Automotive News - June 9, 2008 - (Page 42)

42 • JUNE 9, 2008 final assembly comment DATA CENTRAL >> Go to autonews.com this week for full updated U.S. vehicle sales data from May. Small-car surge is a replay of 1979olks too young to remember the oil crises of the 1970s may see the recent small-car surge as the greatest market flip in U.S. auto history. But these aren’t uncharted waters. For historical perspective on the shocking sales numbers that rolled in last week, put them alongside this passage from Lee Iacocca’s 1984 autobiography: “Never before in the history of the car business had there been such a violent change in the market as the one that occurred that spring,” wrote the former Chrysler chairman. That sounds like May 2008. But Iacocca was writing about the spring of 1979, a few months after the Shah of Iran was deposed and the disruption of Iran’s oil industry threw world oil markets into a panic. Later that year, 52 U.S. diplomats were taken hostage in Tehran. “We all had small cars, but in 1978 that made full-sized cars were we couldn’t give them working overtime, while “the away,” Iacocca wrote. As Japanese had 700,000 small late as January 1979, just a cars sitting on the docks in San few weeks before the Iranian crisis, Datsun was Diego and Baltimore.” Those offering rebates. Toyota cars were soon snapped up by and Honda weren’t selling Americans desperate for fuelanything. We ourselves efficient vehicles. Iacocca: A vet had thousands of unsold Iacocca wrote that in the first Omnis and Horizons. And of small-car shift five months in 1979, the smallour small Colt, built by car share of the market “rose Mitsubishi, was not selling even with from 43 percent to nearly 58 percent.” a $1,000 rebate. … All of that changed Within a few years, Americans had overnight.” fallen back in love with large vehicles. Before that, Iacocca noted, plants Iacocca: “Somebody yelled: ‘April Fool’s! Gas is cheap again, so give us A 1978 Dodge Omni: Symbol of deja vu big cars!’ ” Auto execs would benefit from some store experience U sually, industry honchos don’t really get to know the inner workings of an auto dealership. Oh, some execs who came up on the sales side may have an understanding of how a dealership works, especially if they’ve been field reps who called on dealers. But if an exec learns the retail business, it’s usually after leaving the factory, EDWARD LAPHAM frequently with a IS EXECUTIVE franchise under EDITOR OF the arm as a AUTOMOTIVE parting gift. NEWS. For some reason, the industry’s traditional career path for high-potential individuals doesn’t run from a dealership to the factory. There are exceptions. Mike Jackson, CEO of AutoNation Inc., got his start turning a wrench at a dealership in New Jersey before scurrying up the corporate ladder to become CEO of Mercedes-Benz of North America. Then, after becoming the factory’s No. 1 exec in America, Jackson went back to the retail business. The top U.S. honcho at another German luxury brand also got his start at a dealership. Johan de Nysschen, executive vice president of Audi of America, started his automotive career at a dealership in his native South Africa. “Running a retail dealership should be almost mandatory training for industry executives,” he says. De Nysschen says building a profitable brand means dealers first must be profitable. “You fill a bucket from the bottom,” he reasons. De Nysschen isn’t the only proponent of the profitabledealers-are-good-for-the-factory philosophy, which is behind the heightened levels of franchise swapping and dealership consolidation activity, especially for Detroit 3 dealers. But reciting a mantra about wanting profitable dealers to strengthen the brand isn’t the same as working to make it happen. Still, it makes sense that an exec who has worked at a dealership would understand what it takes. The only better basic training for a top exec might be to have invested in a dealership. After all, you always take the competition more seriously if you have skin in the game. Edward Lapham writes five commentaries each week for autonews.com. Read them at autonews.com/edwardlapham. Volt’s good PR got struck by lightning T o paraphrase an old joke, there was a pony under there somewhere. In General Motors’ barrage of bad news last week — four planned plant closings, a possible heave-ho of Hummer and a 27.5 percent drop in May sales — there was one bit of good news that got lost in the shuffle. GM directors formally approved funding for the Chevrolet Volt gasoline-electric plug-in hybrid, which is scheduled to go on sale in 2010. “The Volt is a go,” GM CEO Rick Wagoner said at the company’s annual meeting. “We believe this is the biggest step yet in our industry’s move away from our historic and virtually complete reliance on petroleum.” But the tidbit, not surprisingly, got