Automotive News - June 2, 2008 - (Page 1)

autonews.com • JUNE 2, 2008 Robert Sherefkin fsherefki n@cfain.com ve ket price was $535 a LOn. Today, the spot price - which is somewhat higher than contract prices - has al~ most doubled to $1.035. Steel prices are up roughly $500 per vehicle since January, says analyst John Hoffecker of AlixPartners LLC According to the American Iron and Steel Institute, the average car contained 2,400 pounds of steel last year, see STEEL, Page 53 $155/YEAR;$5/COPY Entire contents © 2008 Crain Communications Inc. All rights reserved. Surging steel prices shock auto industry DETROIT - Sharp increases in steel prices- up as much as $500 per vehicle since January - have left autOlTIakers and suppliers reeling. Tensions are rising as steel makers tear up contracts and demand immediate price increases. Steel and automotive executives say that ArcelorMittal - the world's largest steel maker - and other steel mills nOliDana's John Devine: "I've never seen anything quite like it." fied the Detroit 3 last month that they will impose surcharges as high as $250 a ton. That would amount to a price increase of 20 to 40 percent over most contractual prices. "I've never seen anything quite like it in my career," says Dana Holding Corp. Chairman John Devine, a former CFO at Ford Motor Co. and General Motors. The benchmark for automotive steel prices is hot-rolled carbon sheet steel, which is used to make bumpers, wheels and frames. In the fourth quarter of2007, the spot-mar- Coming to America As the dollar shrinks, a new wave of foreign factory investment is hitting U.S. shores. The story kicks off our in~ depth look at issues facing Asian and European automakers and suppliers in North America. The New American Manufacturers section begins on I PAGE 251 As fuel prices soar, every part of the industry will be transformed. Hybrid holdup Talk about lousy timing. Sales of General Motors' mild hybrid vehicles are stuck in neutral because of problems at the battery supplier. I PAGE 81 Stories inside: • Honda may crank out more Civics ~ Page 3 • Market has changed; there's no going back/Editorial .. Page 12 • Small cars comingin 2009·10 .. Page 54 • Big trucks clog used market, too ~ Page 54 • Auto ads' new theme: Fuel economy .. Page 54 • High diesel prices slam suppliers .. Page 55 Gas prices fuel industry's new era Automakers confront new reality: Trucks are out, cars are in, small is chic and mpg trumps everything else Undsay Chappell lchappell@crain.com The dealer speaks • Things are tough all around, says Irma Elder, head of a Detroit dealership empire: "It breaks your heart to see a business closing because you know it can happen to you." I PAGE 321 • Suburban Washington dealer Jack Fitzgerald says factories are pushing too hard for big, exclusive stores: "Why do they want to be alone? Everybody knows you sell more in a shopping mall than anyplace else." I PAGE 341 N N A, see GASOLINE, Page 55 o As gasoline prices top $4 a gallon, the shift by U.S. consumers from big, powerful trucks to small cars with small engines is now a stampede. Fuel prices are roiling the auto industry in a way Americans have not seen since the pan.ic that followed the embargoes by oil-exporting cOWltries in the 1970s. Industry executives and vehicle buyers alike are acting on the belief that high fuel costs are not a momentary discomfort, but a new reality. "I would bet my house that the old buying habits won't return," says Ford Motor Co. sales analyst George Pipas. In a new Automotive News sUlVey, dealers- especially those who sell Detroit 3 brands - cite a mismatch between the fuel-efficient vehicles their customers are demanding and the vehicles they have in stock. That mismatch, they say, is bleedingsales. As in previous oil shocks, the market changes tend to benefit Asian brands whose lineups emphasize small cars. Meanwhile, the Detroit 3 are struggling to sUlVive while they adjust their product plans. Signs of the times: • Last month, vehicles with four-cylinder engines accounted for 45.6 percent of all U.S. retail sales of new cars and trucks, according to J.D. Power and Associates' Power Information Network. That's up from 36.0 percent in February 2008 - and just 28.2 percent in May 2004. • Between January and April, sales of basic compact cars such as the Toyota Yaris and Nissan Versa rose 36.7 percent over the year-ago period, according to J.D. Power. By contrast, sales of full-sized SUVs such as the Chevrolet Tahoe and Ford Expeclition plunged 26.9 percent. • One out of 10 dealers in the Automotive News survey says he or she no longer accepts big SUVs and pickups as trade-ins. And many other dealers say they are offering far lower trade-in prices for those vehicles. Rhett Ricart, who owns a seven-brand superstore in Columbus, Ohio, said he had a sobering glimpse of the market shift over Memorial Dayweekend. Four couples, Ricart says, all bought two smaller, less-expensive but more fuel~effjcient new cars - his and hers - instead of one bigger, pricier vehicle. "it's ali about ti,e gas On the Web This week at www.autonews.com • Tuesday: Get live updates of U.S. vehicle sales for May. • Tuesday: GM holds its annual shareholders meeting in Wilmington, Dei. • Thursday: Harbour ConSUlting releases its annual report of U.S. auto plant productivity for 2007. http://autonews.com http://autonews.com http://www.autonews.com http://www.autonews.com

