Automotive News - January 21, 2008 - (Page 12)

12 • JANUARY 21, 2008 opinion Incentives war isn’t the answer to sales downturn Forecasts of a possible recession and dismal prospects for new-vehicle sales this year seemed out of place among all the shiny new products at the North American International Auto Show in Detroit. Unfortunately, the great products at the show will do little or nothing to improve the economy. The industry undoubtedly faces a tough year. The only With all the pain questions are how tough it will be and what the industry should do — and suffering and not do — to weather the downcaused by the last turn. Economists generally predict that great incentives U.S. light-vehicle sales will range from 15.0 million to 15.5 million vewar, you’d think hicles this year, down from about 16.2 million in 2007. Last week, one the entire economist suggested 2008 light-veindustry would hicle sales could slump as low as 14.5 million. want to avoid Dealers, who operate at the economic grass roots, already are taking another conflict. precautions. Many say they are ordering fewer new vehicles from the factory, stocking more used vehicles, acquiring fewer dealerships and trimming their inventories. Accordingly, some factories are cutting production schedules and preparing to shed more workers through layoffs or buyouts. Although such steps are painful, they make more sense than building a glut of unsold cars and trucks that will sit against a fence somewhere, collecting dirt and depreciating. So it is surprising that Mark LaNeve, General Motors’ North American sales honcho, says he expects automakers to crank up their spending on incentives to keep this year’s light-vehicle sales near 16 million. Although GM won’t start an incentives war, LaNeve says, it is prepared to enter the fray to remain competitive. That could be a major mistake. With all the pain and suffering caused by the last great incentives war, you’d think the entire industry would want to avoid another conflict. That’s especially true of GM, which now claims to have broken the cycle of incentive spending and evolved from touting a great deal to offering great product. Cooler heads must prevail. It is in the best interest of the factories and their dealers to avoid another incentives war. Selfrestraint and a little pain this year will be worth it in 2009, when sales rebound as the economy perks up. Last week, the North American International Auto Show began with the traditional introductions for the press. As always, it was nothing short of spectacular, with plenty of global introductions of production cars, preproduction vehicles, prototypes and show cars. It was a hectic and fruitful time in the Motor City, with nearly 7,000 reporters from more than 50 countries in attendance. This year, five Chinese manufacturers are displaying their products at the show. I had imagined Chinese auto companies would be so busy trying to meet demand for their products in China that they wouldn’t have a great interest in exporting vehicles for quite some time. I was wrong. They came to Detroit to test the waters. They wanted to see what reaction they would get not only from the global automotive press but from consumers as well. It’s too soon to tell which will be the first DAILY AUTO NEWS >> You can get the news you need every day. Go to www.autonews.com/signup and sign up for our daily e-mail newsletter. Here they come, ready or not Chinese automaker to set up a retail network and homologate its cars for U.S. safety and emission standards. But it won’t be long. It’s not a question of whether they’ll come to the United States — only when. That means the market share for existing manufacturers and importers will continue to erode. Adding four or five more brands to the 40 or so that are already here will affect the sales of manufacturers and dealers. After that, how many years will it be before we see manufacturers exporting from India? It doesn’t seem to matter what the state of the market is here. Everyone wants to have an opportunity to set up a dealer network and sell vehicles here. It’s not a question of whether Chinese automakers will come to the United States — only when. There are good cars and trucks and some great ones at the Detroit auto show. But there aren’t any bad ones. There just aren’t lousy cars in the market anymore. By the time the Chinese arrive, they will be producing vehicles that are acceptable to many Americans. It’s no wonder that the Detroit 3 have so many problems in the United States. With just about every manufacturer wanting to be here, there are more choices than ever. It’s the most competitive marketplace in the world. The digital edition is user-friendly, and it is clear that you did your homework before you flipped the switch. TIM BOUTORWICK Cadillac Product Insight Director Modernista Fraser, Mich. Modernista is an advertising agency. It handles Hummer and Cadillac. Toyota over Chevy? Don’t be too sure To the Editor: The Jan. 7 front-page story “Japan Triumphant” says that the Toyota brand is about to become No. 1 in the United States and that its victory is inevitable. Isn’t the real story that Chevy was triumphant in 2007, beating Toyota? Toyota is closing in fast, but the headline is a prognostication, not news. It is unsettling how enthusiastic Automotive News is about the decline of the American manufacturers. How about a real news story on the effects of Toyota’s ascendancy? How about the national trade deficit and its immediate and long-term effects on the American economy? Then report the leading contributor to the trade imbalance. As the economy gets tighter and more people figure out it’s not where they are built that is important but where the money goes, we’ll see whether Toyota’s meteoric rise continues. Chevrolet’s product is really good, just as good as, if not better than, Toyota’s. I contend that people are figuring that out, too. I expect Automotive News to continue rooting for the “away” team. Only time will tell whether 2007 was Chevrolet’s last hurrah or whether Chevrolet will have the last laugh. MARK FROST General Manager Jim Ellis Chevrolet Atlanta THE WEEKLY NEWSPAPER OF THE INDUSTRY Established in 1925, published every Monday by Crain Communications Inc. Keith E. Crain, Publisher and Editor-in-Chief Peter Brown, Associate Publisher and Editorial Director David Sedgwick, Editor Edward Lapham, Executive Editor HOW TO REACH US Web site: www.autonews.com Editorial staff autonews@crain.com Phone: 313-446-0361 Fax: 313-446-0383 Circulation Advertising subs@crain.com lschlagheck@crain.com Phone: 888-446-1422 Phone: 313-446-6790 Fax: 313-446-6777 Fax: 313-446-8030 Editorial data/research To locate information that has been published in Automotive News, call 313-446-1662. Customer service To start or renew a subscription or to report an address change or a delivery problem, e-mail subs@crain.com or call 888-446-1422 (in the U.S. or Canada) or 313-446-1662 (in all other locations). AUTOMOTIVE NEWS (ISSN 0005-1551) is published weekly at 1155 Gratiot Ave., Detroit, MI 48207-2997. Periodicals postage is paid at Detroit, MI and at additional mailing offices. Postmaster: Send address changes to AUTOMOTIVE NEWS, Circulation Department, 1155 Gratiot Ave., Detroit, MI 48207-2912. Canadian Post International Publications Mail Product (Canadian Distribution) Sales Agreement #40012850, GST#136760444. Canadian return address: 2-7496 Bath Road, Mississauga, ON L4T 1L2 Printed in the U.S.A. Digital edition is a ‘quantum leap’ To the Editor: Automotive News has made a quantum leap in newspaper online technology with the digital edition (“A digital Automotive News,” Jan. 7). It may not increase the size of the newspaper pie of dwindling older readers, but it sure will give those who We invite letters from our readers. Please limit your letter to 250 words and tell us whether we may print it. We reserve the right to edit it. Include your name and title, the name of your company, your city and your state. Also include your telephone number or your e-mail address. E-mail letters to: autonews@crain.com Or send them to: Letters Automotive News 1155 Gratiot Ave. Detroit, MI 48207-2997 autonews.com To read the digital edition of Automotive News, go to www.autonews.com/digitaledition. jump onto this a bigger piece of the pie. Another neat thing about this is that the reader also sees all of the advertisements that are in the hard copy. It almost makes me want to buy some newspaper stock. EARL STEWART Owner Earl Stewart Toyota of North Palm Beach Lake Park, Fla. You did your homework To the Editor: In a word: Kudos! http://www.autonews.com/signup http://autonews.com http://www.autonews.com/digitaledition http://www.autonews.com

