Automotive News - December 1, 2008 - (Page 3) DECEMBER 1, 2008 • 3 83rd year — No. 6336 Transplant expansions: Onward ho! As they’ve done before, imports build up despite U.S. downturn Lindsay Chappell lchappell@crain.com Fitch cuts Toyota debt rating; 1st time in decade TOKYO — Toyota Motor Corp. had its top-notch credit ratings cut for the first time in a decade, hurting its share price and raising borrowing costs. Fitch Ratings last week downgraded Toyota’s long-term foreign and local debt ratings to AA from AAA with a negative outlook. The agency said Toyota needed to review its global investments, product mix and expansion plans. “Negative developments in the industry are so substantial and fundamental that even the strongest player — Toyota — can no longer support an ‘AAA’ rating,” said Fitch Director Tatsuya Mizuno. Tight credit dried up car sales in the United States and Europe, and the impact has spread to China, India, Russia and other markets. Toyota had consolidated debt of ¥12.2 trillion ($127.8 billion) as of March, according to Fitch. — Reuters NASHVILLE — As the Detroit 3 plead for federal loans, Asian and European competitors continue investing in the United States. Even in another market downturn, they are building assembly plants in a relentless search for new and growing segments. In the past three slumps, Asian and European automakers invested in new North American factories — in the early 1980s, early 1990s and after the 2000 stock market crash and the 2001 terrorist attacks. The results? Honda and Toyota won a huge share of the minivan market. Nissan cracked the midsized-car market. BMW and Mercedes-Benz established themselves as luxury SUV and crossover players. Now the Detroit 3’s competition is repeating the pattern. Toyota Motor Corp. says it remains on track to build a $1.3 billion Prius factory near Tupelo, Miss., even as it scales back production of other U.S. factory lines. By 2010, the Mississippi plant will give Toyota’s U.S. dealers more hot-selling Priuses, the market’s dominant hybrid powertrain model. Production capacity is limited for the Prius, which is imported from Japan. America Honda has signaled that it might move its Fit subcompact into U.S. production, as it finds itself unable to meet dealer orders from Japan. Imports invest in U.S. As the Detroit 3 struggle, import competitors are investing in the U.S. Here’s the current schedule. Kia: New plant in Georgia for small cars in 2009 Toyota: New plant in Mississippi to produce Prius hybrids in 2010 Nissan: Converting line in Mississippi to produce light commercial vehicles in 2010 BMW: Plant expansion in South Carolina to produce X3 crossover in 2010 Volkswagen: New plant in Tennessee for mid-sized sedan in 2011 Right segments Meanwhile, Volkswagen AG is moving ahead on a $1 billion assembly plant in Chattanooga, Tenn., that will spin out a new mid-sized sedan starting in 2011. Nissan North America is spending $118 million to convert its unsuccessful Titan pickup line to produce three new commercial vehicles in Canton, Miss. That plan will put Nissan into a segment dominated by the Detroit 3: workhorse commercial vans and cargo-hauling trucks. Kia Motors Corp. has a $1.2 billion see TRANSPLANT, Page 51 Auto lobbyists, Obama team go face to face WASHINGTON — The lines of communication between the automakers’ Washington offices and President-elect Barack Obama’s transition team for transportation are officially open. Representatives of most automakers — import brands as well as the Detroit 3 — met with team members Tuesday, Nov. 25, sources told Automotive News. The meeting was more of a getacquainted session, the sources said. But big issues remain to be discussed, including the speed with which the new administration intends to raise fuel economy standards and whether states should enforce their own greenhouse gas emissions rules. — Harry Stoffer ■ New look for Lincoln’s MKZ The Lincoln MKZ was restyled and re-engineered for the 2010 model year. The most striking change is the large split grille with tall vertical fins, key elements of Lincoln’s new design language. Richer-looking materials and a higher level of fit and finish highlight the redesigned interior. The car debuted last month at the Los Angeles Auto Show. Sales begin in the first quarter of 2009. RICK KRANZ Key