Automotive News - March 17, 2008 - (Page 4)

4 • MARCH 17, 2008 VW plant capacity in U.S.: 250,000 units Diana T. Kurylko dkurylko@crain.com VW plant specs Details of plans for U.S. assembly plant Start of production: 2010 or 2011 Maximum capacity: 250,000 vehicles annually Employees: 1,000 to 2,000 First vehicle: Passat replacement designed for U.S. Future production: SUVs and Audi vehicles Under consideration: Engine and transmission production would make the plant launch easier. But if the plant starts with a new car, VW would only have to make one investment in tooling, he said. “At the new location, we will start with car production,” Heizmann added. “But maybe in the future, SUVs can follow. This is an option we are investigating.” Audi considers making cars in U.S., too ➤ 6 verse engines. The architecture could spawn as many as 20 vehicles across the group — including the next Audi A3 and future generations of the VW Rabbit, Jetta and Passat. The first vehicle on the modular architecture is due in 2010. The modular system is not being used on the next-generation Rabbit/Golf that debuts in Europe this year. Because the new architecture allows using the same engines, gearboxes and other major mechanicals in different brands, Audi cars could be built on the same line as a Volkswagen, said Michael Dick, Audi AG board member for technical development. Audi is considering building vehicles in the United States. Heizmann agreed: “We have to find the right relationship between dollar and euro. The first step will be VW, and Audi is generally involved in these investigations. There is a general option that Audi can build in that plant or in an additional facility. This is an open issue.” GENEVA — Volkswagen’s factory in the United States will likely have an annual capacity of 250,000 vehicles a year, require between 1,000 and 2,000 employees and launch a new midsized car especially for the United States, say Volkswagen group executives. If a decision on plant location is reached by June, as expected, VW would need between two and a half and three years to build the factory. In the same period, VW would complete development of a vehicle on a new modular architecture, said Jochem Heizmann, Volkswagen group board member for production, in an interview at the Geneva auto show. Volkswagen group CEO Martin Winterkorn said the first car for the plant would likely be a replacement for the Passat designed for the United States. The car would get a new name and cost about $20,000 — nearly $5,000 less than the current entry Passat. VW is debating whether to open the factory with a new car designed for the United States or to produce an existing vehicle initially, said Heizmann. Starting production with an existing vehicle Modular plan The new car for the plant would be developed on the VW group’s new MQB modular architecture for small and mid-sized cars with trans- Local sourcing Heizmann said VW is talking with suppliers. “The best solution would be to localize every part in the car — even the engine,” he said. “Of course, there will be limits because of volume, and we don’t just use one engine in our cars.” Building the engine and transmission in the United States would be a second step. VW’s plan for the United States is to start with a body shop, paint shop and final assembly, Heizmann says. VW could use suppliers already making components in volume production for other manufacturers, he said. “It has potential from a cost basis.” Because of the strong euro, VW also is developing a plan to increase sourcing and local content in the U.S. dollar zone for the vehicles it produces at its Puebla, Mexico, factory, said Heizmann. “It is not a secret that we are losing money selling cars in the States, and we have to change this,” he said. “The only solution is local sourcing and content.” Puebla is nearing its capacity of 500,000 units, and VW will not expand that factory. The automaker will keep producing the Jetta and New Beetle there, said Heizmann. “It does not make sense to invest in new structures,” he said. “Puebla is already a big plant, and we need additional capacity in the North American region.” c Bad cruise control switch haunts Ford Harry Stoffer and Amy Wilson hstoffer@crain.com A rare government warning to millions of Ford Motor Co. vehicle owners — to take their cars and trucks to dealerships “immediately” for repairs — is the latest move in a decade-long controversy over faulty cruise control switches. The defect “could lead to a vehicle fire at any time,” federal regulators advise. But Ford says it won’t begin to have enough parts until June to repair all of the vehicles. The automaker’s protracted inability to fix the switch problem is another blow to its image and its effort to return to profitability. “It’s like a ghost clanking its chains,” says David Healy, automotive analyst for the investment firm Burnham Securities Inc. Healy compares Ford’s cruise control epic to a similar struggle over bad ignition switches that unfolded more than a decade ago. It “never seemed to go away,” he adds. The cruise control problem emerged in 1998, when the government investigated complaints of engine compartment fires. A year later, Ford recalled about 279,000 Ford Crown Victoria, Mercury Grand Marquis and Lincoln Town Car sedans built for the 1992 and 1993 model years, to replace cruise control switches. More complaints and investigations led to five more recalls in 2005, 2006 and 2007. Those recalls totaled more than 10 million cars and trucks built for the 1992-2004 model years. In January, 225,000 of the vehicles were recalled again, to redo the initial repair. While it waits for repair parts, Ford RV AND MARINE INVESTIGATIONS OF AMERICA LLC see FIRES, Page 33 A fire investigator said a malfunctioning cruise control switch set this Ford F-150 pickup ablaze. Saab sticker prices rise as sales fall; will U.S.-built 9-7X offset losses? Jamie LaReau jlareau@crain.com Saab sales are slumping along with the dollar. General Motors’ Swedish brand has raised prices sharply because of the currency fluctuation and is counting on the 9-7X SUV, built in Moraine, Ohio, to offset losses until new product arrives, say sources close to GM. But Saab will not get any new vehicles until late next year, and dealers are at a loss to reverse the decline until then. “The price going up never helps anything,” says Lynn Thompson, owner of Thompson Sales Co. (Buick-Pontiac-GMC-Cadillac-Saab) in Springfield, Mo. “I don’t care what merchandise it is, it’s going to hurt your sales. The euro up against the dollar is going to have some effect.” Through February, total Saab U.S. sales fell 23.5 percent to 3,506 units. Retail registrations were also down for the 9-3 and 9-5, the brand’s European-built sedans. Saab 9-3 retail registra- © GM CORP. Saab is counting on 9-7X sales to remedy losses caused by currency fluctuations. tions declined 31 percent in January 2008 compared with January 2007. Retail registrations of the 9-5 plummeted 57 percent over that same period, according to data from R.L. Polk & Co. Meanwhile, prices are up for the 9-3 and 9-5, both built in Trollhattan, Sweden. Those close to GM say the price increase is largely to offset the currency difference. Last week, the Swedish krona was worth $0.16. “We watch it every day,” Steve Shannon, general manager of Saab, said in an interview in Geneva recently. “We’ve done a few little adjustments.” As of March 1, the sticker price on the 9-5 2.3T automatic is up $1,205 compared with a year ago. Likewise, the 2007 9-3 2.0T six-speed manual sedan is priced at $1,830 more over the same time frame. Part of the 9-3’s price increase is because of changes and enhancements when it was reskinned last year, says a Saab spokesman. Saab is looking to the U.S.-built 9-7X to help offset some losses, despite sales of the vehicle being down 6.6 percent through February. “Month in, month out, we are selling somewhere in the mid-400 range, so far over 15,000 in the U.S. since the start of sales in mid-2005,” says a Saab spokesman. “With good profitabili- Saab stickers Saab sticker prices on March 1, 2007, compared with March 1, 2008* 9-3 2.OT manual sedan 2007: $26,995 2008: $28,825 9-5 2.3T automatic sedan 2007: $36,790 2008: $37,995 *All prices include shipping ty, the 9-7X makes quite a difference for our bottom line.” Saab also is counting on the new 9-4X crossover, due late next year, to provide a “shot in the arm.” The 9-4X will be built in Mexico, where the peso fluctuates in tandem with the dollar. c

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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