Automotive News - June 23, 2008 - (Page 4)

4 • JUNE 23, 2008 Why small isn’t always big Production, image, other factors create winners and losers Jesse Snyder jsnyder@crain.com Hot, and not so hot Rising gasoline prices have boosted sales of some smaller cars … 5-MONTH SALES IN ’08 % CHANGE FROM ’07 news ANALYSIS © GM CORP With gasoline prices rising, it should be easier to market small cars. Yet sales of some compact models — such as the Pontiac G5, Chrysler PT Cruiser and Mitsubishi Lancer — are down this year. And sales of some mid-sized cars are up a bit but lag competitors that are selling by the truckload. How is this possible? Supply disruptions. General Motors’ Fairfax assembly plant in Kansas City, Kan., was shut by a UAW local strike this spring. Sales of the Chevrolet Malibu and Saturn Aura built there are still affected by a lack of cars, said GM sales analyst John McDonald. Wrong powertrains. For some cars, dealers have adequate inventories of V-6s but not four-cylinders, which are more fuel-efficient. Last month in Michigan, Saturn of Clarkston sometimes had only one four-cylinder Aura. Production constraints. In recent years, automakers have moved to flexible manufacturing — multiple models in a single assembly plant — so they can adjust quickly to market shifts. For example, GM builds three cars Toyota Yaris Honda Civic Honda Fit Ford Fusion Ford Focus 56,208 164,994 29,784 73,197 105,499 +50.4% +20.2% +64.0% +10.5% +35.7% Honda Fit: Up 64 percent % CHANGE FROM ’07 … but others were flat or down 5-MONTH SALES IN ’08 Mitsubishi Lancer Pontiac G5 Chrysler PT Cruiser Chevrolet Aveo Mercury Milan 13,141 9,925 26,614 25,971 17,453 –7.7% –5.8% –38.3% +2.3% +2.2% PT Cruiser: Off 38.3 percent Source: Automotive News Data Center and companies on its mid-sized architecture — the Chevrolet Malibu, Pontiac G6 and Saturn Aura — in two plants. A surge for any model can be met by adjusting the mix. But when all are in demand, the only way GM can increase output is to add a shift. It will do so this summer at its Orion Township, Mich., plant. In contrast, Toyota and Honda can adjust by increasing production at North American plants that make vehicles on several platforms — and by More Fits for U.S. come fall ➤ 6 increasing imports. Parts shortages hurt, too. The Toyota Prius hybrid, rated at 48 mpg city and 45 highway, should be hot in a market focused on fuel economy. But its battery maker cannot increase production fast enough to meet demand, so sales are up only 3.8 percent this year. An old model. The PT Cruiser was freshened for the 2006 model year but is essentially the same vehicle that debuted for the 2001 model year. The PT Cruiser’s initial design buzz has faded, and compared with other nameplates, it’s relatively unsophisticated with middling fuel economy. Weak marketing. With scant marketing support, the Pontiac G5 is invisible to consumers who otherwise might consider it. That probably explains why the compact is down for the year while its platform-mate, the Chevrolet Cobalt, is up. Poor brand image. Many spring car buyers went to automakers they knew had fuel-efficient cars. So sales of the subcompact Honda Fit rose 64 percent in the first five months, while GM’s competing Chevrolet Aveo, with comparable fuel economy, was flat. “Japan has long had a reputation for fuel-efficient vehicles,” says Joseph Barker, senior manager of sales forecasting for consultants CSM Worldwide. “Its brands are benefiting from years of developing that reputation.” Rebecca Lindland, an analyst for the consultancy Global Insight in Lexington, Mass., said perception is a handicap for domestic brands: “The Detroit 3 have fuel-efficient vehicles, but people don’t expect it.”c Only 338 of Chevy’s 3,932 U.S. dealers will have the Corvette ZR1. Chevy limits ZR1 Corvette to top dealers Jamie LaReau jlareau@crain.com To move metal, hire an Ironman Toyota signs off-road racing king to give truck marketing some traction Mark Rechtin mrechtin@crain.com LOS ANGELES — Toyota has enlisted off-road racing legend Ivan “Ironman” Stewart to give its big pickups and SUVs a much-needed marketing boost. Ironman editions of the Tundra, Tacoma and FJ Cruiser are expected to reach Toyota dealerships later this summer. Dealers will do the Ironman conversions in their own service bays from kits supplied by Halo Special Edition Vehicles, of Irvine, Calif. Dealerships can install the performance parts on any Tundra, Tacoma or FJ Cruiser in their inventory. Stewart’s namesake Tundra carries a supercharger that pushes horsepower to 500-plus, while adding a Magnaflow cat-back exhaust, tuned Bilstein shocks, Hella light bar, Hurst pistol-grip shifter, 20-inch General tires and Alcoa alloy wheels. The Toyota warranty remains intact. Similar upgrades also are available for the Tacoma and FJ Cruiser. May to 72,704, and the FJ Cruiser has sunk 40.8 percent to 14,961. Gary Boler, manager of Toyota Racing