Table of Contents Feed for the Digital Edition of Automotive News - June 2, 2008

Automotive News - June 2, 2008 Gas prices fuel industry's new era Chrysler faces tricky dealer mergers Honda may crank out more Civics in N.A. Mercedes will move into Chrysler Pacifica studio Ford to offer hatchback version of Fiesta Prestige Automotive sells stores but keeps Black Enterprise top spot Dealership marketers take to text messaging Senate to hear personal pleas on roof crush rule Magazine: Chrysler, Fiat are talking Former Fla. dealer gets jail for bilking bank That guy Alfred had possibilities Ford will make next Mustang look smaller Pontiac subcompact may come to U.S. GM: Battery glitch cuts hybrid sales Porsche exec: CAFE 'will not change our nature' Japanese rivals race for lithium batteries Jatco boosts CVT capacity in Mexico for N.A. vehicles Mercury deserves a better chance Rising gas prices have changed the U.S. market Marketing and sales: Context and content Mexico's Nemak grows beyond North America Buyers didn't quit GM; GM quit on its buyers Brand perceptions change slowly Bloggers are journalists, too Nice HQ, Nissan, but where's Nobe? Chrysler's Chernoby: Growing up gearhead Picture this Mitsubishi hopes new gearbox widens Evo's appeal Openlane gets funds Obituaries Survey: Going green can get your auto ad noticed Inrix: Router can reduce traffic delays Mazda6 gets own platform for U.S. ... sort of Mazda6 set to take on mid-sized sedan heavyweights Troubled or not, the United States still beckons What's next? More transplant models headed this way Exports help as Mitsubishi sorts things out Irma Elder: 'This is one of the toughest times we have had' Fitzgerald: Dealers, consumers need alliance Can Bertone design a comeback? Family-owned business struggles for survival Some design houses fall on tough times Hughes: Not a subscriber? No problem American Axle lines up new non-U.S. business GM think tank works to boost service business Toyota offers gas card as tire incentive VW turns to common software to develop products Continental's Calif. office targets Asian carmakers ZF sees chassis, axle opportunities in N.A. Flex: A new Ford image ... or just over the top? Ford targeted Flex interior quiet, ride Ex-dealership managers say firings were over religion Dealers Genesis in Toledo: It's a long story Back woes sideline Nardelli GM: 19,000 take buyouts Panama to head Nissan Mexicana Wilhite jumps to Jumpstart Dauch sons move up, out Kozyra leaves Continental Ford to lay off salaried staff More small cars to arrive in 2009-10 Even on used market, big trucks go begging Auto advertisers adopt mpg mantra Industry to motorists: We're here to help Diesel prices hit suppliers' Mexico sites Can Camry catch F series? Leno's words of wisdom for automakers Nissan's carbon credits ease global warming guilt Automotive CEOs' pay pales next to peers' Year of the Small Car can't come too soon Foreign suppliers adding capacity in Southeast From cows to kimchi: Making Alabama sweet home for Koreans After light-truck push, cars are king again Mexican suppliers expect sales record in '08

Automotive News - June 2, 2008

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