Automotive News - October 20, 2008 - (Page 1) autonews.com ® OCTOBER 20, 2008 Entire contents © 2008 Crain Communications Inc. All rights reserved. $155/YEAR; $5/COPY The Detroit 2? Anything’s possible As General Motors and Cerberus Capital Management huddled last week over Chrysler’s fate, one thing became clear: Any number of acquisitions and alliances in Detroit are on the table: Will Chrysler be acquired? Broken up? Will Renault and Nissan find a North American partner? We handicap these and other possibilities on | PAGE 4 | With GMAC out, banks trickle in But loan money is elusive for shoppers with less-than-sparkling credit Donna Harris dharris@crain.com After GMAC Financial Services’ broad retreat last week from auto lending, General Motors dealers were trying to plug the gap with banks, credit unions and independent finance companies. GMAC said it would lend money only to consumers with credit scores of 700 or above — lowrisk prime customers — and raise rates, too. The changes disqualify up to three-fourths of some dealers’ shoppers. CHRONICLING THE CREDIT CRUNCH 6 Honda: We’re still lending ➤ LaNeve: Tight credit costs thousands of sales ➤ 35 GM’s quandary: Find loans for the imperfect ➤38 “That, in effect, puts GMAC out of the retail finance business,” says Ken Cooper, sales manager of Alex Chevrolet Inc. in Charles Town, W.Va. “GMAC used to be there for us all the time when things were good or bad. Now they float with the wind.” The GMAC pullback means opportunities for other lenders, such as banks and credit unions. But the frozen credit markets mean that whatever the source, auto loans will be expensive and availability limited for those with poor credit scores. GMAC added three-quarters of 1 percentage point to the buy rate — the interest rate it charges dealers to provide auto loans to consumers. Rates vary around the country, but dealers say see GMAC, Page 35 Amazingly, vehicle inventories are low Jesse Snyder jsnyder@crain.com Softer steel After a strong run-up early this year, the price of hot-dipped galvanized steel eased as the recession cut demand. His way is by the highway More real estate mogul than car guy, California dealer Mike Kahn has been growing as fast as any dealership group in the country. His secret? Buy up prime locations, then go out and get good franchises to plunk down on the sites. | PAGE 3 | $1,400 1,200 Average price per ton of galvanized steel Call it a miracle, but despite the industry’s biggest sales collapse since 1980, automakers have prevented inventories from spiraling out of control. The sales plunge and a huge swing in the model mix could have sent stockpiles soaring. Yet none of the six big manufacturers has excessive supplies of any high-volume model. Auto dealers are cutting their own inventories as floorplan financing rates rise and lenders pressure them to reduce stock. “They’re being very careful in ordering in the new model year,” said Mike Robinet, head of forecasting for CSM Worldwide. The industry’s combined stock of 2.9 million unsold vehicles on Oct. 1 was almost 300,000 units below the 10-year average for that date. The total generally includes vehicles at dealerships, factory lots, ports of entry and in transit. The industry as a whole had a 72day supply of vehicles as of Oct. 1, up from 61 days on Sept. 1 and 59 days on Oct. 1, 2007. But the number is inflated now because of September’s disastrous selling rate. see INVENTORY, Page 36 1,000 800 600 400 200 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT 0 Source: Purchasing Magazine REITHOFER ODELL Talk from the top REBECCA COOK Once-hot prices for steel and other commodities have cooled in recent months, as the recession reduced demand. The price declines may be temporary, but the industry welcomes any lower costs that help to conserve cash. BMW boss Norbert Reithofer says his company is cruising above the credit crisis. Meanwhile, Volvo’s new chief, Stephen Odell, is strapping in for what could be a harrowing ride. We talk with both