Automotive News - June 9, 2008 - (Page 4)

4 • JUNE 9, 2008 GM plans big ad push for its big hybrid SUVs Jamie LaReau jlareau@crain.com GM’s big SUVs may lose weight ➤ 6 GM launched Two Mode versions of the GMC Yukon, shown, and Chevrolet Tahoe in January. Now the automaker plans to step up promotion of the hybrid SUVs to strengthen sales. dent for North American sales, service and marketing. “We’re going to be constrained by battery availability, but we still think that we could work it up to 5 to 10 percent of our full-sized SUV sales.” GM launched the vehicles in late January. GM began publicly releasing hybrid sales figures in March. From March 1 through May, GM says, the automaker sold about 1,540 Tahoe and Yukon hybrids. In the first five months, sales of all Tahoes and Yukons totaled 57,818. That’s a far cry from the 8,000 to 12,000 SUV hybrids GM hopes to sell annually. Marketing to build awareness, and move the metal, has to be kicked up. DETROIT — General Motors’ marketing staff plans to aggressively promote its Two Mode hybrid SUVs — the GMC Yukon and Chevrolet Tahoe — across as many forms of media as possible this year. That includes a large digital presence and a lot of product placement. But so far, the word isn’t getting out. Sales are weak, and outside marketing experts offer faint praise for GM’s marketing of the SUVs. “There’s very little awareness that we even have these products,” concedes Mark LaNeve, GM’s vice presi- ‘Opportune time’ “It is an opportune time for us, especially around the fuel prices,” says Don Butler, director of marketing for Chevrolet trucks. “The original think- ing behind the Two Mode hybrid went beyond fuel prices and into minimizing the impact on the environment.” The technology is called Two Mode because it offers hybrid efficiency in both city and highway driving. The transmission has two motors. The electric motor propels the vehicle on electricity alone up to about 30 mph. Chevrolet is incorporating the Tahoe hybrid as part of its “gas friendly to gas free” campaign, Butler says. Chevrolet has two TV spots devoted to the hybrid SUV: one called “Boxes” and another called “Ridsee SUVS, Page 28 Congress, Bush square off over rollover suits Harry Stoffer hstoffer@crain.com A Japanese newspaper reported that Toyota is talking with NUMMI partner GM about assembling the Prius in California. Toyota considering ‘Made in U.S.A.’ Prius Hans Greimel hgreimel@crain.com NAGOYA, Japan — Toyota’s popular Prius hybrid could soon be “Made in U.S.A.” The company is considering a North American production site to meet soaring demand for the fuel-efficient car, but it has made no decisions regarding a reported plan to build the Prius at Toyota’s joint venture plant with General Motors in California. “Production of the Prius in the United States is something we are considering,” spokesman Hideaki Homma said June 2. “We are struggling with strong demand and not enough supply.” With gasoline prices leaping to record highs, Toyota is facing a Prius pinch. Global production capacity is 280,000 units. But in the first four months of the year, 107,100 vehicles had been sold worldwide. At that pace, sales are clearly outstripping supply. The challenge: Global production capacity of the Prius is 280,000 units. In the first four months of the year, 107,100 vehicles were sold worldwide. company is negotiating with partner GM about using the Fremont, Calif., plant, the newspaper said. A production pressure valve on the West Coast makes sense for the Prius. North America accounts for more than half of the car’s global sales, and California is by far the biggest market in the United States. Toyota is expected to launch a redesigned Prius in 2009, so demand could surge even higher. But NUMMI has several limitations. For starters, the entire Prius supply chain is in Japan. That makes exporting knockdowns a pricey and lessthan-optimal strategy for just-intime manufacturing. China is the only place outside Japan where the Prius is assembled, also from complete knockdowns. Last year, only 316 Priuses were made in China. Hard to be partners NUMMI itself is an example of successful cooperation between two of the auto industry’s greatest rivals. But enter the Prius, and baser instincts may prevail. “The Prius is a kind of icon for Toyota. I’m not sure GM would allow that to be built there,” says Masaki Taketani, vice president of the auto consultancy CSM Worldwide. Toyota also may want to keep assembly of its high-tech Prius away from GM’s prying eyes. Toyota’s Homma said production of nickel-metal hydride batteries has been the