact was limited to 33 employees because the company had hedged its bets by supplying transfer and transmission plates to a variety of automakers. Chain Sandhu may have fewer options. The CEO of the suburban Detroit plastic components maker NYX Inc. told Automotive News in early 2006 that he was counting on a 5 percent net gain in profits as a result of GM’s pickup and SUV business. NYX won GM contracts valued at $75 worth of content per vehicle, or $70 million annually. But that was contingent on 1.7 million units at peak production. In the first quarter, GM built 375,972 trucks in Canada and the United States, down from 551,634 last year. Through April 5, GM lost production of 95,346 trucks and 1,100 cars because of the strike. Sandhu could not be reached for comment. Tier 2 suppliers to seat belt and airbag supplier T.K. Holdings Inc. in suburban Detroit have weathered the storm so far, says spokesman Alby Berman — unless they have a plant dedicated to GM. So far, the Tier 1s have been vague about the strike’s impact on their balance sheet. But disappointment looms. Lear Corp. was expected to outperform the sector because of its solid credit profile and stronger sales in Asia — until the strike hit GM. Because Lear gets 29 percent of its sales from GM and 42 percent of those sales from SUVs, crossovers and pickups, the strike will be a blow to Lear’s first-quarter 2008 revenue. “We view this as a temporary blow to revenue,” says New York bond analyst Shelly Lombard. So far, no major suppliers have filed for bankruptcy because of the GM shutdowns, but financial strains are showing. Standard & Poor’s analyst Gregg Lemos Stein says S&P last month put American Axle, Lear and Tenneco Inc. under review for a possible debt rating downgrade because of the strike. c Dodge launch goes digital DETROIT — Dodge is launching the Journey crossover with the brand’s largest digital marketing campaign. At a press event last week, Dodge spokesman Mark Spencer said that 29 percent of the media budget for the launch of the 2009 Journey will go to digital venues. Spencer would not disclose the marketing launch’s overall budget but said the digital campaign is Dodge’s costliest. The Journey campaign, which began Tuesday, April 8, targets young families and empty-nest baby boomers. The tag line: “If you can dream it, do it.” STRIKE Key for a deal: GM’s deep pockets continued from Page 1 a settlement fairly quickly. GM is producing Malibus full-out already. If they lose any production, they probably won’t be able to recoup those sales. CRAIG FITZGERALD Plante & Moran “ GM has to be concerned about getting So far, GM has stayed out of the negotiations. The company line is that the dispute is solely between the UAW and American Axle. GM has been a passive observer, closing or partially shutting down 30 assembly and parts plants as the strike interrupts the supply of axles and other parts. The shutdowns have predominantly affected pickup and SUV plants. ” Toyota plans 2nd India plant TOKYO — Toyota Motor Corp. plans to spend ¥35 billion (about $350.0 million) to build a second assembly plant in India. The plant will begin operating in 2010 with an annual capacity of 100,000 vehicles. The factory, which will be built outside Bangalore next to Toyota’s existing plant, also will be run with local partner Toyota Kirloskar Motor Private Ltd., Toyota said last week. The new factory will build the Corolla plus a new compact vehicle. Toyota said that like the Corolla, the compact is expected to be exported to other countries. High-stakes poker But as happened in Delphi Corp.’s bankruptcy, GM is being sucked into a high-stakes poker game between the union and an irreplaceable supplier. And, as with Delphi, GM holds the weakest hand. On one side of the table is American Axle CEO Richard E. Dauch. His company is sitting on a $344 million pile of cash. Moreover, Dauch continues to operate four U.S. plants, a major plant in Mexico and several factories overseas. So he has the financial re- sources to hold out for weeks. Last week, Dauch rejected a UAW proposal that he said fails to address the wage gap between American Axle, which pays workers $28 an hour, and less generous rivals such as Dana Holding Corp. American Axle is offering $14 an hour. Benefits would be slashed, too. On the other side is UAW President Ron Gettelfinger, who is personally involved in the negotiations. He knows his strikers never will accept the massive concessions being demanded. So Gettelfinger’s troops continue to walk the picket lines and draw $200 a week in strike pay from a strike fund of nearly $900 million. Last week three GM locals not af- fected by the American Axle work stoppage threatened to strike GM over local grievances. Local union officials say the strike warnings relate to local issues and should be taken at face value. But the implication has not been lost on GM executives. Strategic targets Indeed, it appears that the UAW, which approves local strikes, has chosen its strike targets carefully to remind GM that it could disrupt key vehicles. One plant that might shut down is GM’s Delta Township assembly plant near Lansing, Mich., which builds the Buick Enclave, GMC Acadia and Saturn Outlook crossovers. The shadow of GM’s bailout of Delphi looms over the American Axle dispute. The automaker has spent more than $7.5 billion to restructure its former parts division, Delphi. GM is helping Delphi buy out more than 20,000 UAW members, and it may have to spend billions more to help the supplier emerge from Chapter 11 reorganization. At Delphi, GM was legally obligated to help with worker cutbacks. It has no such obligation at American Axle. But from a practical standpoint, GM may have no choice. Shortly before American Axle workers struck on Feb. 26, the supplier’s executives asked GM to allow 2,000 of its workers to transfer to GM, said a source familiar with the talks. The offer fizzled when GM asked whether price cuts or other considerations would be offered in return. Within a week, GM will learn the price for noninvolvement. That’s when the carmaker runs out of an American Axle-made knuckle used in rear suspensions on the Malibu and G6. Dealers have slim 40-day inventories of those vehicles. And that’s when the UAW and American Axle will find out exactly how much pain GM can tolerate. c TRW plant will build Ford gears DETROIT — TRW Automotive Holdings Inc. said it plans to build another plant near its factory in Lafayette, Ind., to supply steering gears for Ford Motor Co. heavy trucks starting in 2010. TRW spokesman John Wilkerson said the gears had been made by Ford unit Automotive Components Holdings LLC at a plant in Indianapolis. GM New hybrids get off to slow start in first quarter continued from Page 8 GM hybrid sales JAN. FEB. MARCH 1ST QTR. “Our strategy was to come out with a large awareness bang and then back off to follow up in the nontraditional media,” Rosenblum says. “We’re early on, and our plans haven’t been all that realized yet. We’re just starting out.” Chevrolet Tahoe GMC Yukon Saturn Vue Saturn Aura Chevrolet Malibu Total 7 0 0 0 0 7 103 95 61 0 0 259 225 225 97 20 10 577 335 320 158 20 10 843 Source: J.D. Power and Associates The Saturn Vue ranks third in GM hybrid sales, with 158 deliveries in the first three months of 2008. Rothkop says. That’s because of “the gap between the actual fuel economy and claimed fuel economy,” he says. That gap makes it difficult for automakers to maintain price premiums. ‘Cutesy’ ads? Plastech tries to sell 2 units DETROIT — Troubled supplier Plastech Engineered Products Inc. is trying to sell its exteriors and stamping business units. Kelvin Scott, Plastech’s top in-house lawyer, told reporters after a U.S. Bankruptcy Court hearing last week that the plastics parts supplier is trying to sell the units, but he would not name potential buyers. Scott said the exteriors business alone generates at least $200 million to $300 million of Plastech’s $1.4 billion annual revenue base. But analysts say there has been no bang so far. “The marketing for selling hybrids is too soft and squishy,” says Jim Hall, director of industry analysis at 2953 Analytics in suburban Detroit. He says the hybrids are “in a cutesy-pie commercial that doesn’t scream this is the product you need to buy.” For the Two Mode hybrid, GM is using a demonstration vehicle at dealerships for test drives. Customers then must order the vehicle. Butler says it’s a way to gauge where to send inventory. Hall says Americans don’t like to have to order vehicles and wait but says it is a reasonable approach. But Americans’ love affair with hybrids might be waning, says J.D. Power and Associates analyst Jason Rothkop. “We’re seeing a