CEOs. | PAGES 22, 24 | An upside of the big slide: Raw material prices dip — for now Robert Sherefkin rsherefkin@crain.com Chevy cut Silverado stock almost in half in a year. DETROIT — Inside the financial crisis gleams a silver lining — at least temporarily. As worldwide auto sales and production plummet, prices of steel, crude oil and other raw materials are plummet- ing, too. Weak demand in North America, Europe and China has eased the bidding war for raw materials. Take steel. After two years of record prices, the spot price for hot-dipped galvanized steel — the top-grade finished steel for vehicles’ exposed body panels — has declined steadily. After peaking at $1,303 per ton June 5, the price slid to $1,150 last week. For the average vehicle, that drop for just one grade of steel implies savings of up to $120. Crude oil, a key ingredient in automotive resins, has tumbled in price to half its peak of $147.27 per barrel on July 11. Prices of many commodities important to the auto industry remain above levels of a year or two ago. And lower raw material costs won’t make up for sinking auto sales. But any drop in costs is welcome news for automakers and suppliers. On the Web This week at www.autonews.com: Monday: Sirius Satellite Radio Contract talks open Automakers are looking for price relief from steel makers in 2009 contracts that will be signed in December. Suppliers may get relief, too. A typical 3,000-pound car has about 1,875 pounds of steel, includsee UPSIDE, Page 35 NEWSPAPER CEO Mel Karmazin speaks at Convergence 2008 in Detroit. Wednesday: Federal-Mogul Corp. releases its thirdquarter financial report. Wednesday: Continental Executive Board Chairman Karl-Thomas Neumann and Chrysler co-President Jim Press speak at Convergence. http://www.autonews.com http://www.autonews.com
Table of Contents Feed for the Digital Edition of Automotive News - October 20, 2008 Automotive News - October 20, 2008 Amazingly, vehicle inventories are low An upside of the big slide: Raw material prices dip â for now With GMAC out, banks trickle in Get your daily Automotive News - in video form, starting Nov. 3 Honda's Fukui favors fed loans, confirms V-8 To move the metal, Mike Kahn moves the store Hyundai airbag flaw tied to drink spills Texas promo: Buy a GM vehicle, get GM stock Chrysler's uphill road in China GM/Chrysler? Anything's possible GM/Chrysler deal? Companies' pension plans may need cash Acura dealers: A V-8 engine is on the way Buyers pursue former Heard stores Honda: We're still lending Gilles, Ligocki will speak at congress Fed list promotes high-mileage cars Party time: Saturn turns to grass-roots marketing Online inventory service aims to cut dealer costs Document fees must not become a dirty little secret Just put up a 'For Sale' sign Cash for clunkers? Scrap the idea Arbitration can work for everyone It's time we control our own destiny GM missed boat on Cheyenne, Volt Sept. truck sales fall 7.4% Microheat seeks Chapter 11 At Bosch, r&d spending remains strong GM's new diesel opens up, loses weight Urea must flow or new diesels won't go Hankook plans to bring fuel-saving tire to North America Odell: I can help Volvo tap more potential So far, BMW cruises above the credit crisis Jatco builds China plant to meet expanding CVT demand 10 appointed at American Axle Personnel Milestones Obituaries Supplier Personnel Biking buddies Ford targets fleets with parental control key European sales fall; VW group bucks the trend 11 innovators win honorable mention 25 finalists selected for 2009 PACE awards Suppliers to the 2009 BMW X6 GMAC's loan cutbacks cost GM thousands of auto sales Credit tops agenda for NADA chief 'Flash' draws modest cash at theaters Booth's new berth sparks CEO speculation at Ford Economy's skid sends ritzy toys to eBay Report: Mazda scraps plan for U.S. plant GM's quandary: Finding loans for the imperfect Taylor to Hummer - and then ... ? Tough times at Tesla Automotive News - October 20, 2008 Automotive News - October 20, 2008 - (Page Intro) Automotive