main bottleneck to ramping up Prius output. The company is working fast to fix it. Panasonic EV Energy Co., the joint venture that makes Toyota’s hybrid vehicle batteries, is adding a second battery line to its main plant in Shizuoka, just southwest of Tokyo. It is also building a new battery plant in northern Japan’s Miyagi prefecture. Annual capacity for nickel-metal hydride batteries now stands at 500,000 packs. But that will jump to 1 million in 2010, when the Miyagi plant comes online. c WASHINGTON — Automakers are caught in the middle of a fight between Congress and the Bush administration over a new vehicle standard for roof strength. Last week, senators warned the administration not to adopt a standard that would limit the ability of crash victims to sue car companies in state courts. “You’ll get a reaction from Congress that you won’t like,” Sen. Mark Pryor, D-Ark., told James Ports, deputy administrator of the National Highway Traffic Safety Administration. Pryor presided over a Senate hearing on NHTSA’s proposed update to the federal roof strength standard adopted in 1971. The proposal would curb lawsuits against automakers if their vehicles meet the new standard. “Where is this coming from?” said Sen. Claire McCaskill, D-Mo. She suggested White House involvement. The Alliance of Automobile Manufacturers did not seek lawsuit preemption, said Robert Strassburger, the group’s vice president for safety. But members of the alliance — the Detroit 3, Toyota and six other automakers — would benefit from the provision. Senators held the hearing at the request of safety advocates who say NHTSA is doing too little to protect vehicle occupants in rollover crashes. The hearing did not yield consensus on how strong roofs should be and how they should be tested — the main points at issue. Sen. Mark Pryor warned NHTSA that Congress won’t allow a roof standard limiting the ability of crash victims to sue in state courts. In a 2005 law, Congress gave NHTSA until July 1, 2008, to adopt a new roof rule. But Sen. Tom Coburn, R-Okla., who testified at the hearing, said getting the rule right is more important than adopting it on time. Coburn said he may seek to impose a new roof standard by law if NHTSA’s final product isn’t tough enough. He said he is working with Sen. Barack Obama of Illinois, the presumptive Democratic nominee for president, to get more “transparency and accountability” in federal rule-making. Strassburger testified that a too-aggressive roof rule would force automakers to build vehicles hundreds of pounds heavier. That change would make those cars and trucks less fuel-efficient and more dangerous to other vehicles in crashes, he said. Mike Stanton, president of the Association of International Automobile Manufacturers, said automakers can minimize the potential weight gain if they get enough lead time and an adequate phase-in period. Then companies could design new models with sturdier roofs instead of trying to improve existing designs, Stanton said. AIAM represents 14 import-brand automakers.c Chrysler cuts fees to outside service firms 5% Bradford Wernle bwernle@crain.com Knockdowns at NUMMI? To feed demand, Toyota wants to start assembling the Prius from knockdown kits at New United Motor Manufacturing Inc. next April, the daily Tokyo Shimbun reported, without citing sources. The Japanese DETROIT — Chrysler LLC’s nonproduction contractors are feeling the pain of the industry’s downturn. Chrysler has imposed a 5 percent price cut on roughly 80 nonproduction contract houses. The cuts took effect June 1 and will remain in place for a year. The firms supply Chrysler in a range of services, including information technology, engineering, office, custodial and marketing. Chrysler is leaving it up to individual suppliers to decide how to achieve the savings, said spokesman Kevin Frazier. In a statement, the company said: “Our recent decision to enact a 5 percent cost reduction on nonproduction materials and services is part of Chrysler’s ongoing efforts to reduce its cost footprint in a highly competitive marketplace.” Frazier could not say how many contract employees might be affected. One staffing company sent a letter to contract employees, a copy of which was obtained by Automotive News. “We were not consulted on this issue and have no control or input on these decisions,” the letter said. The staffing firm said it had no choice but to pass the cost cuts on to them. c

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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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