facts What: An online conference When: May 6-7, 2009 Where: Your computer Sponsors: Automotive News, Association of F&I Professionals Time: 10 a.m. to 6 p.m. Eastern Cost: $49 Info and registration: www.autonews.com/connections Credit cutoff sent Minn. megadealer into tailspin Kathy Jackson kjackson@crain.com Chrysler Financial demanded more than $20 million from Denny Hecker’s dealership group, then eliminated floorplanning and other credit lines. Hecker sued Chrysler Financial in U.S. District Court in Minnesota on Nov. 13, alleging the credit line was cut off without warning. The suit said the relationship began to sour after Cerberus Capital Management LP bought Chrysler in August 2007. Ford to halt Mexico output MEXICO CITY — Ford Motor Co. will close its Hermosillo assembly plant the last two weeks of December and all of January, the automaker’s new president in Mexico said. In his first interview with a U.S. media outlet since taking the job Nov. 1, Eduardo Serrano said Ford will build hybrid versions of the Ford Fusion and Mercury Milan cars at the plant next month. Volume production of 2010 versions of the Fusion, Milan and Lincoln MKZ cars will begin Feb. 2. The vehicles will be in North American dealerships in March, he told Automotive News. CORRECTIONS A story on Page 16 of the Nov. 24 issue reported an incorrect number of lithium ion battery cells that GS Yuasa Corp. will have the capacity to produce. GS Yuasa plans to increase capacity to 1 million a year from 200,000. Automotive News and the Association of Finance & Insurance Professionals are hosting a two-day conference May 6 and 7 — and delivering it to your computer. F&I Connections is a virtual event that will cover trends in F&I funding regulation and management. Session topics will include getting subprime buyers financed and making the best deals with captive finance companies and independent lenders. The program is designed for dealer principals, general managers, F&I managers and their staffs. The cost is $49. Attendees will be able to attend 10 Webinars, five discussion groups and around-theclock chat rooms. They also will get full access to the exhibition area for 90 days after the event and receive a one-year subscription to the Automotive News Digital Edition. For more information and registration, see www.autonews.com/connections. Online conference tracks F&I trends Tim Sunburg could see that things were coming undone at Denny Hecker Automotive Group back in mid-October. Sunburg, a service adviser at Hecker’s Ford dealership in Monticello, Minn., said Chrysler Financial employees converged on the store one day and froze all the accounts. They also posted security to guard the vehicle inventory. That kind of thing was happening at several of the Minnesota megadealer’s stores. On Oct. 14, Chrysler Financial — which floorplanned most of Hecker’s dealerships, including several non-Chrysler brands — demanded more than $20 million in payments from Hecker. The next day it pulled the plug on floorplanning and then, on Nov. 7, cut off credit lines for Hecker’s leasing and rental-car businesses. Now Denny Hecker’s business empire is teetering. The 56-year-old Minnesota megadealer closed six stores and sold three more on Nov. 21, and he may be ready to dump other parts of his operation. “We’re looking at all options,” said John Austin, a spokesman for the Hecker group. “We’re trying to work out a new business model.” Hecker, a high-profile and at times controversial figure, owned 13 dealerships in Minnesota and three in California that sold 17 brands. He also owns Advantage Rent A Car of San Antonio and has a national leasing business. But the group has been reeling since Chrysler Financial pulled out. The stores that were sold and closed were all financed by the captive. No warning In March, the suit contended, Chrysler Financial told Hecker it no longer would finance nonChrysler vehicles. Chrysler has not responded to the lawsuit, and no court date has been set. A Chrysler Financial spokesperson declined to comment last week. Hecker owned six Hyundai stores, but Chrysler Financial moved so swiftly in October that even Hyundai couldn’t help, though it tried. see HECKER, Page 51 http://www.autonews.com/connections http://www.autonews.com/connections
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