News - October 20, 2008 - With GMAC out, banks trickle in (Page 1) Automotive News - October 20, 2008 - With GMAC out, banks trickle in (Page 2) Automotive News - October 20, 2008 - Texas promo: Buy a GM vehicle, get GM stock (Page 3) Automotive News - October 20, 2008 - Companies' pension plans may need cash (Page 4) Automotive News - October 20, 2008 - Companies' pension plans may need cash (Page 5) Automotive News - October 20, 2008 - Gilles, Ligocki will speak at congress (Page 6) Automotive News - October 20, 2008 - Gilles, Ligocki will speak at congress (Page 7) Automotive News - October 20, 2008 - Online inventory service aims to cut dealer costs (Page 8) Automotive News - October 20, 2008 - Online inventory service aims to cut dealer costs (Page 9) Automotive News - October 20, 2008 - Online inventory service aims to cut dealer costs (Page 10) Automotive News - October 20, 2008 - Online inventory service aims to cut dealer costs (Page 11) Automotive News - October 20, 2008 - Arbitration can work for everyone (Page 12) Automotive News - October 20, 2008 - Arbitration can work for everyone (Page 13) Automotive News - October 20, 2008 - GM missed boat on Cheyenne, Volt (Page 14) Automotive News - October 20, 2008 - GM missed boat on Cheyenne, Volt (Page 15) Automotive News - October 20, 2008 - Microheat seeks Chapter 11 (Page 16) Automotive News - October 20, 2008 - Microheat seeks Chapter 11 (Page 16A) Automotive News - October 20, 2008 - Microheat seeks Chapter 11 (Page 16B) Automotive News - October 20, 2008 - Microheat seeks Chapter 11 (Page 16C) Automotive News - October 20, 2008 - Microheat seeks Chapter 11 (Page 16D) Automotive News - October 20, 2008 - Microheat seeks Chapter 11 (Page 17) Automotive News - October 20, 2008 - Hankook plans to bring fuel-saving tire to North America (Page 18) Automotive News - October 20, 2008 - Hankook plans to bring fuel-saving tire to North America (Page 19) Automotive News - October 20, 2008 - Hankook plans to bring fuel-saving tire to North America (Page 20) Automotive News - October 20, 2008 - Hankook plans to bring fuel-saving tire to North America (Page 21) Automotive News - October 20, 2008 - Odell: I can help Volvo tap more potential (Page 22) Automotive News - October 20, 2008 - Odell: I can help Volvo tap more potential (Page 23) Automotive News - October 20, 2008 - So far, BMW cruises above the credit crisis (Page 24) Automotive News - October 20, 2008 - So far, BMW cruises above the credit crisis (Page 24A) Automotive News - October 20, 2008 - So far, BMW cruises above the credit crisis (Page 24B) Automotive News - October 20, 2008 - So far, BMW cruises above the credit crisis (Page 24C) Automotive News - October 20, 2008 - So far, BMW cruises above the credit crisis (Page 24D) Automotive News - October 20, 2008 - So far, BMW cruises above the credit crisis (Page 25) Automotive News - October 20, 2008 - Obituaries (Page 26) Automotive News - October 20, 2008 - Biking buddies (Page 27) Automotive News - October 20, 2008 - Biking buddies (Page 28) Automotive News - October 20, 2008 - Biking buddies (Page 29) Automotive News - October 20, 2008 - Biking buddies (Page 30) Automotive News - October 20, 2008 - Biking buddies (Page 31) Automotive News - October 20, 2008 - European sales fall; VW group bucks the trend (Page 32) Automotive News - October 20, 2008 - European sales fall; VW group bucks the trend (Page 33) Automotive News - October 20, 2008 - Suppliers to the 2009 BMW X6 (Page 34) Automotive News - October 20, 2008 - GMAC's loan cutbacks cost GM thousands of auto sales (Page 35) Automotive News - October 20, 2008 - Credit tops agenda for NADA chief (Page 36) Automotive News - October 20, 2008 - Credit tops agenda for NADA chief (Page 37) Automotive News - October 20, 2008 - Tough times at Tesla (Page 38) Automotive News - October 20, 2008 - Tough times at Tesla (Page 39) Automotive News - October 20, 2008 - Tough times at Tesla (Page 40)
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