Automotive News - July 14, 2008 - (Page 46)

46 • JULY 14, 2008 final assembly comment The ‘B’ word brings Philosopher has media deathwatch at GM insight for ailing U.S. auto industry T P ray that German philosopher Friedrich Nietzsche was right. Well, not necessarily all of his existential ramblings, but at least his idea that what doesn’t kill me makes me stronger. For the Detroit 3, perhaps these tough times are the equivalent of an industrial vaccination. Detroit’s automakers have a history of bouncing back from economic adversity to better health and fatter wealth. Until EDWARD LAPHAM now, it has worked IS EXECUTIVE something like EDITOR OF AUTOMOTIVE this: When the NEWS. auto market hits the fan, automakers whack furiously at their costs. So when the economy turns upward and pulls the auto market along, profits rocket out of the trough. And new, timely products are what make it possible. It’s what Ford did in North America in the 1980s with the Explorer and Taurus and what Chrysler did in the 1990s with the Dodge Ram and the cab-forward cars. This time, all three need a whole new fleet of fuel-efficient vehicles. It won’t happen overnight. The good news is that once the Detroit 3 get the new products onstream, they will have products in North America that the rest of the world wants, unlike the giant pickups and SUVs that once accounted for so much of their profit. That will convert at least GM and Ford into truly global companies, which will make them stronger. But first they must: Find the money they need to change the fleet. Lobby Washington for a national energy policy — and do it with the entire supply chain and the UAW — so the industry can plan better. Create more plants with flexible manufacturing capabilities. Finish restructuring North American operations to match market share — finally accepting that the old days are gone, and the old market share numbers are gone and will never return. Accept that most product development, except for big trucks and SUVs, may be done overseas. Remember: Nietzsche said if you survive, you’ll be stronger. He never said it would be easy. Edward Lapham writes commentaries each week for autonews.com. Read them at autonews.com/edwardlapham. he Detroit 3 are hemorrhaging cash, and that has the media smelling blood. A feeding frenzy ensued after Merrill Lynch analyst John Murphy wrote in a note to investors July 2 that a General Motors bankruptcy “is not impossible if the market continues to deteriorate and significant incremental capital is not raised.” GM’s stock plunged to less than $10 a share — “its lowest level since Dwight Eisenhower was president, power brakes were new and the Bel Air was the automaker’s hot new car,” observed the Detroit Free Press. “General Meltdown,” blared a New York Post headline July 3. “Even towel purveyor Bed Bath & Beyond and motorcycle maker Harley-Davidson now enjoy richer market values than GM,” the paper observed. The Financial Times was equally sardonic. “The decline of Detroit’s three carmakers has come to this: General Motors’ market value sank this week below Mattel, the maker of Matchbox toy cars.” But Dave Cole, chairman of the Center for Automotive Research, says the pack already has begun to disperse. Reporters who called him two weeks ago demanding to know why GM is going bankrupt are now asking how Detroit can get back on track. “There was a hysteria about a week ago, but it’s sort of ebbed,” Cole said last week. “Whether it’s going to come back, who knows? So many things are in the process of unfolding here.” Unfortunately for the automakers, the general media don’t cover those day-to-day developments, says Tom Wilkinson, GM’s director of news relations. He says they parachute in “when they see a story above the fold in The Wall Street Journal and say: ‘Oh, wow. This must be news.’ “It gets a little frustrating when some of the speculation runs amok. But it’s just the waters we swim in.” VOLKSWAGEN >> For the latest updates on the location of VW’s new U.S. assembly plant, visit www.autonews.com. Daimler’s Smart minicar will get an electric version in 2010. Current trend in Europe: Electric cars S Design and handling have earned the Ford Flex crossover praise. Solid reviews for Ford’s new Flex Flex F arriving at crossover is and dealerships, ord’s some auto writers are impressed. Some examples: “Its daring design sets it apart from the legions of look-alike crossovers roaming our roads. Fortunately for Ford, the Flex’s appeal is much more than skin-deep. For example, it offers one of the highest-quality interiors we’ve seen from Ford in a long time, replete with plentiful soft-touch surfaces and an expensive-looking design.” (Edmunds.com) “For argument’s sake, let’s declare Flex the most honest and best-looking SUV since the now-departed Jeep Cherokee. In a sense, Ford has reinvented the station wagon. Flex sits a bit lower than usual for a crossover SUV, giving it a more carlike appearance. The long, straight roofline evokes Ford Country Squires of yore.” (James Healey, USA Today) “On a rainy test drive on really rough expressways through the New York boroughs of Manhattan and Queens, the Flex shrugged off potholes, expansion joints and road construction and kept interior noise to a minimum.” (Jim Henry, AutoWeek) purred by tough environmental rules and high fuel prices, European automakers and suppliers have launched a bevy of electricvehicle programs. Daimler said it will bring an electric version of its Smart minicar to market in 2010. The company also is considering electric versions of MercedesBenz A- and B-class cars. PSA/Peugeot-Citroen, in partnership with Mitsubishi, said it aims to produce electric models in two years. Renault plans to sell electric cars in Denmark by 2011. The French company is working with its Nissan affiliate and the Japanese battery manufacturer NEC. Bosch, the world’s largest auto supplier, has announced a project to build lithium ion batteries with Korea’s Samsung. Bosch foresees batteries capable of powering a car almost 200 miles between charges. But European analysts and industry executives caution that a widespread move to electric vehicles will pose challenges and cause dislocation in the industry. For example, massive retraining programs will be needed for service workers at dealerships and repair shops. And automakers and suppliers will have to shift production to new technologies. Said one BMW exec: “Thousands of workers in our company are employed in engine manufacturing. The question is: What are they going to do in the future?” Chrysler to dealers: Don’t panic THE FINAL SAY hrysler, to paraphrase Mark Twain, says analysts’ reports of its impending death are premature. “Speculation has surfaced recently in media coverage of analyst reports suggesting Chrysler might have liquidity issues down the road if the U.S. market does not pick up,” the company said in a letter to dealers that was meant to stave off the jitters. “Chrysler has communicated to the media that the suggestion of a possible bankruptcy situation is without merit.” The letter was signed by coPresident Jim Press and Steven Landry, executive vice president of North American sales. It quoted a presentation to the national dealer council on June 27 by Lenard Tessler, managing director of Cerberus Capital Management. Tessler told dealers a $2 billion loan drawn down by Chrysler from Daimler Chrysler co-President Jim Press: “A possible bankruptcy situation is without merit.” AG and Cerberus was something agreed to in the original transaction when Cerberus bought 80.1 percent of Chrysler from Daimler last August. The loan “was not something that was a result of Chrysler having any need for incremental cash based on financial performance of the business,” Tessler said. “The company has exceeded all of its financial targets it set for itself from the day we closed the transaction on Aug. 3. The truth behind the $2 billion is that it was a contractual obligation we had to the company.” “ Lindsay Lohan General Motors has become the Lindsay Lohan of the bond market — a former investmentgrade star that now seems to be unraveling right before our eyes. — Analyst Shelly Lombard Gimme Credit LLC ” NEWSCOM http://www.autonews.com http://Edmunds.com http://autonews.com http://autonews.com/edwardlapham

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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