Automotive News - July 21, 2008 - (Page 4) 4 • JULY 21, 2008 Dealers cut, shift their ad spending Internet grabs bigger share of media budget Mary Connelly mconnelly@crain.com Auto dealerships are slicing their advertising budgets to cope with depressed profits. But because new-vehicle sales have plummeted so abruptly this year, the cost of advertising per new car or truck sold — a standard metric of auto retailing — has increased to a record level. Some dealers say they need to advertise as much, if not more, in a down market to generate showroom traffic. Others say they are targeting their limited resources by shifting ad dollars from newspapers to the Internet. In the first four months of 2008, the National Automobile Dealers Association reports, dealership ad spending fell 4.1 percent from the year-ago period, to about $2.35 billion. The spending figures do not include ad subsidies from automakers. At the same time, NADA chief economist Paul Taylor says, the average dealer spent $626 on advertising for every new vehicle he or she sold from January through April — a 5.5 percent increase from the same period of 2007. This year, dealerships “are looking to save money any way they can,” Taylor told Automotive News. “The risk of not advertising is to be overlooked by the consumer. But given the difficulties to cash flow, it requires a major effort.” Paul Fotopoulos says new-vehicle sales at his two Dallas-area Ford dealerships have dropped from roughly 300 cars and trucks a month to about 230 units in recent months. As a result, he says, he has trimmed the dealerships’ monthly ad budgets 30 percent. He declined to provide a see ADS, Page 35 TV spots featuring a Barack Obama impersonator helped boost sales at Texas dealer Paul Fotopoulos’ three Kia dealerships as much as 15 percent in April and May. Truck for the times? Oklahoma pickup gets 37 mpg Charles Child cchild@crain.com Mileage champs graded interiors for American tastes. An official opening of the plant is planned for July 31. Call it the first pickup for $4-a-gallon fuel. The Tiger Champ gets 37 mpg with a threecylinder diesel engine from Caterpillar Inc. It is assembled in Oklahoma and available at 70 dealerships nationwide. Of course, a few strings are attached: Outside of Oklahoma, you can’t drive it on public roads. It’s slow. And it does not meet federal safety standards. But what the pickup does have is plenty for Mike Ward, CEO of Tiger Truck LLC. Ward, a 62year-old former executive at JM Family Enterprises Inc., is scrambling to meet expected demand. It helps to have friends at the state capital. In June, Gov. Brad Henry signed a bill that makes the Champ and a small Tiger Truck pickup, the Star, legal starting Nov. 11 on all roads in Oklahoma except most federal highways. 25 mph limit Ward made contacts in China while working for JM Family Enterprises. In the 1980s, he traveled in China to source parts for Toyotas that JM imported into the United States. Ward has been importing, modifying and selling pickups from Changan since 1999. In 2006, he sold about 800 vehicles, all for offpublic-road purposes. The move to Oklahoma and expansion should push sales to about 8,800 per year. Outside of Oklahoma, the pickups have governors that limit speeds to 25 mph at construction sites, college campuses and other off-road sites. In Oklahoma, their speeds will be unregulated, but the pickups will be barred from Interstates and federal highways with speed limits above 55 mph. The Oklahoma law is designed to provide jobs in the Poteau area, says state Sen. Kenneth Corn. Drivers, in turn, get inexpensive transportation. In rural Oklahoma, he says, “nothing’s real close.” c Tiger Champ: 37 mpg highway Here’s how the 2 pickups designed in China compare with the Chevy Silverado. TIGER STAR TIGER CHAMP CHEVROLET SILVERADO 1500 Capacity: 35 per day Consequently, Ward says, many auto dealers in Oklahoma are eager to sell the two pickups. Trades workers and farmers, desperate for inexpensive transportation, will snap them up, he says. “I just don’t know how people are paying for gasoline,” Ward says. First, Ward must get assembly in gear. His 100-employee plant in the small city of Poteau near the Arkansas border has capacity to produce about 35 pickups per day. Now, Ward is producing fewer than five per day. He moved his operations from Dallas late last year, lured by tax breaks and other incentives from the state and federal governments. The two pickups were designed by a Chi- Wheelbase Length Width Height Curb weight Base engine Horsepower Torque, lbs.