Automotive News - August 4, 2008 - (Page 1) autonews.com ® AUGUST 4, 2008 Entire contents © 2008 Crain Communications Inc. All rights reserved. $155/YEAR; $5/COPY Crisis at Chrysler: Buyers bail Cars sales plunge, trucks tank despite 11th-hour leases Jesse Snyder jsnyder@crain.com Consumers are bailing out on Chrysler LLC — the sign of a company in crisis. Despite a four-day flurry of leasing to beat Chrysler Financial’s exit from the sector, Chrysler still posted the biggest loss of any automaker in July U.S. sales. The company’s overall 28.8 percent plunge to 98,109 light vehicles slightly exceeded General Motors’ 26.1 percent decline. But the July results exposed the weakness of Chrysler’s car lineup in the glare of the U.S. market’s abrupt shift away from gas-guzzling pickups and SUVs to fuel-efficient cars. JULY SALES Trucks betray Detroit 3 ➤ Sales tables ➤ 27 25-27 Chrysler LLC truck sales fell 29.0 percent in July, close to the industry’s 25.8 percent truck slide. But while industry sales of cars were flat in July, Chrysler LLC car volume fell 28.2 percent. “More than (GM and Ford), Chrysler let its cars go while everybody focused on trucks,” said Doug Scott, senior vice president for automotive at GfK Custom Research in suburban Detroit. “As trucks are punished in the market, Dodge suffers disproportionately.” Hammered The U.S. marketplace hammered most automakers in July. Sales fell 13.2 percent to 1.14 million units, see SALES, Page 28 A Frontier pickup rolls down the line at Nissan’s Smyrna, Tenn., plant. Buyouts at Nissan Nissan cut truck output and offered buyouts to Tennessee workers. Is this a new era in Japanese labor relations? | PAGE 3 | GM’s really bad news: Its revenue Jamie LaReau jlareau@crain.com THE INCREDIBLE SHRINKING RESIDUAL Son of Scion? Brand reviews its strategy What if you create a small-car “youth brand” and a) young people stop buying; and b) small, fuel-efficient cars move into the mainstream? Toyota’s Scion brand is rethinking its niche strategy. | PAGE 4 | ‘In a battle for their life’ “Revenue is a measure of the business going forward,” Cole says. “They’re in a battle for their life.” GM attributes about $1.8 billion of its revenue downturn to production lost during the strike at American Axle & Manufacturing Holdings Inc. And the slow economy also took a toll. But disappearing sales of highprofit trucks — a problem that will continue as GM continues to change its sales mix — played a major role. Cars and crossovers accounted for 58 percent of GM’s July production, and GM will continue to boost production of cars and crossovers in the third quarter. But even with more cars in its lineup, GM will struggle to replace the revenues lost when sales of full-sized SUVs and pickups collapsed. Consider the Chevy Malibu, one of the few GM nameplates selling well this year. The Malibu’s average transaction price is $22,329, according to see GM, Page 28 OF STICKER PRICE 2008 F-150 Source: Automotive Lease Guide OF STICKER PRICE How’s this for resale value? The Toyota Prius is in such short supply that some dealers are buying back used ’08s from owners — for the full sticker price — and then selling them as used for even more. | PAGE 30 | Losing leases: It hurts already Dealers scramble for new ways to trim shoppers’ payments Arlena Sawyers, Donna Harris and David Kushma asawyers@crain.com RETAILING REVAMPED Lease customers rush to Chrysler ➤ 8 8 Chrysler’s new finance deal ➤ The Chrysler-Jeep dealership in Houston where Helfman is general manager leases about 20 of the 100 new vehicles it moves each month. But on Friday, Aug. 1, Chrysler Financial halted leasing in the United States. Helfman’s fallback, Chase Auto Finance, says it no longer will finance leases of Chrysler, Dodge and Jeep vehicles, either. “That’s a hard pill to swallow,” Helfman told Automotive News. “We’ll just have to try to put our customers in retail contracts.” So far this year, leases account for one of every five new vehicles Alan Helfman already misses his leasing business. sold at retail in the United States, up from one in seven in 2003. But last week, in a seeming eye-blink, much of the auto leasing industry deflated as the Detroit 3’s captive finance companies and several large banks announced major cutbacks. Industry analysts warn against expecting great improvement in leasing conditions for several years — if then. Meanwhile, automakers and dealers are making traditional loans more attractive to compensate for the loss of leasing. On the Web This week at www.autonews.com Wednesday: Supplier Magna International releases its quarterly financial report. Thursday: Automotive retailer Lithia Motors releases its quarterly financial report. NEWSPAPER Why it happened The leasing industry’s crisis was triggered by a sudden, stunning drop see LEASING, Page 8 JIM CALLAWAY DETROIT — A $15.5 billion loss is bad enough, but that may not even be the worst news in General Motors’ abysmal second-quarter earnings report. Here’s the really bad news: General Motors’ North American quarterly revenue totaled $19.8 billion, down nearly $10 billion compared with the same period a year earlier. Revenue is a strong indicator of an automaker’s health because it does not contain any one-time items, says Dave Cole, chairman of the Center for Automotive Research in Ann Arbor, Mich. Cars for cons After 3 years, what’s it worth? 2007 F-150 40.5% vs. 28.3% A Cincinnati Chevy dealer is targeting a captive audience: Soon-to-bereleased state prison inmates who will need some wheels when they get out of stir. | PAGE 6 | http://www.autonews.com http://www.autonews.com
