Automotive News - June 2, 2008 - (Page 30H)

After light-truck push, cars are king again Michael LeGault autonews@crain.com Downshifting The New American Manufacturers have shifted their production increases from light trucks to small cars. This table shows the increase in output by Asian and European automakers in North America by vehicle category. YEAR SMALL CARS MID-SIZED LIGHT CARS TRUCKS The New American Manufacturers are steering back onto familiar roads. In recent years they catered to the American market by making pickup trucks and SUVS. But with demand for low-mpg vehicles slumping, those automakers are going back to their roots. Over the past two years they have throttled back production of light trucks, including SUVs, pickups and minivans. Instead, they have increased output of the small and midsized cars on which they built their North American reputations — at least at those factories that remain flexible enough to build either light trucks or cars. Factories dedicated to light-truck output are giving their owners headaches. The shift to smaller cars also opens the door to possible exports. Those vehicles, unlike full-sized pickups or hefty SUVs, are sold around the world. Reconfiguring part of production for export, while not easy, is at least possible. “We see the trend to smaller vehicles as an advantage for us,” says American Honda Motor Co. spokesman Edward Miller. “We’ve never abandoned our focus on small vehicles in the North American market.” 2007 2006 2005 2004 2003 7.6% 2.0% 5.3% 10.6% 4.0% 1.4% 6.2% 14.5% 18.0% 1.8% 0.3% 20.7% 7.7% –1.2% 20.1% Source: Automotive News Data Center A 2008 Nissan Altima sedan receives a coat of paint in the Smyrna, Tenn., plant. Nissan spokeswoman Julie Lawless says the Altima “has been sort of our balance-out vehicle at the plants as production for the truck side has slowed.” four-door Civics in Greensburg, Ind., this fall in anticipation of even higher demand for the smaller car. Up to now, Miller says, flexible manufacturing capacity has allowed the company to meet the sudden rise in demand for the Civic. “Our plants are designed to build multiple vehicles, so if one vehicle isn’t selling and another is, we can adjust volumes accordingly,” Miller says. Honda’s East Liberty, Ohio, plant, for instance, builds the Civic, CR-V crossover and Element. As production of the Element declines, the plant is “building as many Civics as it can,” he says. Miller says Honda stepped up its ability to flex between vehicle types when it implemented a new strategy in the late 1990s. The goal was to apply flexible manufacturing practices on a global basis through automation and robotics, especially in body, welding and painting operations. Different models can be built in batches on the same line. Flexibility also eliminates long downtimes required by traditional retooling during model changes or downturns. Instead, Honda plants reprogram their operations using the same robots and fixtures. duction between Canton and Smyrna because that’s our bread-andbutter vehicle,” Lawless says. “It has been sort of our balance-out vehicle at the plants as production for the truck side has slowed.” Rising exports The conversion of a larger share of production capacity to smaller vehicles could mean new export opportunities for these manufacturers, as the global market is mostly dominated by sales of cars. Honda is exporting its Acura TL, made in Marysville, Ohio, to China. The company also manufactures the CR-V crossover in Mexico for export to other Latin American countries. Miller notes, though, that exporting to foreign markets is not as simple as increasing production of smaller vehicles in North America. Each market is distinct. The CR-V, for instance, is considered a large SUV in Latin America. Export strategies also are affected by global production plans. Honda builds the Civic at 13 plants around the world, so there is no need to export it from North America. As global income and living standards grow, rising exports also can be a result of new demand for larger, higher-end vehicles. Nissan exported about 71,000 vehicles last year, the majority of which were the mid-sized Altima and Maxima. The automaker also began exporting the QX56 SUV to Russia and Ukraine in October. “Our plants are flexible enough to respond to marketplace demand overseas for North-American made vehicles,” Lawless says “If the demand increases, we are prepared to meet it.” c Flexibility helps Light-truck production at all import-brand plants in North America jumped 20.7 percent in 2004 and 18.0 percent in 2005. But then those glory days for pickup and SUV output ended. In 2006, the increase in their lighttruck production came to just 1.4 percent, although it rebounded modestly to 5.3 percent in 2007. Those manufacturers are largely picking up the slack with production increases in small cars. Production of these models rose 10.6 percent in 2006 and another 7.6 percent in 2007. That’s well above an increase of just 1.8 percent in 2004. Production of the Honda Civic rose to 404,406 units in 2007, up from 319,579 units in 2005, an increase of 26.6 percent. Over the same period, production of the Element crossover tumbled 43.2 percent. Production of the Pilot crossover declined 11.9 percent. Ridgeline pickup production slid 9.4 percent. Honda will open a plant to build The 2008 Titan pickup is assembled at Nissan’s Canton, Miss., plant. production of its Sequoia SUV dropped almost in half, from 44,852 units in 2005 to 23,488 units in 2007, due in part to a model changeover. Output has since rebounded to 24,931 in the first four months of 2008. Production of its Sienna minivan declined by 17.3 percent in 2007 from 2005. But the Princeton, Ind., factory that builds these models does not make one of Toyota’s hot-selling smaller vehicles. As a result, “We have slowed down our lines in Indiana and San Antonio, Texas,” which builds the Tundra pickup, says Toyota spokesman Mike Goss. On May 27, Nissan North America began producing the mid-sized 2009 Maxima at its Smyrna, Tenn., plant. The plant also produces the Altima sedan, coupe and hybrid, as well as the slower-selling Xterra and Pathfinder SUVs and Frontier pickup. In April, the Smyrna factory went to a four-day, nine-hour-per-day shift schedule for both truck and car assembly operations. The cutback is intended to help balance vehicle inventory levels and bring production in line with market demand, says spokeswoman Julie Lawless. The same reduced production schedule has been adopted at Nissan’s Canton, Miss., truck operation, which produces the Armada SUV, Titan pickup, QX56 SUV and Quest minivan. Canton’s Altima sedan line is unaffected. Last year Nissan built 338,609 Altimas, a 25.6 percent increase over 2006 production. The increase was largely because of the addition of the coupe version. “We split Altima pro- Maintaining balance Not all New American Manufacturers’ facilities are that flexible. Toyota Motor North America Inc.’s 30H Automotive News JUNE 2, 2008 http://WWW.ANX.COM http://WWW.ANX.COM

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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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