Automotive News - June 2, 2008 - (Page 43)

JUNE 2, 2008 • 43 ZF sees chassis, axle opportunities in N.A. In April, the 10 millionth axle system produced worldwide by ZF Lemforder, a German driveline and chassis system supplier, rolled off the assembly line in Duncan, S.C. ZF Lemforder is the car chassis technology division of ZF Friedrichshafen AG. It is appropriate that the axle milestone came at one of ZF’s three North American chassis systems plants. ZF has high hopes for growing its chassis business in North America. A weakening dollar makes the United States an attractive manufacturing base for ZF and its traditional European customers. Peter Holdmann, executive vice president in charge of chassis systems for ZF worldwide, and Kurt Mueller, ZF’s North American chassis system vice president, spoke with Staff Reporter April Wortham about the challenges ahead. Are you under pressure from your German customers to source more parts from the dollar zone? Mueller: It’s a big push, from BMW in particular. What BMW has traditionally done is produce high volumes in Germany, then take common architecture and they try to move it to their other locations. Quite often, that means that the suppliers can set up in close proximity to the German operations and then ship overseas. In the latest discussions with BMW, there has been a lot of talk about what can we localize here in North America and how can we minimize the exposure that we’ve got to the exchange rate. Holdmann: Even beyond that, there’s also a push now for the German worldwide customers that say, “Why don’t you use the United States as an export country for supplying our operations in South Africa and Australia or wherever?” Due to the exchange rate, North America becomes really a best-cost country for the automotive industry. It’s really intensifying the possibilities of exporting from here as a kind of natural hedging. Can you do that with your existing production facilities in North America, or will you need more capacity here? Holdmann: You only need to look to what is the share of ZF parts inside a BMW, and you see that there is more than the axle systems. Some of the electric steering gears are still produced in Germany. All the gearboxes are still produced in Germany. The more volume BMW is putting here into the market with the production in Spartanburg (S.C.), the more this creates a need to look for further activities. How would Volkswagen’s building a U.S. plant help ZF make the case for adding production here? Holdmann: We see a lot of opportunities. VW is the second-biggest ZF customer, behind BMW, worldwide. The difference is that there are areas with VW where the in-house production is stronger than with BMW. They sometimes do axle assembly on their own. They do even gearboxes and steering gears on their own. We know that even if they localize these kinds of models here, they’re going to have the need for lo- questionanswer calized subcomponents from suppliers. And since VW is a very high priority for our business unit, we think that we can offer VW a really good package of competencies, especially here in North America. Axles are a hot topic right now. With new players like Magna International Inc. and Linamar Corp. entering the scene and some automakers taking axle work in-house, how will ZF remain competitive? Mueller: We have a sweet spot, re- ally, that I think supports us. When technology is important, when being able to leverage the supply base and utilize the buying power of multiple programs, when there is a lot of design and development work required — that really hits into our sweet spot. As for other players coming in, there’s a certain group of people that have moved from logistics providers to providing assembly services within a plant. They don’t have the design and development. In a lot of cases, they don’t finance the investment. Maybe the supplier buys the products. They don’t do the supplier de- velopment. There’s a place for them, too, and their sweet spot is down toward the lower end. Holdmann: We don’t see that as our core business: to be just a rent-awrencher. And we see also in our classic customer base that the trend is more and more going away from this kind of rent-a-wrencher. I can quote several statements from Volkswagen and BMW that clearly show they are interested in systems suppliers that also have a major portion of the development of the components. Yes, there are some OEMs, especially here the classic North American ones, that still are on the path to reduce an axle supplier to the assembly and logistics portion. But even then, there are areas of the world — for example, we have good contacts with Ford in Australia at the moment — where these companies are on a different path. Therefore, we think there is a huge opportunity for our business. And to add to that, if you look at emerging markets like China, India or Russia, these companies really rely on systems suppliers that bring in their engineering competence and allow them to develop vehicles. There, we are already realizing a lot of opportunities.c A CUDL conversation with the owner of what may be the nation’s fastest growing dealership group — the $1.4 billion Ken Garff Automotive Group of Salt Lake City, Utah. ROBERT GARFF ON THE SPGT: AT A GLANCE: With a last name that has been in the automotive business for over 75 years, Robert talks about expanding ON THE SPOT: We know your father, Ken Garff, started this business in 1932. When did you start? GARFF: I started at age 13, sweeping floors in our body shop. By the time I was 16, I was a salesman in one of our used car operations. I learned the business from the ground up. ON THE SPOT: What do you contribute to your family’s success? GARFF: Garff’s never, never give up. You know that speaks to longevity, that speaks to doing things right. That means stick-to-itness. ON THE SPOT: How involved are you with the communities you serve? GARFF: One of the main ingredients of our success is that we play an active part in the community. As much as 20 to 30 percent of our lives are spent giving back to the communities we serve. ON THE SPOT: How do you feel about CUDL in terms of what it’s done for you? GARFF: The main thing about CUDL is that it provides us with a different avenue of buyers. It’s another opportunity to get in front of another group of customers. ON THE SPOT: How many of your buyers go through the CUDL system? GARFF: Approximately 15 percent. And that’s 15 percent of buyers that maybe we wouldn’t have otherwise. ON THE SPOT: How do feel about AutoSMART and being able to showcase your inventory online? GARFF: For us, it’s another way of having a storefront. I think in the fourth quarter alone, our organization attracted 967 buyers from CUDL’s AutoSMART system. ON THE SPOT: CUDL did $12 billion in auto loans in 2007. What does that mean to you? GARFF: Well, it means that they’re one of the major players in the auto finance arena. G into the West, staying connected with the communities they serve and his top priority — family. This avid horseback rider, who still enjoys a good “round up”, also elaborates on how CUDL is responsible for 15 percent of his auto loans. “I think in the fourth quarter alone, our organization attracted 967 buyers from CUDL’s AutoSMART system.” Log onto www.CUDL.com/robert to read the entire interview. It’s another On the Spot interview brought to you by 877.744.2334 x2334 www.cudl.com FAST, FRIENDLY CREDIT UNION FINANCING http://www.CUDL.com/robert http://www.cudl.com http://www.cudl.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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