Automotive News - September 22, 2008 - (Page Cover1)

autonews.com ® SEPTEMBER 22, 2008 Entire contents © 2008 Crain Communications Inc. All rights reserved. $155/YEAR; $5/COPY Credit-crunched Costs soar, funds are scarce — and the pain looks long-term Finance blues Percentage of auto dealers who say it’s harder to finance buyers with prime or subprime credit than it was a year ago 100% 80% Prime 60% 40% 20% 0 Subprime Donna Harris dharris@crain.com Source: Automotive News survey Wall Street volatility likely will prolong the auto industry’s credit crisis through 2009, industry executives say. And the pain is becoming intense. Dealers surveyed by Automotive News report greater difficulty and expense financing their inventories. They say it’s getting harder and more expensive to find financing for buy- ers — even those with good credit. Meanwhile, the cost of borrowing continues to rise for many auto lenders. Worsening credit conditions have led one market forecasting firm to predict sluggish U.S. light-vehicle sales of 13.7 million units next year. And in this shaky market, the credit crunch is dividing automakers’ captive finance companies and dealer networks into haves and have-nots. The haves generally are large dealerships and captive lenders that work with import brands. The have-nots are smaller dealers and captives associated with the Detroit 3. David Cosper, vice chairman of the public dealership group Sonic Automotive Inc., said the recent federal see CREDIT, Page 39 Designing for MPG The need for more aerodynamic shapes has changed the way almost all vehicles are being styled. Our special design section starts on | PAGE 17 | O’Donnell knows the U.S. ➤ 38 BMW to cut volume and jobs in U.S. Diana T. Kurylko dkurylko@crain.com On the Web This week at www.autonews.com: Monday: The Automotive News Data Center posts reports on European vehicle sales, commercial truck sales, certified pre-owned vehicles and average wholesale used-vehicle prices. WOODCLIFF LAKE, N.J. — BMW’s new North American chief wants to stop pushing for maximum sales volume in a declining market — even if it means bringing 16 years of U.S. sales increases to a halt. BMW Group’s U.S. operations will not take 44,000 new BMW brand cars and trucks that were to be allocated to the United States this year, said Jim O’Donnell, CEO of BMW (U.S.) Holding Corp. Those vehicles will go to markets where they can be sold more profitably, he said. The smaller sales target is part of a bigger rethinking of U.S. strategy that O’Donnell will present to his German bosses in January. That plan could include the reintroduction of fourcylinder powertrains, O’Donnell said. Currently, the smallest powerplant in the BMW brand’s U.S. lineup is a six-cylinder engine. In an interview last week, O’Donnell said he will: Cut lease volume at least 10 percentage points. Reduce incentive spending and end the traditional December blowout. Change dealer bonuses to boost customer satisfaction. Cut corporate costs. O’Donnell says he will eliminate 90 North American jobs. “We want to see how the market is going and will revisit our aspirations in January,” said O’Donnell, 58. The Scot, who took the helm at BMW in see BMW, Page 38 Prelude to Paris Having taken the wraps off the production version of the Chevrolet Volt last week, General Motors will display it at the Paris auto show. Press days are on Oct. 2-3. Other headliners include the Ferrari California, above, and the Mazda Kiyora city-car concept. The Paris show preview is on Pages 24-27. Fritz Henderson: GM’s COO will speak Tuesday night. Henderson will keynote World Congress General Motors President Fritz Henderson will be a keynote speaker at the 33rd Automotive News World Congress in Detroit on Tuesday evening, Jan. 20. Henderson, 49, has been a key figure in GM’s efforts to navigate the industry’s rough waters. He was named president and COO in March. Henderson moved to Detroit in 2006 to become CFO after leading GM’s turnarounds in Europe and Asia. Now, GM’s operations in North America, Europe and Asia-Pacific report to him. c General Motors CEO Rick Wagoner introduces the production Chevrolet Volt at the GM centennial celebration. For coverage of the Volt’s big week, see Pages 4 and 42. Did dealer pitch have a catch? 2 Kansas City area Suzuki stores accused of TV ad deception Patricia Scott pscott@crain.com When a local TV station brings a hidden camera into your showroom, secretly records your finance manager in action and then puts the guy on the 6 o’clock news, you know you’ve got a problem. That’s what happened in April at Chad Franklin Suzuki in Kansas City, Kan., after customers complained of wildly deceptive sales promotions — like “Drive a different brand new Suzuki every year and never make a single car payment.” Now attorneys general in two states — one citing “ridiculous advertising claims” — have sued a pair of Chad Franklin Suzuki dealerships, the one in Kansas and one in Kansas City, Mo. For seven months, the stores had bombarded local airwaves NEWSPAPER with improbable come-ons — nearly 10,000 TV and radio spots. The offers varied. One in-your-face ad promised: “No money down and a brand new vehicle for $43 a month,” gasoline included. The TV spots — created by a Florida agency, The Christopher Advertising Group — used flashing, boldface words on the screen to drive home messages such as “no payments for life.” One ad claimed: “Chad Franklin will make your first year’s worth of see SUZUKI, Page 38 Key facts When: Jan. 19-22 Where: Detroit Marriott Renaissance Center Cost: $1,495 early registration fee by Dec. 1 (save $200); daily fee $850 Information: 313-446-0485 or autonews.com/worldcongress Exclusive lead sponsors: PricewaterhouseCoopers and IBM http://www.autonews.com http://www.autonews.com http://www.autonews.com/worldcongress

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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