Automotive News - July 14, 2008 - (Page 43)

JULY 14, 2008 • 43 CAW board endorses local president TORONTO — The Canadian Auto Workers executive board last week endorsed union local President Ken Lewenza as the successor to CAW President Buzz Hargrove, who will retire by Sept. 15. Hargrove, 64, has led the CAW for 16 years. In March, he turns 65, the mandatory retirement age for the position. For 14 years, Lewenza, 53, has headed CAW Local 444 in Windsor, Ontario, one of the union’s largest locals. United States in the near term, Tom Kowaleski, BMW’s North American vice president of corporate communications, told Automotive News. Mini dealers had just 1,051 cars in inventory as of July 1, a fiveday supply. Kowaleski said here last week that marketing officials are working on a new U.S. forecast to gauge long-term demand before lobbying BMW to boost production. CHRYSLER Automaker missed boom in small cars continued from Page 1 Chrysler’s car sales sag in June — even more than trucks Bradford Wernle bwernle@crain.com Suit against Ford is reinstated CINCINNATI — Ford Motor Co. again could be haunted by a diesel engine problem resulting from a batch of bad engines used in 2003 and 2004 model trucks. A U.S. appeals court last week reinstated a suit on Wednesday, July 9, against Ford alleging that it equipped its 2004 diesel-powered Super Duty pickups with flawed engines from the 2003 model year. The ruling reopens a motion previously filed to give the suit against Ford class-action status. The 6th U.S. Circuit Court of Appeals here ruled in favor of Kenneth Corder, of Louisville, Ky., who sued Ford in 2005. JCI plant cuts shift, work force LOUISVILLE, Ky. — Johnson Controls Inc. cut a shift and more than half its work force at a plant that makes truck seats for Ford Motor Co., according to the Louisville Courier-Journal. The Shelbyville, Ky., plant makes seats for Ford’s F-series Super Duty pickups. JCI last week notified 114 workers that they would be laid off immediately, the newspaper reported, citing union sources. crossover, fell 38.8 percent. The Patriot, another compact crossover on the same platform, enjoyed a June sales increase of 5.5 percent. Overall sales of the three vehicles are up 18.3 percent this year. The numbers are skewed because the Patriot did not go on sale until March 2007; year-over-year combined sales for the Caliber and Compass are down 5.0 percent. At the end of June, the Caliber had a 41-day supply, up from 20 days on June 1. Compass supply was 78 days, and Patriot supply was 48 days. The Ford Focus had a 39-day supply, while the Honda Civic had a 16-day supply. (See inventory table on Page 41.) Weighing demand Chrysler has boasted that its status as a privately held company allows it to react quickly to market conditions. But a memo this month to dealers suggests otherwise. In the July 3 memo Chrysler said demand for the Belvidere plant products had “skyrocketed.” “Chrysler is taking aggressive actions to realign our product volumes to coincide with market demand,” the memo said. Chrysler asked dealers to “forecast sales and order through December production,” adding, “With your help, we will ensure that we build as close to market demand as possible.” The five-month lead time is much longer than usual. Chrysler normally asks dealers to order 30 days in advance. Earlier this year the company asked dealers to order 60 days in advance for 2009 models. In March, just as fuel prices began to soar, Chrysler killed the third shift at Belvidere. Chrysler is now running the plant on two shifts with overtime. A Chrysler spokesperson said Chrysler is monitoring sales but has made no decision about restoring a third shift. Chrysler’s Campi makes nice MEXICO CITY — John Campi, Chrysler LLC’s chief procurement officer, promised to repair the automaker’s relationship with its suppliers. Over the years “we have managed to destroy the trust between us and our suppliers,” Campi said in a speech here last week. “I’m dedicated to correcting this issue. I want fierce collaboration with our supply base.” During a dismal June, sales of trucks fell more than cars for most automakers. Not so at Chrysler LLC. June sales of Chrysler cars plunged 46.3 percent to 35,973 from 66,950 a year ago. Chrysler truck sales dropped 30 percent in June to 81,484 from 116,397 a year ago. “Chrysler is going opposite to the industry,” says Tom Libby, an analyst for the Power Information Network. Industrywide, June truck sales fell 29.5 percent, and car sales dropped only 7.6 percent. General Motors was the only other carmaker to see June car sales fall more than truck sales in percentage terms — down 18.3 percent compared with 18.1 percent, a much less dramatic difference than Chrysler’s. Chrysler’s mid-sized cars, the Chrysler Sebring and Dodge Avenger, haven’t captured the same momentum as domestic rivals such as the Chevrolet Malibu. Chrysler has been cutting the number of Sebrings and Avengers it sells to rental fleets. Retail sales haven’t made up the