Automotive News - September 22, 2008 - (Page 8)

8 • SEPTEMBER 22, 2008 advertising Suppliers seek piece of loan package Harry Stoffer hstoffer@crain.com WASHINGTON — Although Lear Corp. is best known for vehicle seating, it also supplies high-voltage wiring for Ford hybrids. And it is developing other hybrid components. Producing those components is the kind of project that might qualify for a low-interest federal loan, Lear executives say. Lear was among a dozen major suppliers that sent representatives to Capitol Hill late last week to support funding of a $25 billion loan program for the auto industry. The loans would promote accelerated development of fuel-efficient vehicles. Visteon has projects Lydia Brennan, government affairs manager of Visteon Corp., said the company “absolutely” has projects for which it could seek loans. Visteon is working on components for hybrid and electric vehicles and on lightweight materials, she said. “The first step is getting the fund- ing,” Brennan told Automotive News. The suppliers’ visits to more than 40 congressional offices followed an unusual lobbying effort last week by the Detroit 3. The automakers’ CEOs went to the Capitol last Wednesday, Sept. 17. Ford Executive Chairman Bill Ford visited the previous day. Automakers and suppliers want Congress to fund the full loan program, created by an energy law last December. Congress and the White House must approve as much as $7.5 billion in funding to make the loans available. Industry leaders say approval of the funding this month is critical. In addition to Lear and Visteon, suppliers that sent executives and staffers to Capitol Hill last week were Robert Bosch LLC, Johnson Controls Inc., Delphi Corp., Continental Corp., BorgWarner Inc., Gates Corp., Bridgestone Corp., Honeywell Inc., Sabic Innovative Plastics and Goodyear. Some of the suppliers were present to support their customers, the au- tomakers, rather than to seek loans for their own projects, said Bosch spokeswoman Cheryl Kilborn. Suppliers, like automakers, would face big hurdles in using the loan money even if funding is approved. The Energy Department is writing rules that likely will place more conditions on the loans. Already on the books is a requirement that a project be designed to produce components for vehicles, or complete vehicles, that yield 25 percent better fuel economy than comparable cars and trucks. Some industry lobbyists are trying to ease that requirement, saying fuel economy gains typically occur in smaller increments. Suppliers have a key role because they have plants in congressional districts across the country, said Ann Wilson, senior vice president for government affairs of the Motor & Equipment Manufacturers Association. “We are everywhere,” she said. MEMA, which arranged the supplier visits, cites research that suppliers are responsible for nearly 70 percent of the value of the typical vehicle and more than 40 percent of automotive r&d spending. Detroit, not Wall Street Last week’s industry effort came amid an unfolding Wall Street crisis. Bill Ford said the auto industry’s need for low-interest loans for advanced vehicles is distinct from government rescues of financial firms such as AIG. Evidence even emerged that the Wall Street turmoil was benefiting the auto industry. Senate Majority Leader Harry Reid, D-Nev., called the money needed to release the auto loans “small change” compared with other demands on public coffers. Still, the loan deal was not done late last week. Sen. Lamar Alexander of Tennessee, the No. 3 Republican Senate leader, told Automotive News: “I’m skeptical of the need for the federal government to support companies in that way.”c GM’s ’09 list prices rise 2.7% John K. Teahen Jr. jteahen@crain.com DETROIT — Despite soft sales and high gasoline prices, General Motors is raising sticker prices on its 2009 models by 2.7 percent. According to analysis by Automotive News, the average price increase amounts to $790. But that’s only part of the story. In anticipation of its 2009-model price increase, GM raised stickers in early April and late May. Those boosts totaled $360, so GM stickers are an average of $1,150 higher than they were when this year’s spring selling season began. The sticker price is the manufacturer’s suggested retail price with standard equipment. Rebates or other incentives are not included. All figures include shipping and are salesweighted. That means each brand’s price increase is weighted to reflect each nameplate’s total sales. The April-May boost is the oldest trick in the price book: Raise your prices late in the model year so your price increase on new models appears smaller than it really is. The price run-up shouldn’t surprise anyone. Since last spring, GM sales chief Mark LaNeve has hinted at a $1,000 increase for 2009 models. Complete ’09 prices for Ford Motor Co. and Chrysler LLC are not yet available. Partial figures indicate that Chrysler’s boost will be about the same as GM’s, and Ford’s will be perhaps $200 higher. GM price increases range from $565 for Pontiac to $1,972 for Hummer. A Pontiac G3 is left; a Hummer H2 is right. GM gets more bucks for its 4-bangers Amy Wilson awilson@crain.com DETROIT — With consumers demanding more fuelefficient vehicles, General Motors is getting higher prices for its four-cylinder models. In the past 12 months, GM transaction prices on fourcylinder models have jumped $2,077, according to the Power Information Network. But the increase is not enough to make up for declines on V-8 models, long a key to GM’s profitability. During the same 12 months, transaction prices on GM’s eight-cylinder models plunged $3,271, PIN reported. “We’ve reduced the premiums on eights and eliminated the discounts on fours,” Mark LaNeve, GM vice president of North American vehicle sales, service and marketing, told Automotive News. “That gap is significantly less than it used to be.” GM has increased list prices on four-cylinder models, he said. Transaction prices also are up on those vehicles because the automaker is adding upscale features to those vehicles in response to customer demands. Four-cylinder models are now the focus during prodes stick. These list prices are too new to affect the transaction prices of GM cars and trucks. The transaction price is the amount of money that actually changes hands (cash or credit) when a vehicle is sold. It includes optional equipment. The cash rebate to the customer is deducted from the selling price to arrive at the transaction price. And those rebates are looking pretty heavy right now. In August, General Motors’ incentives averaged $3,865 per vehicle — up $500 from the same period a year earlier, according to data from Ed- uct planning. For instance, on a mid-sized car such as the Chevrolet Malibu, the company used to plan its target price around the six-cylinder model. “We’d say we want to hit the market at $22,000 with the six-cylinder,” LaNeve said. “Now we’re saying at what price do we want to hit the market with a fourcylinder because that’s the key product. To be honest, that price is pretty close to that same $22,000.” The trend toward higher four-cylinder transaction prices and lower eight-cylinder transaction prices spans the industry. In the same 12 months, transaction prices across the industry are up $422 on four-cylinders and down $2,834 on V-8s, PIN reported. Demand for four-cylinders during that period rose from 35.7 percent of industry sales in September 2007 to 42.6 percent in August 2008. But it has fallen significantly from its peak of 51.3 percent in May, according to PIN. The reasons: restricted availability during the summer of some four-cylinder models such as the Ford Focus and Honda Civic and higher pickup sales in late summer that held down the four-cylinder mix. c the industry and $1,120 for GM. Incentives can boost sales, but they are a mixed blessing for dealers. Take GM’s recent employee pricing promotion, for example. For GM dealers, employee pricing means less profit. The negotiating process goes out the window, and dealers receive a pittance from the factory for handling the paperwork. On a Chevrolet Malibu, for example, the difference between wholesale and sticker is about $1,100. The Malibu is a strong seller, and the dealer stands to make a nice profit. But not under employee pricing for all.c munds.com. Among the Big Six automakers, only Chrysler LLC is offering bigger incentives, with $4,366 per vehicle in August. Ford was a bit lower, with August incentives averaging $3,443. More sales, less profit Given the hefty incentives that GM is offering, it’s not surprising that transaction prices actually have declined since the beginning of this year. According to the Power Information Network, GM’s transaction prices in early September were down from January. The dip was $1,090 for Lower transaction prices GM’s introductory price increases for 2009 cover a broad range. Pontiac prices rose an average of $565, but the step-up was $1,888 for Cadillac and $1,972 for Hummer. But it isn’t clear whether General Motors can make these price increas- http://www.zadv.com http://www.edmunds.com http://www.zadv.com http://www.edmunds.com

