Automotive News - March 17, 2008 - (Page 3)

MARCH 17, 2008 • 3 82nd year — No. 6299 Hoops fans take a shot at China McCombs venture will aid Brilliance, sell dealer services Alysha Webb awebb@crain.com Ex-GM purchasing executive indicted A federal grand jury in Chicago has indicted two Midwest businessmen, including a former General Motors executive, for allegedly diverting $80 million from GM. The U.S. attorney’s office in Chicago says Daniel Bealko, GM’s former global commodity manager for lightweight metals, concealed $5.4 million in kickbacks given by businessman Anthony Demetrius Brown. Bealko, 61, formerly of Clarkston, Mich., is thought to be living in the Caribbean islands of St. Kitts and Nevis. Brown, 46, of suburban Chicago, will be arraigned later. According to the indictment, Brown paid Bealko $5.4 million in bribes to steer GM bulk aluminum sales on favorable credit terms to a metals company owned by Brown. — Robert Sherefkin SHANGHAI — Red McCombs owns a dealership group in Texas. Wu Xiaoan is chairman of Brilliance China Automotive Holdings, an automaker in China. The two men like cars, of course. More important, they share a passion for basketball. When Wu traveled to San Antonio in mid-February to meet McCombs, basketball helped seal the deal to form a joint venture. McCombs also owns the San Antonio Spurs, the Red McCombs’ ownership of the San Antonio Spurs impressed Wu Xiaoan, Brilliance China chairman and basketball fan. reigning champions of the National Basketball Association. “Wu’s first impression was ‘Whoever owns this team must be good,’ ” says Kenneth Huang, managing director of Rocket Capital Investment, another investor in the venture. “Red McCombs thinks the Chinese aftermarket is in an infant stage compared to the United States,” Huang says. “He saw a huge potential there.” On March 10, McCombs and Rocket Capital signed a memorandum of understanding to buy $100 million worth of Brilliance Auto shares. Brilliance is listed on the Hong Kong stock exchange. The proceeds will be used to expand Brilliance’s production capacity. The investors also will form a joint venture to sell products and services to dealers in China. The offerings will include dealership training, extended warranties, automotive finance, auto leasing, used-car sales and a variety of other businesses that are routine for dealers in the United States. Eventually, the partners will explore exporting cars to the United States, but they gave few details. McCombs did not return messages left last week with his assistant. On the ground floor China’s car market took off only about six years ago, and the market for dealership service is still fragmented, says Sun Jian, a partner at consultants A.T. Kearney in Shanghai. Also, dealership services in China are modest because relatively few cars are on the road. Official figures put the number of private cars on China’s roads at 15.2 million at the end of 2007. In 2005, the federal government see McCOMBS, Page 34 F-150 rising Ford is increasing 2008 F-150 production and incentives in preparation for the transition to the re-engineered and restyled 2009 model. F-150 production was up by 4,664 units in the first 2 months of 2008. By April, Ford expects F-150 inventory to be about 25,000 units above year-earlier levels. Average F-150 incentives were $4,514 per truck in February, up $722 from February 2007. As UAW, American Axle talk, CEO Dauch in Fla. DETROIT — American Axle & Manufacturing Holdings Inc. and the UAW continued negotiations last week to end a three-week strike. Company spokeswoman Renee Rogers said it was uncertain whether the sides would meet over the weekend. Not at the talks Friday was CEO Richard E. Dauch. Reached at his Florida residence on Marco Island, Dauch hung up on a reporter requesting comment. Parts shortages caused by the strike have idled seven GM assembly plants. — David Barkholz F-150’s risk-reward strategy: Ramp up before the revamp In trying times for trucks, Ford to build ’08 inventory before ’09 changeover Amy Wilson awilson@crain.com Court allows higher Plastech credit line DETROIT — A U.S. Bankruptcy Court judge on Friday approved a $10 million increase in a line of credit that will keep supplier Plastech Engineered Products Inc. afloat. That brings Plastech’s credit line to $45.15 million as it works to reorganize under Chapter 11. The current financing agreement, which was to expire Friday, was extended to help keep the financially troubled supplier in business until its next major Bankruptcy Court hearing on April 2. — Ryan Beene DETROIT — Ford Motor Co. is increasing F-150 production and incentives before it starts building a largely revamped pickup for the 2009 model year. Ford wants to have adequate stock of its best-selling vehicle when production slows in July and August as plants begin assembling the 2009 model. Ford is asking dealers to stock additional 2008 F-150s to carry the com- pany through lean production this summer and fall. The changeover is trickier than in 2003, the last time Ford made a major update to the F-150. Three things have changed: 1. Ford now has just two plants producing the F-150. That compares with four in 2003, including one that continued making the old model. 2. The economy is faltering, and sales in the pickup segment have plunged. 3. As part of its turnaround, Ford has vowed to limit production to actual demand rather than keep factories running and blow out inventory with incentives. Ford won’t provide numbers, but production and incentive spending will be higher in the first half than if the current model were carried over, Ford sales analyst George Pipas told Automotive News. Ford is expecting the biggest yearover-year increase in inventory in April when F-150 stocks are likely to be 25,000 units higher than in April 2007. Ford had 170,400 units of all Fseries trucks on hand on April 1, 2007; numbers for the F-150 are not broken out. Stocks are expected to hover near the April level through mid-2008, but the year-over-year differences will start to shrink. That’s because stocks rose in the second quarter of 2007 when full-sized pickup sales softened. Bigger incentives Average F-150 incentives rose last month to $4,514 per truck, an increase of $722 from the previous February, according to Edmunds.com. “That’s an indication to the dealers that we understand that they need to have our commitment that we’re not going to hang them out to dry,” Pipas said. see F-150, Page 33 Toyota will cut Tundra, Sequoia production Lindsay Chappell lchappell@crain.com See our Web site for developments on these and other Late News stories. autonews.com CORRECTION A Supply Line item on Page 28 of the March 10 issue misrepresented the relationship between Magna Electronics Inc. and Allied Transportation Technology Inc. Magna Electronics has acquired Allied. Toyota Motor Corp. will cut back production of Tundra pickups and Sequoia SUVs in Indiana and Texas in response to slow sales. The reduction in volume — a rare move for Toyota in North America — will begin in late spring, said Mike Goss, a spokesman for Toyota’s North American production company. He said last week that Toyota has no plan to lay off workers at either plant. Goss declined to say how many fewer trucks Toyota will produce this year because of the cutback. Toyota will achieve the reduction by slowing down the production cycle. Normally, Toyota and other automakers rigorously build up the number of vehicles per hour that assembly workers can build. The slowdown will not affect production of the Sienna minivan, which is built on a separate line at the Tundra-Sequoia plant in Princeton, Ind. Toyota opened its second Tundra assembly plant in San Antonio in late 2006 in a bid to compete head-on with the Detroit 3 in full-sized pickups. The Texas plant gave Toyota annual capacity to build 300,000 Tundras a year or about 25,000 a month. In February, the company sold 14,400. For the first two months of this year, U.S. sales of full-sized pickups were off 9.8 percent compared with the first two months of 2007. During those two months Toyota sold 26,473 Tundras, up 65.6 percent from the same period of 2007. The gain reflects increased production from the San Antonio plant. c Starting in late spring, Toyota will slow down the production cycles on the Sequoia, top, and Tundra. http://Edmunds.com http://autonews.com