difference, even in a market hungry for better fuel economy. In March, Chrysler slashed production of the two cars from two shifts to one. Chrysler makes them at its Sterling Heights, Mich., plant. The move was part of Chrysler’s efforts to restructure itself after its divorce from Daimler last August. Since April 28, Sterling Heights has been on overtime, and the plant worked the first week of Chrysler’s summer shutdown. A bright spot has been the new 2009 Dodge Journey crossover, built on the same platform as the Avenger and Sebring. Dodge sold 5,162 Journeys in June and is building the vehicle on two production shifts in Toluca, Mexico.c time to stop pushing what we want them to buy.” Skimpy lineup Chrysler is handcuffed by the product lineup it inherited from its previous owner, Daimler AG. Chrysler has contracted Nissan to build a subcompact based on the Versa. The car, expected to be called the Dodge Hornet, is scheduled to arrive in showrooms in 2010. Chrysler also is working with China’s Chery Automobile Co. on small cars, but no dates have been set for North American availability. Meanwhile, in the midst of a major restructuring under the ownership of Cerberus Capital Management LP, Chrysler is trying to stick to its guns on slashing unprofitable fleet sales. Retail sales haven’t compensated for the fleet cuts. Year to date, Chrysler has cut sales to fleets more than 20 percent, the company says. Chrysler does not divulge its fleet sales numbers. Despite the cut in fleet sales this year through April, fleet sales still account for about 35 percent of total BMW reassesses Mini demand DETROIT — Despite high demand and record sales for the small, fuel-saving Mini hatchback, BMW is unlikely to approve an increase in production for the stock watch Manufacturers BMW-ADR Fiat S.p.A.-ADR Ford General Motors Honda-ADR Hyundai-ADR Nissan-ADR PSA-ADR Renault-ADR Suzuki-ADR Toyota-ADR Volkswagen-ADR Closing price July 11 Closing price July 3 Weekly percent change 52-week high 52-week low $46.65 25.50 4.86 9.92 33.43 15.80 15.40 49.55 78.75 21.50 90.52 53.35 Closing price July 11 $46.70 25.50 4.42 10.12 33.57 15.80 16.10 51.60 81.18 21.50 92.00 56.15 Closing price July 3 –0.1% – 10.0 –2.0 –0.4 – –4.4 –4.0 –3.0 – –1.6 –5.0 Weekly percent change $68.80 34.85 9.24 43.20 37.80 23.16 23.75 92.50 165.75 33.25 126.39 60.85 $46.40 14.15 4.30 9.20 27.01 14.25 15.40 48.65 78.75 21.50 90.52 32.70 Image problem Troy Allen, owner of Allen Motors Inc., a Chrysler, Dodge and Jeep dealership in Derry, N.H., that has been selling 30 to 40 new cars a month, says the problem is not availability. “I can get all the Calibers, Compasses and Patriots I want,” he says. “But people are not coming into the dealership looking for high gas mileage cars.” Because sales have been so heavily tilted toward trucks, “the exterior perception of Chrysler is not anything to do with small cars,” Allen says. Allen is not waiting for Chrysler to act. Last week he removed trucks from the front of his lot and replaced them with Chrysler’s most fuel-efficient models. Pen Fry, vice president of sales and operations at Jeff D’Ambrosio’s Chrysler-Dodge-Jeep in Downingtown, Pa., is doing the same thing. He is launching his own promotion called the Over 30 Club. Fry says he’s lining up in front of the dealership and under a banner all Chrysler vehicles that get 30 mpg or better on the highway. The Chrysler Sebring and Dodge Avenger are the only Chrysler vehicles with that rating. “Let’s start pushing what sells, what the people want,” he says. “I think it’s sales at Chrysler, according to an Automotive News analysis of data supplied by R.L. Polk & Co. last month. To make money selling smaller vehicles, says Jim Arrigo, owner of Arrigo Dodge in West Palm Beach, Fla., and chairman of the Chrysler-Jeep national dealer council, Chrysler will have to rethink the way it operates. “They’ve got to open up the ability to order as many as you want and order them the way you need them,” Arrigo says. “There’s not a lot of margin, so you’ve got to sell them in volume.” Jesse Toprak, an analyst at Edmunds.com, says Chrysler’s new management team didn’t inherit much of a portfolio for the huge leap into small cars: “It’s a bit unfair. Chrysler three years from now will be nothing like the Chrysler we see today. They’re dealing with what they’ve inherited. There’s not much you can do with the existing product line.” c David Barkholz contributed to this report Retail Groups Asbury Automotive Group AutoNation Group 1 Automotive CarMax Lithia Motors Penske Auto Group Sonic Automotive Chrysler small-car blues As customers rush to fuel-efficient small and mid-sized cars, Chrysler’s small-vehicle lineup is struggling vs. its domestic competitors. SEGMENT COMPACT CARS HWY. MPG* TRANSACTION PRICE** 2ND-QUARTER SALES (%) 52-week high 52-week low $10.88 8.09 16.96 11.98 4.14 13.08 10.66 $11.01 8.98 18.08 13.15 4.71 14.19 11.88 –1.2% –9.9 –6.2 –8.9 –12.1 –7.8 –10.3 $25.02 22.48 41.07 26.55 25.03 http://www.fueleconomy.gov