-ft. MPG Base price *Company estimates **Includes shipping 98 in. 149 in. 58.5 in. 71 in. 1,940 lbs. 1.0-liter I-4 gasoline 35 hp @ 5,300 rpm 54 @ 5,300 rpm 43 hwy.* $11,795 112 in. 177 in. 65 in. 80 in. 2,486 lbs. 1.1-liter I-3 diesel 28 hp @3,000 rpm 45 @ 2,100 rpm 37 hwy.* $12,995 119 in. 205.7 in. 79.9 in. 73.6 in. 4,453 lbs. 4.3-liter V-6 195 hp @ 4,600 rpm 260@2,800 rpm 20 hwy. $18,515** nese automaker, Chongqing Changan Automobile Co. Changan ships about half of the parts, by value, from China. Ward sources the rest in North America. In Poteau, Tiger Truck welds and paints the bodies and finishes assembly, installing up- Tiger Star: 43 mpg highway Schaeffler goes shopping: Can supplier land Continental? Douglas A. Bolduc dbolduc@craincom.de Goliath vs. a very rich David How supplier giant Continental stacks up against its would-be buyer, Schaeffler Group Continental AG Schaeffler Group Founded: 1871 Founded: 1946 2007 sales: $26.30 billion*; 2008 Brands: INA, FAG, Luk target: $41.83 billion* 2007 sales: $14.10 billion* Employees: 150,000 Employees: 66,000 Headquarters: Hanover, Germany Headquarters: Herzogenaurach, Key products: Engine management, Germany driver assistance, tires Key products: Bearings, engine CEO: Manfred Wennemer components, clutches CEO: Juergen Geissinger *Sales figures are converted from euros at current exchange rates Schaeffler Group, a German maker of ball bearings that is owned by two of the world’s richest people, has a pile of cash and experience with takeovers. But it is weak in two automotive parts segments poised for growth: powertrains and electronics. Much larger Continental AG has expertise in those two areas, in part because of its own acquisitions. But its stock price, like that of many other suppliers, had been beaten down. On July 11, it stood at less than 54 euros, or about $85 at current exchange rates. That’s off from roughly $173 about a year earlier. You can guess what happened next. Continental, more than twice the size of Schaeffler, rejected the latter’s initial unfriendly bid of $17.74 billion. That offer was $316.8 million less than the price Continental paid to acquire Siemens VDO Automotive last December. Philip Wylie, director of automotive investment banking at Houlihan Lokey, warns of dangers when a supplier gets too big. “Look at what happened with ArvinMeritor, Dana and many other U.S. suppliers, and you see that getting big didn’t do them much good.” Suppliers need both economies of scale and the right product mix, Wylie says. Expect personalities to play a role as the takeover battle unfolds. Continental CEO Manfred Wennemer, 60, has been head of Continental since 2001. He transformed the company from a tire maker into a vertically integrated technology supplier with the size and the product portfolio to challenge giants such as Robert Bosch GmbH and Denso Corp. Maria-Elisabeth Schaeffler became co-owner of the Schaeffler Group in 1996 after the death of her husband and co-founder of the company, Georg Schaeffler. Forbes magazine has listed Maria-Elisabeth and her son Georg among the 100 richest people in the world. Juergen Geissinger has been CEO of Schaeffler Group since 1998. Geissinger, 49, has overseen the acquisitions that have made the company the world’s second-largest manufacturer of rolling bearings. Before joining Schaeffler, Geissinger worked for the brake and chassis unit of ITT Industries, which Continental bought in 1998. Lars Holmqvist, CEO of the European supplier association, predicts that if the deal goes through, more consolidation will follow as rival suppliers try to keep pace and Schaeffler spins off unwanted businesses. When that happens, Holmqvist says, “There is always a cascade” of deals. c http://
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)
For optimal viewing of this digital publication, please enable JavaScript and then refresh the page. If you would like to try to load the digital publication without using Flash Player detection, please click here.