Automotive News - June 23, 2008 - (Page 12)

12 • JUNE 23, 2008 opinion The Detroit 3 are smart to cut sales to fleets The retail automotive market in the United States is still in the doldrums. But give credit to the Detroit 3 for reducing the number of light vehicles they are selling to daily rental companies and corporate fleets. Such discipline may be painful now, but it will pay off later. Usually in a down market, automakers wrestle with the temptation to shovel more vehicles at their fleet customers. Fleet sales to corporate customers may be profitable, but sales to daily rental fleets usually aren’t. They keep the factories humming but can damage a brand’s residual values when retired rental units turn up at auction, often in the same model year. Not this time. Through the first four months of the year, General Motors, Ford Motor Co. and Chrysler LLC reduced U.S. sales to fleet buyers. The problem hasn’t been eliminated completely. With retail sales in the tank, fleet sales still account for as much as 35 percent of total U.S. sales by Chrysler LLC and Ford Motor. But the discipline demonstrated by the Detroit 3 is an encouraging start. The best way to reduce the percentage of sales to fleets is to sell more cars and trucks at higher prices at retail. That ought to be a little easier to do when the market bounces back, thanks to the steps GM, Ford and Chrysler are taking now. Sometimes it seems as though car companies are more interested in public relations than in solid progress. With great fanfare, Honda announced more details about the arrival of its hydrogenpowered electric vehicle in California next month. Whether or not the company wants to admit it, the vehicle is at least 25 years away from being a production model. Honda will lease a few in California, but drivers had better stay close to home since refueling is such a problem. Factories and dealers realize that they have to reduce the number of domestic franchises. General Motors, Ford Motor and Chrysler all acknowledge that there are too many dealerships in the United States for the number of cars and trucks sold. It’s getting worse, not better. By our DAILY AUTO NEWS >> You can get the news you need every day. Go to www.autonews.com/signup and sign up for our daily e-mail newsletter. Lots of talk but little to show count, not a lot is happening even though everyone acknowledges how important it is to reduce the number. Flexible manufacturing is essential to the survival of the Detroit 3. It probably will take longer than overnight, but if they don’t learn how to do it, they die. With the sudden changes in the marketplace, they must figure out how to produce, almost overnight, the products that Americans want to buy and then switch back, overnight, when consumers change their minds again. GM is wise to stop talking about a car that doesn’t exist. We’ve seen the Chevrolet Volt for years, but it will still be a while until production begins. Until GM has the production model available, the company should be quiet. It looks like that’s what GM is doing. It’s time to stop running ads that feature only highway mileage for production vehicles. If you’re going to promote fuel economy, use the combined mileage. Highway mileage numbers aren’t representative of what buyers will experience. Better to err on the conservative side. Is anyone going to question the presidential candidates on their simplistic solutions to the problems of the Detroit 3? Last week, Sen. Barack Obama was in Detroit and didn’t address the problems of the domestic industry much less try to understand the automobile industry. If Michigan is going to be an important state for both candidates, they should talk to someone about what’s really going on in the domestic industry. This business seems to get more complicated all the time. Leno was off base in bashing U.S. cars To the Editor: Much can be said about the improved design and quality of American cars during the past decade or more. Unfortunately, I think there is a tendency to assume that imported vehicles are still better in every way. Comments such as Jay Leno’s, recounted in the June 2 issue, reinforce that misconception (“Leno’s words of wisdom for automakers,” Final Assembly). I know Leno is a passionate hobbyist and is known to turn a wrench now and then, and I’m surprised he would make such a general statement. Every one of us could share a bad experience or two, regardless of the manufacturer involved. One could spend hours discussing all the weaknesses with imported vehicles, but simply saying they are better (or worse) would be an equal disservice. ERIC GLASSMAN Buffalo, N.Y. The writer works for an automotive supplier. Going green pays off A few U.S. dealers are learning the value of using green policies to run their dealerships. In its best sense, being green simply means being efficient. Consuming less energy and other resources can cut costs. Among the things dealers can do: Use rainwater to irrigate landscaping, use solar panels to provide energy, and install a carwash that uses a fraction of the water used by a conventional unit. Dealers report that such Earth-friendly practices not only attract consumers who are concerned about the environment but also give the dealership the choice of passing the savings along to customers or letting those savings drop straight to the bottom line. When dealers realize that environmental practices are not just sales gimmicks but investments that can improve their business model, real change will come. That will be good for dealerships that change their policies and good for the industry. THE WEEKLY NEWSPAPER OF THE INDUSTRY Established in 1925, published every Monday by Crain Communications Inc. Drop Mercury? No; Ford needs it To the Editor: Keith Crain is right (“Mercury deserves a better chance,” June 2). Drop Mercury? Not so fast! In May, Mercury outsold Buick; Mercury outsold Cadillac; Mercury outsold Mitsubishi; it outsold Infiniti, and it outsold Audi. Mercury outsold Jaguar, Land Rover and Volvo combined. With the product emphasis shifting away from trucks, Ford needs every car line advantage available. Mercury has a constituency that the Ford and Lincoln brands can’t fulfill. Creating salable products requires more than meeting key price points. Psychographic types exist — beyond demographics — individuals who wish something more exclusive than a Ford but find Lincoln pretentious or just too expensive. Mercury was just awarded the top rating among domestic nameplates for Keith E. Crain, Publisher and Editor-in-Chief Peter Brown, Associate Publisher and Editorial Director David Sedgwick, Editor Edward Lapham, Executive Editor HOW TO REACH US Web site: www.autonews.com Editorial staff autonews@crain.com Phone: 313-446-0361 Fax: 313-446-0383 Circulation Advertising subs@crain.com rgreer@crain.com Phone: 888-446-1422 Phone: 313-446-6050 Fax: 313-446-6777 Fax: 313-446-8030 Editorial data/research To locate information that has been published in Automotive News, call 313-446-1662. Customer service To start or renew a subscription or to report an address change or a delivery problem, e-mail subs@crain.com or call 888-446-1422 (in the U.S. or Canada) or 313-446-1662 (in all other locations). AUTOMOTIVE NEWS (ISSN 0005-1551) is published weekly at 1155 Gratiot Ave., Detroit, MI 48207-2997. Periodicals postage is paid at Detroit, MI and at additional mailing offices. Postmaster: Send address changes to AUTOMOTIVE NEWS, Circulation Department, 1155 Gratiot Ave., Detroit, MI 48207-2912. Canadian Post International Publications Mail Product (Canadian Distribution) Sales Agreement #40012850, GST#136760444. Canadian return address: 2-7496 Bath Road, Mississauga, ON L4T 1L2 Printed in the U.S.A. initial quality by J.D. Power and Associates. Mercury has been starved for product, but a little imagination and ingenuity could alleviate that deficiency. Go, Mercury! BOB MARCKS Scottsdale, Ariz. The writer is a former Lincoln-Mercury stylist and a retired Chrysler productplanning, marketing and sales executive. Awareness isn’t GM’s problem To the Editor: Troy Clarke, president of General Motors North America, says Saturn has “a basic awareness problem” (“Clarke: Buyers don’t know Saturn brand,” May 12). After all these years, there is an awareness problem with Saturn? I used to be an Oldsmobile dealer (family-owned dealership since 1948). Oldsmobile nationally had a customer base in the millions. Why did General Motors kill a brand that had built such a great reputation since 1897? Is that not evidence that GM’s top management is out of touch with reality and has been for quite some time? GUY P. SMITH Lexington, N.C. autonews.com Did you know that you can write a letter to the editor on our Web site? Here’s how. Go to www.autonews.com. At the top of our home page, put your cursor on the tab that says “Opinion & Feedback.” Click on the section below that says “Send us a Letter.” That will bring up a letter form. Follow the directions. http://www.autonews.com/signup http://www.autonews.com http://autonews.com http://www.autonews.com