Table of Contents Feed for the Digital Edition of Automotive News - July 14, 2008

Small-car boom misses Chrysler Ford's large rwd car plan is iffy Suppliers: Inflation is looming Hummer H3T price: $31,495 VW may build next Passat in U.S. plant Glut of trucks pulls Prius to U.S. Ford sues U.S. over taxes Restyled Ridgeline Volvo will tighten U.S. dealer network As BMW's chief in N.A., Purves got biggest thrill out of Mini Despite pricey fuel, Jetta diesel in demand Everybody's a critic: How dealers cope with online reviews Hyundai goes big on Genesis lease The shift to automatic: A transmission transition Jaguar-Land Rover dealer: Stand-alone would bankrupt me Chevy christens compact Cruze Fiat, BMW will team up on platforms, parts Revision: Bosch still tops Auto News supplier list GM to build Volts in U.S. for Europe GM ads will push mpg for 90 days A missed opportunity 2008 sales forecast? 14,652,757 Suzuki cuts U.S. work force 8% CAFE standards: Stop whining and get to work Uncertainty is the name of the game Honda dealer rubs salt in a wound Careless driver was to blame for crash Unsafe driving wasn't Ford's fault For doomsayers, business is booming again Best ad slogans have staying power Bird Dog Club creator hunts dealer poachers Dealers How to design a Lamborghini? Passion for speed certainly helps Dressed to kill Check for children Delinquency rate on indirect loans skyrockets Group promotes payment assurance Ford has big plans for small vehicles in North America Mulally pushes Ford toward fuel efficiency Ford brand will draw on European lineup With no new vehicles planned, Mercury's future is bleak Engines promise power plus fuel economy Horbury: We'll keep our vehicle designs fresh Ford aims to move Lincoln upscale Toyota's Lentz: Don't panic over collapse; market will stabilize Personnel Chrysler's car sales sag in June — even more than trucks PG sells majority of auto glass business to private-equity firm Chrysler's Campi makes nice Suit against Ford is reinstated BMW reassesses Mini demand JCI plant cuts shift, work force CAW board endorses local president Purves: Thumbs-up for BMW innovations Current trend in Europe: Electric cars Solid reviews for Ford's new Flex Philosopher has insight for ailing U.S. auto industry The 'B' word brings media deathwatch at GM Chrysler to dealers: Don't panic

Automotive News - July 14, 2008

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