Automotive News - May 19, 2008 - (Page 43)

MAY 19, 2008 • 43 CAW completes pacts with GM, Chrysler early DETROIT — The Canadian Auto Workers reached tentative agreements last week with General Motors and Chrysler LLC four months before contracts were to expire. The agreements preserve shifts and keep open plants that the automakers had planned to close. The GM pact also offers buyouts for all union-represented workers at a Windsor, Ontario, transmission plant scheduled to close in 2010. CAW President Buzz Hargrove said labor costs will stay essentially the same for the automakers under the agreements, which await ratification by union members. The union ratified a three-year deal with Ford Motor Co. on May 4. accounting gain of $754 million. During the same quarter last year, Dana lost $92 million. SONIC Suit: Mercedes tries to ‘extort’ renovation continued from Page 1 See you in court In its lawsuit, Sonic Automotive alleges Mercedes-Benz USA Illegally blocked Sonic’s purchase of a Mercedes dealership Misled the dealership’s seller about Sonic Has abused its influence to approve or deny dealership acquisitions Sandler says a dealership sale he brokered this spring fell through because the buyer balked at the cost of renovations that Mercedes required before it would approve the deal. Sandler declined to identify the dealership. The $3 million to $4 million in mandated building costs would have added 15 to 20 percent to the negotiated price of the sale, Sandler says. Sandler adds that he is surprised Sonic is challenging Mercedes-Benz in court. “Most dealers don’t get that far,” he says. “They’re afraid of the factory.” Brady Schmidt, president of National Business Brokers, a dealership brokerage firm in suburban Los Angeles, says a factory-mandated upgrade “reduces the goodwill value of the dealership unless the new facility will generate an increase in sales.” “Unfortunately, we have seen time and again that new or upgraded facilities have not resulted in increased sales volume,” Schmidt says. New media buyer for Chrysler DETROIT — The agency that buys media advertising time and space for Chrysler LLC has a new chief, Jim Helberg. Last week he was named executive vice president of PHD Detroit, a unit of the Omnicom Group holding company. Helberg had been Chrysler LLC’s media director since February. His new job follows his “total immersion” at Chrysler, the automaker said in a statement. Visteon names Stebbins CEO DETROIT — Visteon Corp. promoted Donald Stebbins to CEO, replacing Michael Johnston at the company’s helm. Johnston, 60, will remain executive chairman of the former parts unit of Ford Motor Co. Stebbins, 50, had been president and COO since joining Visteon in 2005. He also served a 13-year stint at Lear Corp. The moves are effective June 1. Dana reports higher sales DETROIT — More than three months after leaving Chapter 11 reorganization, Dana Holding Corp. said it is making progress in its turnaround effort with improved sales and a net profit during the first quarter. The drivetrain parts supplier said it generated revenue of $2.31 billion during the quarter, an 8 percent gain from sales of $2.14 billion during the same quarter last year. Dana said it had net income of $685 million in the quarter, but the figure included a one-time Convertible registrations drop DETROIT — Convertible registrations, which grew steadily the past several years in the United States, slumped in 2007, dropping 8.6 percent. The segment fell below 300,000 new registrations last year for the first time since 2003, according to data by R.L. Polk & Co. Polk said convertibles maintained about a 2 percent share in the U.S. light-vehicle market even though registrations dropped by more than twice the rate of the overall market decline. size of the showroom to 16,000 square feet. “They are trying to extort all they can,” Smith told Automotive News. “It’s so unfair. Mercedes-Benz is holding the transaction hostage.” Mercedes-Benz declined to comment on the dispute. Automakers such as MercedesBenz are using their power to block franchise transfers to promote dealership improvement programs, say brokers and lawyers who represent dealers. In some cases, dealers complain, the exercise of that influence has caused lucrative agreements to sell their stores to collapse. Sonic’s complaints are not limited to Mercedes-Benz. Smith says Sonic is having trouble selling four Toyota dealerships because of the automaker’s building requirements under its “Image USA II” architectural plan. Smith says dealers cannot “invest where it doesn’t make sense.” Toyota declined to comment. ‘Killing deals’ Sheldon Sandler, an investment broker who handles dealership acquisitions, says automakers’ efforts to link dealership sales to their upgrade plans are becoming a major issue. “It’s killing deals,” says Sandler, CEO of Bel Air Partners LLC in Skillman, N.J. Limits on factories Franchise laws in about half the