Automotive News - December 1, 2008 - (Page 8) TIMES ARE TOUGH. RELYING ON YOUR AD AGENCY SHOULDN’T BE. In a time when the auto industry is in crisis, you need an advertising agency that understands and has real experience in driving next day sales, even when your ad budgets are at their lowest point ever. That’s what Zimmerman is all about. We have over 25 years of skill, knowledge and experience when you need it most. We measure our success by the numbers on your balance sheet, not ours. This guiding principal of true partnership is what motivates us to bring you the best advertising and marketing strategy. It really is about being there for you 24/7, seriously. 8 • DECEMBER 1, 2008 What the Detroit 3 will tell Washington Jamie LaReau jlareau@crain.com What the Democrats want Democratic leaders laid out what the Detroit 3 must do to seek loans. Here are key points. Assess cash-flow needs, short- and long-term Estimate the impact of auto sales at current rates, if they improve slightly and if they decline Give top priority to government loan repayment Grant stock warrants Bar dividends and excessive executive pay Indicate plans to pay health care and pension obligations Reveal a plan to meet fuel-efficiency rules and develop advanced-technology vehicles Estimate the financial impact of vehicle sales using a range of projections. GM projects industry sales of 11.7 million vehicles next year. Grant stock warrants so taxpayers will benefit from a rebound. GM CEO Rick Wagoner has said he would agree to do so, and Ford CEO Alan Mulally has said he is “open” to this proposal. Bar payment of dividends and excessive executive pay. GM and Ford have suspended dividends. Wagoner and Mulally have agreed to consider limits on executive compensation. Chrysler, which is privately owned, does not pay dividends. Nardelli says he is willing to work for $1 a year. DETROIT — Democratic leaders of Congress are talking tough about the need for the Detroit 3 to cut costs, eliminate perks and shake things up. But demands issued by House Speaker Nancy Pelosi, D-Calif., and Senate Majority Leader Harry Reid, D-Nev., in a Nov. 21 letter suggest the Democratic leadership actually supports the emergency aid that automakers are seeking. Some of the requested information has been stated publicly by automakers. And to some demands — stock warrants, for example — the Detroit 3’s CEOs already have agreed. Republicans will have another — probably tougher — set of questions. And Congress may not like the answers. For example, the Republicans seem certain to discuss the need for UAW concessions. On Tuesday, Dec. 2, General Motors, Ford Motor Co. and Chrysler LLC will respond to the Democratic leadership. Hearings will follow. Although the Detroit 3 haven’t released their testimony in advance, they have telegraphed their responses to key demands: Assess the cash needed to continue operations. Recent analysis by JPMorgan estimates GM will burn up $14 billion in 2009, while Ford will burn $12 billion. The report did not estimate Chrysler’s immediate cash needs, but CEO Bob Nardelli testified last month that reserves are thin. Some other executive perks may disappear, too. After some congressmen and media nationwide made an issue of it, GM said it had turned in two of its leased jets in September and will turn in two more, leaving three. Spell out a plan for health care and pension obligations. For example, in 2010 GM must cough up $7 billion for the UAW’s retiree health care fund. Ford’s VEBA obligations are much smaller for 2009 and 2010: $50 million each year. Chrysler would not reveal its liability. Show how the companies will meet federal fuelefficiency requirements. Both Ford and GM plan to launch new small cars powered by turbocharged gasoline engines. The compact Chevy Cruze sedan, for example, will top 40 mpg. In 2010, GM also will launch the Chevy Volt, a hybrid vehicle that can run up to 40 miles on its batteries alone. Ford has announced plans to bring its European lineup of cars to the United States. The fuel-efficient Ford Fiesta goes on sale in 2010. Chrysler has joined with Nissan to market a version of the Versa subcompact. Company officials have hinted at plans to produce the Chrysler EV, a minivan powered by an electric motor with a small gasoline engine to extend its range. c Bradford Wernle, Harry Stoffer and Amy Wilson contributed to this report Chrysler: Product plans are a go — if Rick Kranz rkranz@crain.com These are some of the marketing solutions we offer to our partners: Advertising LOS ANGELES — Has financially