Table of Contents Feed for the Digital Edition of Automotive News - March 17, 2008

Leases grow as alternative to long loans Toyota dealers balk at upgrades Up for grabs: China importer Testing Chevy's Camaro Escalade first vehicle to get full LED headlamps Hoops fans take a shot at China Toyota will cut Tundra, Sequoia production F-150's risk-reward strategy: Ramp up before the revamp As UAW, American Axle talk, CEO Dauch in Fla. Ex-GM purchasing executive indicted Court allows higher Plastech credit line Saab sticker prices rise as sales fall; will U.S.-built 9-7X offset losses? VW plant capacity in U.S.: 250,000 units Bad cruise control switch haunts Ford Continental plans to bring r&d in-house Rieter expects to increase its global footprint Stadler: Audi considers U.S. plant Another General charges into electric cars Toyota sees its first checkered flag as sign NASCAR's paying off A pickup may figure in Kia's future Analysts: Lampert no threat to AutoNation More likely to be spent to keep suppliers alive in '08 2 suppliers plan Alabama plants UAW seeks job guarantees to end American Axle strike Revolving door continues to spin at Nissan GM, top marketers to share research Electric power steering is grabbing the wheel Delphi completes sale of interiors unit to Renco Mercedes again is true-luxury king How electric power steering works It's time for dealer-factory collaboration Ford must close stores but remain open to diversity The small print Here's a question for Obama, Clinton Didn't you ever hear of a halo? Hurray for affordable performance cars Politics can age a car overnight Good for planet, good for GM What 'scientific consensus'? Lutz may be right but said it wrong Lutz had the courage to tell the truth Big Apple isn't very green 23 finalists in running for PACE honors Canada sales up 14.5% in Feb. RV shipments drop 7.1% in Jan. Wagoner: No sure thing on state air rules Conquest sales, Asia growth boost ADP Brockman: Reynolds focuses on service OEConnection links to ADP Geneva goings-on Judge: Dealer suit over transfer of GM franchise can proceed Honda will build Ridgeline in Alabama So who's running the show at Chamco? GM seeks Plastech tooling Federal-Mogul reports gains Chrysler sells plant to Fiat BMW's new sales boss Odell is named COO at Ford of Europe Strike dents GM truck output Tony Stewart blows a gasket Illingworth leaving — and staying with — Toyota A note to eager auto execs: Invaders sometimes get icy reception in Russia Hush, hush: Baby Nason on board For rent: Ford's PAG palace on the West Coast Chrysler cuts Calif. studio

Automotive News - March 17, 2008

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