Automotive News - July 21, 2008 - (Page 1) autonews.com ® JULY 21, 2008 Entire contents © 2008 Crain Communications Inc. All rights reserved. $155/YEAR; $5/COPY Gray sky, not blue; store values wilt Detroit 3 franchises often worth only real estate, parts Donna Harris dharris@crain.com Six months ago, dealer Mike Kahn put Superior Chrysler-Jeep-Dodge in suburban Los Angeles up for sale. He’s still waiting for the phone to ring. “It’s probably one of the nicest dealerships on the busiest freeway,” Kahn told Automotive News. “And we have not had one offer at any price, even for zero blue sky.” The dismal U.S. economy, rapidly rising gasoline prices, plunging vehicle sales and bad press have conspired to slash the values of Detroit 3 dealerships to a fraction of what they were just last year, say dealers, brokers and industry executives. Dealer and property developer Bruce Toll owns and operates two auto malls in suburban Philadelphia. He says a domestic brand dealership, including its real estate, that might offer at any price, even for zero blue sky. “ We have not had one MIKE KAHN Dealer ” have sold in his market for $4 million a few years ago would be lucky to fetch $500,000 today. Toll says all of his 13 franchises, Detroit 3 and import brand, are profitable. But he has seen at least 10 domestic brand competitors go out of business in the past year. When Detroit 3 dealerships sell at all these days, many bring only the value of their real estate and parts inventories. “Blue sky” — the intangible value of a franchise — is often virtually nil for a Detroit 3 store. “I would not go out and pay someone $2 million to $3 million for a franchise unless it came with a great piece of real estate,” Toll says. “I don’t believe the blue sky is worth that much today, and neither does anybody else.” Sheldon Sandler, an investment banker in Skillman, N.J., specializes in working with big auto retailers to buy dealerships. He says his company, Bel Air Partners, “won’t bother” with Detroit 3 dealerships. “They are just worth parts,” Sandler says. see FRANCHISE, Page 35 Rethinking everything Wipers Lower location reduces wind noise and drag. Side mirror Subtle notch near the rear edge assists airflow. Grille and hood Reshaped to optimize aerodynamic perfomance. Caught in a meat grinder of an auto industry, carmakers, suppliers and dealers are doing all they can to cope. Companies are re-examining products, technology, manufacturing and marketing strategies in a furious effort to survive. Cowl screen Raised lip directs air flow toward the sides of windshield. Fog lamps Flush-fit pockets eliminate aerodynamic drag. GM’s agonizing week: Where to turn for profits GM CEO Rick Wagoner’s key challenge: With highmargin pickups and SUVs in steady decline, the automaker must wring more profits out of fuelefficient cars. GM also is looking to pare its product lineup, searching for cash savings and chopping more out of its marketing budget. | PAGE 34 | REBECCA COOK/REUTERS Wheel wells Smaller wheel wells and lower side sills reduce drag. Air dam Directs airflow around the vehicle to reduce drag. VW in Chattanooga: German suppliers line up for work German parts makers are eager to win more VW contracts now that the automaker will build an assembly plant in Tennessee. VW says the field is wide open. | PAGE 3 | Designers spent more than 200 hours in the wind tunnel, honing the design for lower wind resistance and thus better mpg for the redesigned 2009 Ram 1500 pickup. More mpg — ASAP: How engineers are pulling out the stops to increase fuel economy now As consumer tastes change before their eyes, designers and engineers are bending sheet metal, tweaking transmissions and engines, and slashing weight wherever possible to squeak out better mileage from vehicles built for $2-a-gallon gasoline. See Page 33. To improve fuel economy fast, experts say it’s hard to beat low-rolling-resistance tires. “If we reduce rolling resistance by 10 percent, it can improve fuel economy 1.5 percent,” says General Motors engineer David Cowger. See Page 33. Just when they need it most, dealers slash ad spending Here’s a paradox: Although dealers are cutting their advertising budgets, vehicle sales have fallen even faster. So ad costs per new vehicle sold are at an all-time high. Dealers are accelerating their shift of ad dollars to the Internet from other media, notably newspapers. | PAGE 4 | The plunge in full-sized pickup production From July through December, output of out-of-favor large pickups will plunge to about half what it was in the same period last year. | PAGE 8 | Brave new world: A big, honkin’ Chinese pickup that gets 37 mpg NEWSPAPER An entrepreneur in Oklahoma is assembling pickups from China that get better mileage than a Honda Fit. Are they a novelty — or a peek at the future? | PAGE 4 | http://autonews.com