strapped Chrysler put its product spending on hold in the current economic storm? No way, says the company’s product development chief. Chrysler’s new-vehicle plans are on track through the beginning of the next decade — barring a further economic slowdown in 2009, said Frank Klegon, executive vice president of product development. But Klegon said at the recent Los Angeles Auto Show that the projects will be knocked off course if the company does not receive its share of $25 billion set aside for federal loans to develop green technology. “We haven’t shifted the timeline on any of the major online programs,” Klegon said. “Everything is still in the pipeline (for) 2010, 2011, 2012, 2013.” But he added “it is a whole different story” if Chrysler does not receive the federal money. Klegon said the aid is “critical at the end of the day for our near-term performance.” “It is a liquidity thing,” he said. Congress and the White House have approved $25 billion in low-interest loans for automakers and suppliers. That aid, designed to help companies retool to build more fuel-efficient ve- Chrysler’s electric EV van: Still on the agenda hicles, has yet to be released. Chrysler would use the funds for programs to develop such vehicles as hybrids and pure-electric vehicles. Klegon said the state of the market also will affect the cadence of Chrysler’s future vehicle programs. “If the economy continues to be lackluster, people don’t come in the front door next year, I’m sure I will have a reduced amount of money,” Klegon said. “And if you spread it over the same products, you have to spread it over a longer period of time.” The company’s restyled, re-engineered Chrysler 300 and Dodge Charger are expected to debut for the 2011 model year. The company’s redesigned Jeep Grand Cherokee will arrive about the same time. Frank Klegon: “We haven’t shifted the timeline on any of the major online programs.” Meanwhile, Klegon said the first phase of Project D, Chrysler’s program for mid-sized cars, has been completed by a seven-member planning team. He said: “Their job was really to do the front end of the business that we historically didn’t spend enough time understanding — the customer, understanding the platform, what it should be, what are the needs.” Klegon said the next step is to determine whether Chrysler should develop a new platform, modify a current one or ally with another automaker and share a front-drive platform. Klegon also denied reports that Chrysler’s V-6 engine project, called Phoenix, is on hold. The engine family will replace six V-6 engines. Industry sources say the first engines are expected in 2010. “I’ve heard these things that (we’ve) stopped working on Phoenix,” he said. “That is a $3 billion investment. Absolutely not. I have been in vehicles with what we call our S Zero prototype engines.” c Bradford Wernle contributed to this report call tracking system Without Getrag deal, Chrysler will refine its 6-speed Rick Kranz advertising rkranz@crain.com 1-888-878-ZADV email us: or visit: zauto@zadv.com www.zadv.com LOS ANGELES — Chrysler LLC will make due with its front-drive automatic transmission now that its deal with Getrag Corporate Group has collapsed. Getrag’s transmission had been expected to give Chrysler’s vehicles potentially a 6 percent reduction in fuel consumption over the automaker’s current gearbox. “Step transmissions have opportunities for efficiency, so we will refine our six-speed and look for some other alternatives down the road,” said Frank Klegon, Chrysler’s executive vice president of product development. Getrag contracted to supply its wet dual-clutch transmission for Chrysler’s four- and six-cylinder engines. The transmission has separate clutches for odd and even gears and shifts without interrupting power. Chrysler was expected to use the transmission in its next generation of small and mid-sized vehicles. Chrysler sued Getrag in October, seeking damages because Getrag allegedly failed to secure financing for the project. Getrag disputes the claim, saying it was “stunned” by the lawsuit. A new transmission assembly plant in Tipton County, Ind., was to have opened in late 2009. Chrysler agreed to be the main customer for the 700,000 transmissions built there annually. “It is unfortunate,” Klegon said at the recent Los Angeles Auto Show. “I believe the (transmission) had great potential. But it had to work from a business standpoint, and they were unable to deliver that.” c http://www.zadv.com http://www.zadv.com
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