Table of Contents Feed for the Digital Edition of Automotive News - June 23, 2008

TRW exec: We're in the 'sweet spot' for growth 'Like house of cards,' used trucks fall Detroit 3 a big drag in global supplier race Ford rethinks big-block V-8 plan Looters and broken levees Plastech's Brown stands to get $9.25 million Lawmakers: Redo roof rule Hunt takes job at Gallup Lawmakers urge roof rule rewrite Webinar offers tips on going green Lawmakers: Redo roof rule Webasto sees more demand for retractable hard tops Why small isn't always big To move metal, hire an Ironman Chevy limits ZR1 Corvette to top dealers Lithium ion battery is key to hybrid growth With Russia hot, Ford will boost Europe production BMW exec: We can grow in U.S. The man who put the wind in GM's sales GM's parts ordering comes down to Earth More Fits for U.S. in fall GM: Volt buyers deserve tax credit Mercedes exec seeks more exclusive technology from suppliers Bosch, Mahle execs to lead turbo venture Supplier personnel ZF moves steering operations in Ky. Slowing Volvo, Saab add to Sweden's industry woes Feds: Drivers don't have to hang up phones Magna eyes new growth strategy: Powertrain-driveline modules Alleged sales scam snares Ohio dealers GM center troubleshoots IT in plants around the world Senator: Plants have capacity for plug-ins Lots of talk but little to show Going green pays off The Detroit 3 are smart to cut sales to fleets Drop Mercury? No; Ford needs it Awareness isn't GM's problem Leno was off base in bashing U.S. cars Roofs, rollovers and reckless driving Big-truck sales fall 15.2% in May Serra deal reflects GM channel strategy No. 2 vehicle hauler to go out of business Chinese company's car looks a lot like a Mini Honda taps star power for fuel cell car Dealer wanted media attention — and got it Dealers European sales dip 7.8% in May Merger gives Hughes Telematics a cash boost Mexico sales bounce back in April Suzuki dealers test system to turn Web leads into sales Bosch-Samsung venture to make lithium batteries Hyundai plans Elantra hybrid for Korea in '09 RV sales drop 8.5% in April Japan’s best-kept secret Utilities join automakers for plug-in r&d Ford likely to build '11 Focus at 2 plants Glut of '08 Ford F-150s delays launch of '09s '09 Porsche SUV prices rise Ford calls off Ohio plant sale Ford idles Mich. truck plant CarMax net earnings decline Dodge Journeys recalled 2009 Chrysler hybrid SUVs start at $45,340 GOP: Climate bills would make $4 gas look cheap EVs on eBay: It's all the rage In terms of market value, the General is a buck private Sign of the times: Hummer store to be used-car lot Bob Stempel's legacy is the future Flying 1 series? It's BMW's joke Dealer hurt in sky-dive navigates the road to recovery Opel car recognizes signs; BMW plans similar system JCI, Magna unit buy main parts of Plastech The little engines that could Suppliers to the 2008 Dodge Viper

Automotive News - June 23, 2008

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