Table of Contents Feed for the Digital Edition of Automotive News - April 14, 2008

Dealership jobs hit 8-year low GM is the wild card in axle war Service contracts: Hard-sell tactics plague dealers, customers TV auto ads shift to online, mobile venues At seminar, marketing execs to discuss new ways to reach customers Better get to know the Nano — it's set to change the world Veteran Detroit 3 dealer: 'The future is quite bleak' Poll: Dealers scrounge for cuts Locals closer to GM strike Scion xB price rises $100 Valeo CEO: No breakup Tata Nano changes low-cost development Hyundai tailors TV, Web ads for Hispanics Study: Ads focused on vehicle qualities won on Oscar night Post-Celine, Chrysler ad guru seeks right note Chrysler's quest for quality lured Nissan exec Betts Search starts for in-vehicle alcohol detectors After S. Calif. success, Honda may fund ad groups Computer images gain ground in TV ads Web TV offers automakers new ad, sales options BMW: X6 will bring brand new buyers Diana T. Kurylko Chrysler fields 'dream' ads Nissan seeks dealerships for trucks Honda will export Alabama-built Pilots to Russia Toyota, Subaru work on 'affordable' sports car Cadillac's ad agency savors the sweet life Some stores may not sell Chrysler hybrids GM hybrids get off to a slow start in first quarter Lexus adds a personal touch to pamper owners, prospects What they're buying — and what they're not The age of fuel innovation is here Approaches to r&d vary Nano brings credibility to Indian engineering Honda must revisit online dealer sales of service pacts Chrysler got it right Mandates, markets and buyer demand For Detroit, some things never change Buick: As Chicago goes, so goes the nation Auto industry has lost a good man Accentuate the positive Ex-Porsche CEO: Cayenne spiced up sales Green programs shape battle for engineering grads Tata rewards suppliers with ties to India Bill aims to set minimum sound levels for vehicles Industry lobbyists step up emissions fight Seeking wider market, Nissan equips sports car for snow New chief of SAE has D.C. skills China and GM's answer to Nano — sort of $2,500 car is Ratan Tata's personal quest NADA offers training in risky credit Donna Harris Deal's goal: Widen appeal of dent-repair coverage Title committee created Vehicle loan delinquencies rise from 2007 Suppliers to the 2009 Tata Nano Odd China combo: Fuel sippers, SUVs Pontiac Vibe: A sporty hauler with Toyota touches Dealers J.D. Power III named tracking company partner Toyota will buy back rusted Tacomas 100,000 Flex sales a year? Farley: 'Absolutely' Ford wants word-of-mouth campaign Small suppliers feel the pain of axle strike Plastech tries to sell 2 units TRW plant will build Ford gears Toyota plans 2nd India plant Dodge launch goes digital Toyota, GM recall 660,000 vehicles for window flaws Lear announces white-collar layoffs March output drops 23.6% New Ford ads tout quality improvements Tata dealers must be handy with a wrench Can the Greens slow down the autobahn? Racy scandal for race exec Echoes from the grave: Olds still has cachet The Final Say

Automotive News - April 14, 2008

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