Table of Contents Feed for the Digital Edition of Automotive News - September 22, 2008

Credit-crunched BMW to cut volume and jobs in U.S. Did dealer pitch have a catch? Henderson will keynote World Congress Suppliers: Chrysler jury a worry Learn how going green can be good for business Hyundai hesitates on i10 Ram launches with incentive Dodge RamBox cost: $1,895 Toyota seeks bids to build A-BAT Volt: A pricey short hauler? A horse of a different, uh, color Delphi work moves to N.Y. from plant in Mexico GM store count down 226 so far this year Bill Heard shuts Arizona dealership Would Mazda2 hurt Mazda3? Chrysler dealers may see Volt fighter GM gets more bucks for its 4-bangers GM's '09 list prices rise 2.7% Suppliers seek piece of loan package Don't attach too many strings to federal loans Cars run on money and credit, not gas The workplace is a democracy? Free Choice Act must be defeated Extreme makeover Logo no go A 4-cylinder Cadillac? Get real A double standard on idle workers? Free Choice Act means no choice Saccucci: Let's hear it for free enterprise Dealers signal support for 35% estate tax rate Dealers Designing for MPG Slippery styling What happened to Volt's racy design? Aerodynamics Belletech will supply Honda in Indiana Practicality will top panache at Paris show Chrysler seeks to build loyalty with service Band buddies Personnel Auction group's new boss sees dip in volumes Wholesale prices of big used trucks rise 8.6% in August Big-truck sales off 22.6% in Aug. August sales in Europe worse than in U.S. Honda will let supplier assemble on-site at Ohio plant Farley: Retool image for era of the small car O'Donnell: No stranger to U.S. Honda to debut camera, airbag American Axle lands contract Ex-Ford dealer prevails in court Dodge plans Web blitz for Ram Federal-Mogul will idle 4,000 Sparks will fly over GM, Toyota plug-ins Negotiations fail; chaos (allegedly) ensues Bo plays defense, helps GM avoid weather woes Critics say the new Volt was jolt Lithium, schmithium-- Will the ladies like it? Small and beautiful-- mutually exclusive? Where Andrea Pininfarina saw design headed Designers think small to make it big Designers can't ignore history Pretty and petite Toyota goes its own way with green designs The elements of style It's difficult to design fuel efficiency into big pickups Specialty-car maker has bright design ideas Form follows fashion Vehicle designers aim to please Chinese Suppliers to the 2009 Dodge Ram Eaton will equip '09 VW Golf IAV to move into new tech center BorgWarner makes Tesla deal Mann plans 4th China plant NovaCast buys into Korean firm Valeo shifts rear-light work Supplier personnel

Automotive News - September 22, 2008

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