buried in news reports well below details of GM’s stunning retreat from its big-truck agenda (see stories, Pages 1 and 6). True, and it was just an incremental step forward, since the Volt was considered pretty much a sure thing among industry watchers. But in a perfect PR world, it would have been nice to have the poster child for GM’s eco-image in the spotlight all by itself. Toyota breathing down GM’s neck on monthly U.S. sales DMITRY BODROV/ISTOCKPHOTO W GABOR IZSO /ISTOCKPHOTO Nice car — so what’s the ppmpg? uel efficiency once ranked somewhere near seatback pocket elasticity on the U.S. auto buyer’s list of priorities. Now Priuses fly off lots and F-350s linger longer. To reflect those new realities, Consumer Reports created a new metric: price per mile per gallon. The formula for the ppmpg is simple: divide sticker price, including options, by mpg. The result is the price for each mile per gallon. That means that each of the 32 mpg the Honda Fit got in the magazine’s tests costs $476. For the Hyundai Elantra GLS, the number was $650. Because the price includes options, the extra cost of a sunroof and snazzy sound system — neither of which have anything to do with fuel efficiency — will change the equation. ith Toyota closing the sales gap every month, General Motors must be feeling a little like Norm Peterson, the portly patron of “Cheers,” who once lamented in a sitcom episode: “It’s a dogeat-dog-world, and I’m wearing Milk-Bone underwear.” The numbers tell the story: For the first five months of 2007, GM led Toyota in U.S. sales by 491,717 units. This year, as consumers accelerate their switch from trucks to cars, GM’s lead dwindled to just 280,055 units for the same five months. In May, Toyota’s monthly sales were only 11,488 behind GM’s. If sales trends of the last three months hold for the rest of the year, Toyota could pass GM in one-month sales for the first time. Still, 280,000 units is a big deficit, and Toyota likely couldn’t catch GM in total sales until next year. The Kremlin: During the Cold War, a hotbed of rumors, speculation Kremlin watching, Chrysler styleack in the bad old days of the Cold War, Kremlin watchers looked for hidden meaning when the Politburo in Moscow delayed a meeting or changed the luncheon speaker. That’s a little bit like privately held Chrysler these days, as analysts and reporters try to decipher what’s going on behind the walls based on rumors and almost-imperceptible signals. The past two weeks have been tantalizing for Chrysler watchers. First, CEO Bob Nardelli canceled several meetings, including a keynote address at a major economic conference. Was something big happening behind the scenes? Nope. Nardelli had hurt his back. He resumed his duties early last week, Chrysler said. Then the Financial Times published a report saying Chrysler’s majority owner, Cerberus Capital Management, had sold most of its Chrysler equity to other investors. Such a move would have confirmed what many industry watchers believe: that Cerberus didn’t know what it was getting into when it bought 80.1 percent of Chrysler from DaimlerChrysler last August. Again, not true. Cerberus issued a statement saying it hadn’t dumped a nickel of its Chrysler holdings. PR chief Steve Harris: At GM through ’08 teve top Swon’tHarris, beyond. retirementPR executive, be resuming his until year end — or maybe General Motors’ Harris, who was asked in January 2006 to Steve Harris: unretire by GM CEO Rick Wagoner, agreed to do Santa Fe will the job for 18 to 24 months before reretiring to his have to wait. home in sunny Santa Fe, N.M. Twenty-eight months later, he’s still on the job. Harris says he has agreed to stay through 2008. Beyond that? “I haven’t decided, but I told Rick we would revisit it toward the end of year.” Mini’s mixed results: Sales soar, quality stumbles MW’s little Mini brand came up big in May, but started June with a full-sized dose of bad news. The brand had the biggest U.S. sales increase, on a percentage basis, of any brand in May, up 52.8 percent from May 2007. Although that was only 6,312 sales, it’s still a sign of progress. Then came the bad news: Mini had the second-worst ranking in the 2008 J.D. Power and Associates Initial Quality Study released last week. The study tallies problems reported by owners of new vehicles in the first 90 days of ownership. Mini owners reported 163 problems per 100 vehicles; only the Jeep brand was worse, with 167. Mini wasn’t included in the study last year because of a small sample size and was well below the industry average in 2006. http://autonews.com http://autonews.com http://autonews.com/edwardlapham

Table of Contents Feed for the Digital Edition of Automotive News - June 9, 2008

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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