Development, the automaker’s performance-parts division, admits that TRD has not done a good enough job marketing its own special-edition products. The division had looked into a go-fast Tundra, but the depressed truck market quashed those plans. Stewart’s credibility is unmatched in off-road circles. He carries 10 driver’s championships and 84 career race victories — all with Toyota trucks. He will attend Toyota dealership sales meetings and be present for autograph signings on weekends. Spend $8,000 — or $20,000 The added cost to consumers for an Ironman package generally will be $8,000 to $10,000, but a loaded version can go as high as $20,000 over base price. Since the Ironman-edition trucks are not sold directly by Toyota Motor Sales U.S.A., dealers are being contacted by Halo representatives. Initial sign-up requires buying two pallets of parts each for the Tundra, Tacoma and FJ Cruiser, said Halo CEO Don DiCostanzo. DiCostanzo hopes to sell 500 Ironman packages in 2008 and ramp up to between 5,000 and 10,000 units in 2009. The first dealership to sign up with Halo was Toyota of Escondido, near San Diego. “Toyota is a little vanilla, and we wanted some Rocky Road in the store,” said Scott Whitehead, director of fixed operations at the store. “The market needed an elite product that would reach out and grab people.” c ‘Keep it classy’ There are different levels of customization for all three vehicles; the supercharger comes at the top end of the scale. All trim levels will feature upgraded performance pieces, but mostly for on-road use. “I have total control over this,” Stewart said. “I didn’t want lift kits or monster tires. I wanted to keep it classy.” Toyota needs the image help. Last week it cut production of the Tundra for the second time this year, admitting that it won’t meet its sales goal of 200,000 units for 2008. Sales of the Tacoma are off 5.7 percent through MARK RECHTIN Off-road racing legend Ivan “Ironman” Stewart, right, helped create the special-edition Toyota trucks. With him is Scott Whitehead of Toyota of Escondido in California, the first dealership to sign up to sell the trucks. More iron in their blood Performance boost in Ironman edition Toyota trucks with Toyota Racing Development supercharger TUNDRA 5.7-LITER V-8 TACOMA/FJ CRUISER 4.0-LITER V-6 Base hp Ironman hp Base torque, lbs.-ft. Ironman torque 381 @ 5,600 rpm 504 @ 5,500 rpm 401 @ 3,600 rpm 550 @ 4,000 rpm 239 @ 5,200 rpm 304 @ 5,400 rpm 278 @ 3,700 rpm 334 @ 3,600 rpm DETROIT — In early June, Jeff Cauley got the news he was waiting for — a letter from General Motors confirming that his suburban Detroit Chevrolet store will get four new Corvette ZR1s when the cars go on sale this August. “We’ve taken names on a list, and we’ve committed to two of those four cars already,” said Cauley, owner of Cauley Chevrolet in West Bloomfield Township, Mich. “I’m happy to be getting them, but it’s frustrating, too, when you have 60 or 70 people who want to buy one.” Of Chevrolet’s 3,932 dealers nationwide, just 338 are getting a crack at selling the ZR1. GM is basing the tight allocation on those who have highvolume total retail sales and sell a lot of Corvettes. Cauley sells about 150 Corvettes a year. Ken Fichtner is not one of the lucky dealers. He wanted a ZR1 in his store near Billings, Mont., so badly that he took extra Corvette stock last year to try to boost his sales and earn an allocation. “We’re not a big boy,” said Fichtner, who owns Fichtner Chevrolet in Laurel, Mont. “The system is what the system is — I’m disappointed.” Fichtner sells 35 to 40 Corvettes a year. “I understand what the small dealers are saying, and I can empathize,” said Chevrolet spokesman Terry Rhadigan. “On the other hand, would it be fair to take a dealer who sells Corvettes for us all year, every year, and not give them one? There are always trade-offs.” The superfast ZR1 starts at $105,000, including shipping and a gas-guzzler tax. Its 6.2-liter V-8 is rated at 638 hp. The car can go from 0 to 60 mph in 3.4 seconds and achieve a top speed of 205 mph, making it the fastest Corvette ever made. Some small dealers say they’d like a chance to sell just one ZR1, but Rhadigan says that’s not practical because dealers must pay for special training and equipment to service the car. Voss Chevrolet in Dayton, Ohio, sells 90 to 100 Corvettes a year and about 2,400 total Chevrolets. GM awarded owner John Voss two ZR1s. He’s a bit worried about selling them because of the high price tag. He says a small dealer would struggle. “When you give a specialty car to small dealers, you’re not doing any favors because they can’t sell them and bigger dealers end up buying them,” Voss said. GM will not say how many ZR1s it intends to build. But Cauley hopes that GM will build extra and he’ll get a fifth supermachine to sell. c

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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