states prohibit automakers from mak- ing unreasonable construction demands on dealers, according to the National Automobile Dealers Association. Mike Charapp, a lawyer in suburban Washington who represents dealerships, says those laws also limit the reasons that automakers can reject a prospective dealership purchaser. Factories can refuse buyers who lack necessary finances or business experience, Charapp says. Sonic’s lawsuit against MercedesBenz seeks unspecified punitive damages as well as actual damages. The suit accuses the automaker of “unfair and deceptive acts.” It says the automaker incorrectly claims Sonic is violating an agreement to install the Autohaus design at four of its dealerships and improve sales at a fifth Mercedes outlet before seeking to buy more Mercedes stores. The suit says Mercedes-Benz disparaged Sonic to the seller of the Charlotte dealership, claiming several of the retailer’s Mercedes stores were performing poorly. Mercedes-Benz says more than one-third of its 344 U.S. dealers have adopted the Autohaus standards. Those dealers get an extra $400 for every new vehicle they sell for three years, plus a higher vehicle allocation. Sonic Automotive ranks No. 3 on Automotive News’ list of the top 125 U.S. dealership groups. The company owns 144 dealerships. Last year, Sonic stores sold 138,371 new vehicles at retail and reported more than $8.33 billion in group revenue. c 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 May 16 Closing price May 9 Weekly percent change 52-week high 52-week low SUPPLIERS Chrysler wants 25% cut in parts costs continued from Page 1 $57.65 25.50 8.10 20.29 31.11 16.80 18.24 68.96 108.75 24.95 101.31 57.97 –1.9% – 0.3 2.3 6.7 – 2.5 3.1 –0.7 0.5 0.5 0.7 $68.80 34.85 9.70 43.20 37.80 23.16 23.75 92.50 165.75 33.25 128.33 60.60 $48.60 14.15 4.95 17.47 27.01 4.90 15.88 66.15 98.10 23.60 91.21 28.55 ‘Here’s where we’re moving,’ which is primarily a bigger presence in China. “ What we’re saying to them is, $56.55 25.50 8.12 20.76 33.18 16.80 18.70 71.10 108.00 25.07 101.81 58.40 according to people who attended. His comments to the Original Equipment Suppliers Association last week show that Chrysler is seeking to cut costs aggressively despite an increasingly bleak picture for auto suppliers. TOM LaSORDA Chrysler ” Looking abroad Part of Chrysler’s 25% cost reduction would come from sourcing in low-cost countries. Chrysler has Told suppliers to match lowcost-country prices Opened engineering offices in Shanghai and Chennai, India Expanded Mexico-based Latin American engineering operations But it’s unclear whether Chrysler is pushing equally hard with all suppliers. Echoes of SCORE Chrysler’s program is reminiscent of the SCORE program the company employed in the 1990s. Frazier says Campi isn’t a student of SCORE — but Frazier notes that Campi plans to meet this month with former Chrysler purchasing director Tom Stallkamp, who launched SCORE. Neil De Koker, managing director of OESA, says Campi called for a partnership with suppliers that have a global footprint and access to capital and new technology. De Koker says Campi asked the executives to “work in fierce collaboration” with Chrysler. Any cost cuts likely would be in addition to those already written into new and existing supplier contracts, sources say. Chrysler wants the 25 percent saving on “our entire book of business,” according to a supplier executive who met earlier with Campi. So, for instance, a carryover part on which the supplier may have already cut prices over the past three years still would be subject to a 25 percent price cut over the next three years. Retail Groups Closing price May 16 Closing price May 9 Weekly percent change 52-week high 52-week low The vast majority of the $40 billion in parts that Chrysler buys annually comes from North America. In an interview in January, Campi said Chrysler does not buy enough parts from low-cost countries. Asbury Automotive Group $17.27 AutoNation 16.50 Group 1 Automotive 28.89 CarMax 21.23 Lithia Motors 8.35 Penske Auto Group 21.02 Sonic Automotive 19.20 $15.98 16.03 27.51 20.55 7.62 20.08 18.85 8.1% 2.9 5.0 3.3 9.6 4.7 1.9 $27.71 22.86 43.23 27.42 27.58 22.92 31.88 $11.71 11.72 19.81 15.81 7.52 13.57 15.82 Supplier doubts The difficulties facing Chrysler were on the mind of at least one supplier executive at the OESA meeting who asked about Chrysler’s future. Campi assured the audience that Chrysler will survive. The company is hitting the financial goals set at the time of the purchase by Cerberus Capital Management in 2007, he told suppliers. Asked whether Chrysler would provide the kind of financial transparency the automaker demands of its suppliers, Campi said he would try to bring Cerberus executives face to face with certain large suppliers, but not all. Chrysler has expanded overseas engineering and procurement activities since Cerberus took ownership in August. Chrysler has opened engineering offi