Table of Contents Feed for the Digital Edition of Automotive News - July 21, 2008 Automotive News - July 21, 2008 Gray sky, not blue; store values wilt Sour Chery: Bricklin suit claims corruption Germans in U.S. eye VW work S.C. warranty insurer faces shutdown LaNeve: Make do with less marketing money Tesla CAFE: 244 mpg Lincoln's big crossover Schaeffler goes shopping: Can supplier land Continental? Dealers cut, shift their ad spending Truck for the times? Oklahoma pickup gets 37 mpg For Chrysler sensations, glory days are gone Kuzak: Redone Fords must have best fuel economy The Fisher brothers: Quite a body of work Kazamai concept: Mazda's design heard round the world 3 years later, Mitsubishi, UAW resume contract talks Big-pickup production will plunge Nason's NHTSA: More rules, fewer penalties A vote for the Volt Hyundai: Genesis gives brand a new beginning in luxury GM may survive; to thrive, it needs hot products GM just bought some time Green can be cool; it's up to the maker Why don't we drive diesels in the U.S.? Hooray! Joint effort stops airbag deaths All-Stars: Look beyond top brass Leno was right about U.S. cars Toyota recalls Siennas, disputes safety issue This time, the industry embraces connectivity Telematics connects with consumers Telematics gets no respect — the word, that is Tapping mapping for an extra eye on the road Drivers can check CO2 'tire print' Pay As You Drive insurance tracks cars to trim costs Subscribers, sponsors may fund telematics services Big-truck sales fall 14% in June Continental plant to make brakes Lear to shut Mo. seating plant Modine shifts production to Ky. Linamar buys Visteon plant Picture this Lexus revamps 'Taste' marketing extravaganzas Suzuki hires new auto ad agency Fisker turns to Finnish firm to make first hybrids American Suzuki gets new president Canada sales slip 5.6% in June Dealers A big fuel saver: Easy-rolling tires (but watch braking) MPG now! Automakers race to boost efficiency Products — not entire brands — likely to be ditched Pared ad budget is back on the chopping block GM goal: Big small-car profits Congress mulls arbitration bill 2009 Mazda6 price: $19,220 Copart files antitrust suit Denton's out, Leuliette's in as Dura CEO June output falls 13.8% Dodge Challenger: Not quite a sellout Magazine is raided in Renault espionage case Ya gotta believe: Dealers buy GM stock States of the auto industry Will the big guns pull the trigger? Lear a year later: Icahn's offer in hindsight Midcourse correction in Toyota's global sales outlook Chattanooga: A good site better Automotive News - July 21, 2008 Automotive News - July 21, 2008 - (Page Intro) Automotive News - July 21, 2008 - Gray sky, not blue; store values wilt (Page 1) Automotive News - July 21, 2008 - Gray sky, not blue; store values wilt (Page 2) Automotive News - July 21, 2008 - Lincoln's big crossover (Page 3) Automotive News - July 21, 2008 - Truck for the times? Oklahoma pickup gets 37 mpg (Page 4) Automotive News - July 21, 2008 - Truck for the times? Oklahoma pickup gets 37 mpg (Page 5) Automotive News - July 21, 2008 - 3 years later, Mitsubishi, UAW resume contract talks (Page 6) Automotive News - July 21, 2008 - 3 years later, Mitsubishi, UAW resume contract talks (Page 7) Automotive News - July 21, 2008 - A vote for the Volt (Page 8) Automotive News - July 21, 2008 - A vote for the Volt (Page 9) Automotive News - July 21, 2008 - Hyundai: Genesis gives brand a new beginning in luxury (Page 10) Automotive News - July 21, 2008 - Hyundai: Genesis gives brand a new beginning in luxury (Page 11) Automotive News - July 21, 2008 - Why don't we drive diesels in the U.S.? (Page 12) Automotive News - July 21, 2008 - Why don't we drive diesels in the U.S.? (Page 13) Automotive News - July 21, 2008 - Leno was right about U.S. cars (Page 14) Automotive News - July 21, 2008 - Leno was right about U.S. cars (Page 15) Automotive News - July 21, 2008 - Toyota recalls Siennas, disputes safety issue (Page 16) Automotive News - July 21, 2008 - Toyota recalls Siennas, disputes safety issue (Page GM1) Automotive News - July 21, 2008 - Toyota recalls Siennas, disputes safety issue (Page GM2) Automotive News - July 21, 2008 - Telematics connects with consumers (Page 17) Automotive News - July 21, 2008 - Telematics connects with consumers (Page 18) Automotive News - July 21, 2008 - Telematics gets no respect — the word, that is (Page 19) Automotive News - July 21, 2008 - Tapping mapping for an extra eye on the road (Page 20) Automotive News - July 21, 2008 - Pay As You Drive insurance tracks cars to trim costs (Page 20A) Automotive News - July 21, 2008 - Pay As You Drive insurance tracks cars to trim costs (Page 20B) Automotive News - July 21, 2008 - Pay As You Drive insurance tracks cars to trim costs (Page 20C) Automotive News - July 21, 2008 - Subscribers, sponsors may fund telematics services (Page 20D) Automotive News - July 21, 2008 - Subscribers, sponsors may fund telematics services (Page 21) Automotive News - July 21, 2008 - Linamar buys Visteon plant (Page 22) Automotive News - July 21, 2008 - Picture this (Page 23) Automotive News - July 21, 2008 - Fisker turns to Finnish firm to make first hybrids (Page 24) Automotive News - July 21, 2008 - Canada sales slip 5.6% in June (Page 25) Automotive News - July 21, 2008 - Canada sales slip 5.6% in June (Page 26) Automotive News - July 21, 2008 - Canada sales slip 5.6% in June (Page 27) Automotive News - July 21, 2008 - Canada sales slip 5.6% in June (Page 28) Automotive News - July 21, 2008 - Canada sales slip 5.6% in June (Page 29) Automotive News - July 21, 2008 - Canada sales slip 5.6% in June (Page 30) Automotive News - July 21, 2008 - Canada sales slip 5.6% in June (Page 31) Automotive News - July 21, 2008 - Dealers (Page 32) Automotive News - July 21, 2008 - MPG now! Automakers race to boost efficiency (Page 33) Automotive News - July 21, 2008 - GM goal: Big small-car profits (Page 34) Automotive News - July 21, 2008 - Denton's out, Leuliette's in as Dura CEO (Page 35) Automotive News - July 21, 2008 - Denton's out, Leuliette's in as Dura CEO (Page 36) Automotive News - July 21, 2008 - June output falls 13.8% (Page 37) Automotive News - July 21, 2008 - Chattanooga: A good site better (Page 38) Automotive News - July 21, 2008 - Chattanooga: A good site better (Page 39) Automotive News - July 21, 2008 - Chattanooga: A good site better (Page 40)
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