Automotive News - June 9, 2008 - (Page 1)

autonews.com ® JUNE 9, 2008 Entire contents © 2008 Crain Communications Inc. All rights reserved. $155/YEAR; $5/COPY A wild ride as market flips to small cars Japanese can add small cars faster than Detroit 3 Jesse Snyder jsnyder@crain.com Toyota and Honda are better positioned than the Detroit 3 to quickly adjust their production to U.S. consumers’ sudden shift to smaller cars. Automakers are scrambling to cope with an abrupt swing in demand from large pickup trucks and SUVs to small and mid-sized cars as gasoline prices top $4 a gallon. In May, sales of popular models far exceeded North American production. For instance, Honda, Toyota, Ford and Chevrolet last month sold 116,710 more units of eight key compact and mid-sized cars than they built in the United States and Canada (see table, Page 37). But Toyota and Honda have two advantages over the Detroit 3 in the hunt for more small and mid-sized cars. They can more easily boost output because they long ago adopted flexible manufacturing strategies in North America, while the Detroit 3 are still perfecting theirs, says Anthony Pratt, a Detroit analyst for PricewaterhouseCoopers’ Automotive Institute. Honda, for example, can shift production at its Alliston, Ontario, plant from the Ridgeline pickup and Acura MDX crossover to Civics, spokesman Ed Miller says. And, Pratt says, the slumping Japanese market leaves Japanese au- New F-150, Ram in peril as big pickups collapse Forget the F series: Civic leads the pack Cars from Honda and Toyota held the top four spots in the May sales race. The Detroit 3 settled for a record low 44.4 percent of the market. | PAGE 39 | tomakers the capacity to increase exports to the United States. “Toyota and Honda are well-positioned to continue to meet high demand for fuel-efficient vehicles besee SMALL, Page 37 Mark Rechtin mrechtin@crain.com The collapse of the full-sized pickup segment comes at a disastrous time for Ford and Chrysler as they prepare to launch redesigned pickups this fall. The segment is expected to shrink by about 500,000 units this year to as low as 1.65 million. That’s a far cry from the 2.5 million in the peak years of 2004 and 2005. Ford Motor Co. and Chrysler LLC have been counting heavily on the replacements. The Ford F series is Ford Motor’s best-selling vehicle, and the Dodge Ram is Chrysler’s. The com- panies are scrambling to sell down 2008 inventories in the teeth of a perfect storm — and reassessing what to expect when the new pickups arrive. “This is the worst-case scenario for launching a large pickup truck,” said Jeff Schuster, executive director of forecasting at J.D Power and Associates. “It is one of those cases where all the planets align.” Even devoted big pickup owners can’t afford new ones because tradein values are plummeting as demand weakens. A respondent to an Automotive see TRUCKS, Page 37 GM’s announcement dismayed dealers who spent millions on distinctive Quonset-hut styled stores with test tracks and a huge “H” framing the front door. GM source: Old behemoths never die, they just . . . GM’s big SUVS, the Chevrolet Tahoe and GMC Yukon, will “fade away in their present form,” says a GM source. | PAGE 6 | Toyota ponders U.S. Prius production As demand soars, Toyota confirms that it’s thinking about U.S. production of the Prius hybrid. But it’s downplaying a news report that talks are in the works for kit production at the Toyota-GM joint venture plant in Fremont, Calif. | PAGE 4 | Hummer Bummer: A death sentence? Jamie LaReau jlareau@crain.com In 2002, Jacques Moore added the Hummer brand to his Cadillac-Saab dealership in Richmond, Va. As a pioneer with General Motors’ new premium channel, Moore spent millions building a separate Hummer showroom. He was a satisfied Hummer dealer — until Tuesday. That’s when GM made it clear it is pulling the plug on Hummer, saying it is considering “all options” for the brand, including selling it. “I have a real problem, an ice pick in the eye, with GM’s change in attitude here,” Moore said. “Rather than talk about selling Hummer and doing away with a very cool iconic brand that the public really likes, why not NEWSPAPER give us a hybrid or two?” That may be an option. But GM CEO Rick Wagoner made it clear that Hummer is the fat man in the lifeboat who might be tossed overboard. Wagoner’s announcement that GM plans a “strategic review” of the brand dismayed dealers who had spent millions on distinctive Quonset-hut styled stores with test tracks and a huge “H” framing the front door. It also cast doubt on GM’s plans to build a premium sales channel of Cadillac, Hummer and Saab. Ice-cold sales Hummer sales have collapsed in the face of $4-a-gallon gasoline. Through May, U.S. Hummer sales fell 36.0 percent compared with the year-ago period — and 48.1 percent from the same period in Hummer’s peak year, 2006. Last week, Wagoner said Hummer had added value to GM’s portfolio. But in light of rising gasoline prices, he said, “that equation has changed.” In 1999, GM bought the marketing rights to Hummers from AM General in Mishawaka, Ind. After selling small numbers of the H1, based on the Humvee military vehicle, GM launched the full-sized H2 SUV in June 2002. With the SUV era at a peak, the H2 was a cultural sensation, although a polarizing one. GM folsee HUMMER, Page 39 GM said to be near deal for battery firm Sources say GM is near a deal to buy Cobasys, the troubled maker of batteries for GM’s mild hybrids, such as the Saturn Vue. | PAGE 8 | http://autonews.com

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Automotive News - June 9, 2008 Hummer Bummer: A death sentence? New F-150, Ram in peril as big pickups collapse Japanese can add small cars faster than Detroit 3 Battery shortage hurts hybrid sales 2 key overseas staffers move to Automotive News in the U.S. Toyota may add Camry to Indiana truck plant Mazda extends warranty on RX-8 rotary engine CAW to consider strike against GM Porsche's new 911 GM plans big ad push for its big hybrid SUVs Chrysler cuts fees to outside service firms 5% Toyota considering 'Made in U.S.A.' Prius Congress, Bush square off over rollover suits GM finance whiz changed the industry GM's big SUVs may get lighter Harbour Report: Chrysler, Toyota most efficient Spring intros can be dicey Ford spends big on MKS ad launch Media buyer for GM cuts 25 jobs Sources: GM poised to buy Cobasys GM dealer program rebounds Mazda updates the RX-8 New Maxima is a tad smaller — but more buff Congress must balance safety, mpg concerns Is the gas crisis real or just temporary? What about poor driving? There's no substitute for safe driving Lack of regulation foils safety laws Sticker law cleaned up a pricing mess Lithia to sell outlets, delay used-car stores Nielsen likes to step off the beaten path GM union local strives to pull parts jobs in-house JCI will open Ga. plant to supply Kia Dealers: Be open about credit problems Finance venture has $1 billion Picture this Personnel Dealers BMW purchasing chief 'looking for waste' Nissan Mexicana gets new chief Ford Flex output begins Hyundai Genesis: $33,000 Ford buys more from minorities Audi's U.S. chief: Brand can handle high gas prices May in Detroit: Scary, not merry Infiniti FX starts at $41,765 Lincoln: 8,600 MKS orders Plastics supplier sees growth Jenkins gets Aston Martin post Smith is CEO of Jaguar, Land Rover Kremlin watching, Chrysler style Toyota breathing down GM's neck on monthly U.S. sales PR chief Steve Harris: At GM through '08 Small-car surge is a replay of 1979 Auto execs would benefit from some store experience Mini's mixed results: Sales soar, quality stumbles Nice car — so what's the ppmpg? Volt's good PR got struck by lightning

Automotive News - June 9, 2008

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