Table of Contents Feed for the Digital Edition of Automotive News - May 19, 2008

Automotive News - May 19, 2008 Ford eyes smaller F-150 cousin Sonic: Mercedes tries to 'extort' store upgrades Chrysler seeks 25% slash in parts prices Dealership managers pushed Chrysler's latest incentive Crain names 4 new VPs Automotive News staffers win Wheel Awards GM will keep cutting sales to fleets GM studies the future of full-sized trucks American Axle plans to expand in Asia At Lexus, the sales laggards are cars VW positions Tiguan as 'GTI' of small SUVs Tata enters race for 100-mpg car Harley Earl was the daddy of auto design Focus will follow Fiesta as a global vehicle Lexus shows how it sweats details Industry slows tide of state CO2 rules Chevy tweaks Cobalt to add fuel economy Be careful; don't do anything dumb Looking ahead to different industry They thought they knew everything Cerberus doesn't belong in autos Dealers as scapegoats Smart, steady growth works best for suppliers Farley's smart to value Ford's heritage Absurd logic in the U.S., cowardice in Germany BMW, Daimler keep a wary eye on U.S. economy James Franey Dealers' approach can lessen pain of staff cuts GM plans to distinguish Opel with image makeover Make or buy? Software can estimate costs for company Honda, Toyota see robots in their futures Bosch aims to lead in hybrids technology King of hearts Clarke aims to get GM back on track in N.A. Fields navigates Ford through 'white water' LaSorda steers Chrysler's global ventures Toyota's Lentz: A crash course in hard times Truck sales fall 13% in April Modine sells Thermacore unit Alcoa to close Mexico plant Toyoda Gosei expands in Mexico Hayes Lemmerz plans to close Georgia factory Japan's sales slide 2% in 1st quarter; output climbs Dealers Hyundai let U.S. direct Sonata freshening After .com and .edu, is it time for .car? Panoramic sunroof of Lincoln MKS boosts Inalfa sales Chrysler hedged gas price bet Smart phones help dealerships retain customers CAW completes pacts with GM, Chrysler early GM, UAW resolve 2 disputes New media buyer for Chrysler Visteon names Stebbins CEO Convertible registrations drop Ferrari: From denial to debut Buildings Porsches in U.S.? Depends whom you ask Toyota will go slow in Tupelo Ghosn is glum on prices, U.S. sales prospects Pischetsrieder has earned a celebratory cigar NHTSA spins VINs, averts meltdown F_RD GU_S WI_ BUI-_KS 50 PEOPLE FOR 50 YEARS Yutaka Katayama Clarence Talley Jim Morton Pete Brock Marvin Runyon Yoshikazu Hanawa Bill Bruce Shin Maki Jack Collins Mitsuya "Scape" Goto Bob Link Soichi Kawazoe Jerry Hirshberg Takashi Ishihara Roy Rogers John Parker Bob Thomas Teruo Uchino Morrie Sage Bob Thomas Nobe Wakatsuki Earl Hesterberg Carlos Ghosn Lee Clow Jerry Benefield Yutaka Kume Doug Betts Tim McCarthy Jed Connelly Atsushi Nakatsuji Dave Hubbard Joe Opre Patrick Pelata Yoshiyuki Kimura Diane Allen Mad Mike Taylor Chuck King Larry Dominique Mark Igo Mitsuhiko Yamashita Shiro Nakamura Tom Mignanelli Dick Roberts William Cushing Emil Hassan Chester Luby Jane Nakagawa Louis Schweitzer MR. K Ray Lemke Richard McCutcheon

Automotive News - May 19, 2008

For optimal viewing of this digital publication, please enable JavaScript and then refresh the page. If you would like to try to load the digital publication without using Flash Player detection, please click here.