Table of Contents Feed for the Digital Edition of Automotive News - January 21, 2008

Campi will move fast to buy global Ford rolls out new F series — but will it stay No. 1? GM will push metro megastores BMW: We may need a 'green' brand Competition claims traditions German summit Toyota: We have enough plants for now Chinese pitch innovation, not just price Mercedes in, Cadillac out as sponsor of Masters golf tournament Auto show walkaround: Chasing the YIPS around Detroit New Acura TSX will get a diesel Toyota: We'll crack 35-mpg CAFE before 2020 Audi predicts 1 million global sales in 2008 Toyota crosses over into tricky segment LETTER TO THE EDITOR: Digital edition is a 'quantum leap' KEITH CRAIN: Here they come, ready or not EDITORIAL: Incentives war isn't the answer to sales downturn LETTER TO THE EDITOR: Toyota over Chevy? Don’t be too sure DIGITAL EDITION: You did your homework Chrysler concepts show brand tweaks Chrysler: 'Hemi is not powertrain of the future' Some of what we heard at the Detroit auto show Corvette has a future — but maybe a lighter, greener one Nissan exec: Cube is coming to America Subaru relies on new Forester Farley: Ford must groom the market Ford still funds Jag, Land Rover product development Ford will probably develop its new rwd cars in the U.S. Volvo considers North American production Good design: Solving problems, making a statement Horbury wants a more aerodynamic F-150 Hyundai upgrades next Sonata's interior M-B could build C class in U.S. VW hints at vehicles for new N.A. plant Customer demand for CTS sedans strains production capabilities at Cadillac GM to test ZR1 carbon fiber weight savings Honda Pilot has more room, power Indiana plant will boost Honda's flexibility Zetsche sees 20% diesel mix for Mercedes-Benz GM hopes to have E-Flex test vehicles ready by June GM to increase Enclave output Cadillac aims high with Provoq Pontiac to launch G8 marketing in March Big-truck sales fall 43.5% in Dec. Personnel Buckle up for a rocky '08, economists warn Canada sales up 2.4% in '07 Gioia: Ford hybrids will be profitable by year end American Honda opens workplace diversity office Dealers From CDs to Sync: Auto industry races to adapt in-car IT trends Microsoft exec sees a car as 'another room in the house' China's Geely plans plant in Mexico Chrysler exec: China exporters need time Murtaugh: Nissan deal won't affect Chrysler-Chery venture Strike by writers makes TV iffy for auto marketers Super Bowl auto advertisers get pre-game jitters Final Say GM bumps buyout total to 46,000 GM considers U.S.-made Astra Good Karma: Mean, green, fighting machine Purves confirms it: The end is near Rehab for designers: A change can do you good Tata's achievement: Redefining 'cheap' Fans remember auto commercials with sports themes Which brand is stronger — Scion or Prius? Engine advances bring cleaner emissions a step closer Suppliers to the 2008 Ford Focus Varable compression ratio makes a comeback Change the engine's stroke Integrate components to boost efficiency Reduce the size of the engine Eliminate the cams and count the savings ZF expects surge in new orders American Axle's rising son may be another Dauch Honda taps Web for workers Trelleborg unit adds tech center Kia restricts hiring at Ga. plant to Web applicants Magna pursues Ogihara Supplier personnel Age of intelligent transportation is getting closer Plastic spoiler saves weight Automotive News' cartoonist looks at 2007 8 will enter European Automotive Hall of Fame Pininfarina lifted family business to new heights Merciless cost cutter Calvet rescued PSA Opel boys turned bicycle venture into automaker Giacosa fathered the Fiat 500 JCI to supply batteries to Chinese automakers Automakers will spend more on digital ads Ford snares star role in return of 'Knight Rider' GM Certified markets online to Hispanics Writers' strike could benefit auto marketers

Automotive News - January 21, 2008

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