Table of Contents Feed for the Digital Edition of Automotive News - August 4, 2008 Automotive News - August 4, 2008 Losing leases: It hurts already Crisis at Chrysler: Buyers bail GM's really bad news: Its revenue Lincoln reworks bonus plan for dealers Pain spreads beyond Detroit: Nissan offers employee buyouts Mitsubishi changes dealer advisory board GM repeats employee discount program Ford merges brands' sales, marketing After 5 funky years, Toyota's Scion now finds itself in a funk It's a body, er, a bus by Fisher At Tech Center, form follows function Industry nemesis again turns up heat on climate Right products, diverse customers raise suppliers' profits Last-minute leases swamp Chrysler With leases off the table, Chrysler offers new sales incentives GM favors 4 endorsed vendors of dealer management systems GKN to supply F-150 FX4's differential For sale: 2 Metaldyne plants 1 week's notice: Chrysler dealers deserved better Get used to the roller coaster That 1934 Reo had a clutch pedal We sell what the public wants Decision makers can't use hindsight Detroit's truck trauma is self-inflicted Why won't consumers buy Detroit cars? Speaking of ads, don't overlook VW Software helps dealers manage parts Service survey: Customer satisfaction rises Researcher: Vehicles can prevent crashes Personnel Microsoft will offer Live Search Dealers Picture This Nissan offers buyouts to its Tenn. workers Lincoln-Mercury exec joins Kia Kaline out at Ford Penske earnings drop slightly Asbury will move; profits slip S&P downgrades American Axle Best sales news: July is over Now THAT'S resale value ... Sirius-XM satellite radio deal: A mixed bag Don't be misled by Chery's sales; it's a key player McCurdy applies some political (tire) pressure A star is born: The saga of the shrinking sticker Our flag is still there Obama-mobile? Or McCain-carrier? Automotive News - August 4, 2008 Automotive News - August 4, 2008 - (Page Intro) Automotive News - August 4, 2008 - GM's really bad news: Its revenue (Page 1) Automotive News - August 4, 2008 - GM's really bad news: Its revenue (Page 2) Automotive News - August 4, 2008 - Ford merges brands' sales, marketing (Page 3) Automotive News - August 4, 2008 - After 5 funky years, Toyota's Scion now finds itself in a funk (Page 4) Automotive News - August 4, 2008 - After 5 funky years, Toyota's Scion now finds itself in a funk (Page 5) Automotive News - August 4, 2008 - Right products, diverse customers raise suppliers' profits (Page 6) Automotive News - August 4, 2008 - Right products, diverse customers raise suppliers' profits (Page 7) Automotive News - August 4, 2008 - With leases off the table, Chrysler offers new sales incentives (Page 8) Automotive News - August 4, 2008 - With leases off the table, Chrysler offers new sales incentives (Page 9) Automotive News - August 4, 2008 - For sale: 2 Metaldyne plants (Page 10) Automotive News - August 4, 2008 - For sale: 2 Metaldyne plants (Page 11) Automotive News - August 4, 2008 - Decision makers can't use hindsight (Page 12) Automotive News - August 4, 2008 - Decision makers can't use hindsight (Page 13) Automotive News - August 4, 2008 - Speaking of ads, don't overlook VW (Page 14) Automotive News - August 4, 2008 - Service survey: Customer satisfaction rises (Page 15) Automotive News - August 4, 2008 - Personnel (Page 16) Automotive News - August 4, 2008 - Dealers (Page 17) Automotive News - August 4, 2008 - Dealers (Page 18) Automotive News - August 4, 2008 - Picture This (Page 19) Automotive News - August 4, 2008 - Picture This (Page 20) Automotive News - August 4, 2008 - Picture This (Page 21) Automotive News - August 4, 2008 - Picture This (Page 22) Automotive News - August 4, 2008 - Picture This (Page 23) Automotive News - August 4, 2008 - Nissan offers buyouts to its Tenn. workers (Page 24) Automotive News - August 4, 2008 - S&P downgrades American Axle (Page 25) Automotive News - August 4, 2008 - S&P downgrades American Axle (Page 26) Automotive News - August 4, 2008 - Best sales news: July is over (Page 27) Automotive News - August 4, 2008 - Best sales news: July is over (Page 28) Automotive News - August 4, 2008 - Best sales news: July is over (Page 29) Automotive News - August 4, 2008 - Obama-mobile? Or McCain-carrier? (Page 30) Automotive News - August 4, 2008 - Obama-mobile? Or McCain-carrier? (Page 31) Automotive News - August 4, 2008 - Obama-mobile? Or McCain-carrier? (Page 32)
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