Automotive News - November 3, 2008 - (Page 39)

NOVEMBER 3, 2008 • 39 Detroit 3 ties hurt profits of dealer groups DETROIT — Exposure to the Detroit 3 contributed to thirdquarter net losses for many publicly held dealership groups. Last week Sonic Automotive Inc. wrote down about $21 million in devalued Detroit 3 properties. Group 1 Automotive Inc. took an after-tax charge of about $30 million in franchise value impairments, all related to the Detroit 3. Lithia Motors Inc. said it aims to decrease the impact of the Detroit 3 so that half its franchises are domestic and half imports. Penske and Asbury automotive groups, which have the least Detroit 3 exposure of the five companies to report last week, remained in the black during the third quarter. company to buy back $392.2 million in outstanding bonds at less than 30 cents on the dollar. If they don’t, Metaldyne says, it will ask the bondholders to approve a potential reorganization plan. The suburban Detroit automotive supplier, owned by Asahi Tec, of Shizuoka, Japan, wants an answer by Nov. 26. GM takeover would eviscerate Chrysler ranks, model lineup David Sedgwick We’ve seen plenty of badge-engineered cars and trucks. But have we ever witnessed a badge-engineered company? It’s hard to get enthusiastic about a merger between General Motors and Chrysler. Where are the synergies? Both companies need more small cars. Both have too many big trucks, too many dealers and too many brands. And if the merger is consummated, they’ll have too many headquarters. The two companies could squeeze as much as $10 billion in savings by closing plants, discontinuing slowselling models and cutting jobs. Our translation: Chrysler would become a ghost town. GM’s own staff can handle engineering, design and marketing for both companies. Many — probably most — of Chrysler’s white-collar employees would be laid off. Next, let’s consider the companies’ model lineup. Let’s assume that GM sells the Dodge Viper to some deserving coachbuilder and that it markets Chrysler’s well-designed minivans. Perhaps the Chrysler 300 and Dodge Charger could be the rearwheel-drive sedans that GM otherwise couldn’t afford to develop on its own. And Jeep — a brand that retains iconic status — could enjoy a lively reception in GM’s overseas markets. The Dodge Ram pickup, a well-designed vehicle with a strong brand identity, also seems likely to survive, since the Ram, Silverado and Sierra would account for two-thirds of the comment 2009 Element starts at $20,845 LOS ANGELES — The restyled 2009 Honda Element went on sale last week with three packages and a starting price of $20,845, including freight. Honda has updated each of the three Element styles: the basic LX, the more refined EX and a sporty Element SC. The Honda satellite-linked navigation system, a rearview camera and USB digital connectivity are available on the EX and SC. Exterior styling changes include a new front grille and bumper design, restyled front fenders, a new hood design, squared wheel arches and new head and taillights. David Sedgwick is editor of Automotive News. market for full-sized pickups. The rest of Chrysler’s models would be headed for the ash heap. shutdown. That would eliminate 12,000 white-collar jobs and 12,000 production jobs. The dealership network would be consolidated. Chrysler and GM have 22,000 franchises — half of the industry’s U.S. total. But GM and Chrysler together account for one-third of the industry’s sales. The supplier network would shrink. A combined GM and Chrysler could eliminate hundreds of suppliers. Cardboard brands Will consumers buy a Dodge Malibu or Chrysler Aura? These cars would be a measurable improvement on Chrysler’s own lineup of cars. But a GM-Chrysler alliance would have 11 brands. If the Dodge and Chrysler brands become cardboard cutouts, how would marketers generate any enthusiasm? And what would happen to Chrysler’s 3,000 dealers? A cynic would note that the credit crisis will erode their ranks. But that’s a messy process, and it’s hard to visualize the emergence of a lean, geographically balanced network of dealers. To be honest, Chrysler’s product alliance with Nissan looks more rational than a full-scale merger with GM. Chrysler gets Nissan’s small cars, and Nissan gets Chrysler’s pickups. But those deals didn’t go far enough for Chrysler’s owner, Cerberus. Cerberus wants out, and General Motors is the escape hatch. You may e-mail David Sedgwick at dsedgwick@crain.com Slash jobs, models, factories This vision of Chrysler-as-ghosttown got some attention last week when the consulting firm Grant Thornton published its analysis of the proposed GM-Chrysler merger. According to Grant Thornton, a merger could save $6 billion to $10 billion, primarily by slashing engineering, purchasing, r&d and corporate functions. Perhaps as many as 40,000 of Chrysler’s 67,000 jobs would be eliminated. The study’s other conclusions: Only seven of Chrysler’s 26 models are considered “core.” That list encompasses the Jeep Wrangler and Grand Cherokee, plus the minivans and the Dodge Ram, Charger and Caliber. A merged GM-Chrysler could safely eliminate the other nameplates. Half of Chrysler’s 14 plants would be closed. Three already are slated for Audi TTS starts at $46,325 Denso’s net income tumbles KARIYA, Japan — Denso Corp.’s net income plunged in the six months ended Sept. 30 because of currency losses and low production by automakers in North America. Denso also slashed its full-year forecast. Net income tumbled 50.2 percent to $569.2 million. Revenues slipped 2.9 percent to $18.27 billion. HERNDON, Va. — Audi of America has announced prices for its top-of-the line sports cars, the TTS Coupe and TTS Roadster, which will be in dealerships this year. The TTS Coupe will start at $46,325, while the TTS Roadster starts at $48,325. Both prices include freight. The TTS Coupe accelerates from 0 to 60 mph in 4.9 seconds with a combined fuel economy of 24 mpg. The Roadster offers comparable performance with a 0-to-60 acceleration time of 5.1 seconds. Metaldyne wants deal on bonds DETROIT — Metaldyne Corp. wants bondholders to allow the stock watch Manufacturers BMW-ADR Daimler AG 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 Oct. 31 Closing price Oct. 24 Weekly percent change 52-week high 52-week low $25.70 34.50 25.50 2.19 5.79 24.77 6.68 9.61 26.40 29.18 12.50 76.09 122.00 Closing price Oct. 31 $23.01 27.86 25.50 2.01 5.95 20.62 6.68 9.11 22.40 31.95 12.50 66.09 53.25 Closing price Oct. 24 11.7% 23.8 – 9.0 –2.7 20.1 – 5.5 17.9 –8.7 – 15.1 129.1 Weekly percent change $65.25 108.96 34.85 8.99 38.80 37.54 18.58 23.75 91.33 165.75 33.25 117.59 232.30 $21.05 24.00 14.15 1.80 4.00 18.94 6.68 8.04 19.90 25.65 12.50 57.01 41.50 GM Cash crisis thwarts product schedule continued from Page 1 Retail Groups Asbury Automotive Group AutoNation Group 1 Automotive CarMax Lithia Motors Penske Auto Group Sonic Automotive 52-week high 52-week low $3.25 6.87 10.05 10.62 4.10 8.19 5.13 $2.10 4.43 5.92 9.37 2.14 5.59 2.55 54.8% 55.1 69.8 13.3 91.6 46.5 101.2 $18.24 19.59 31.07 24.10 18.69 23.58 25.75 $1.75 3.97 4.34 8.79 1.53 5.04 2.01 Suppliers Biggest weekly swings from among the Automotive News top 150 suppliers to North America whose stocks are traded in the United States Closing price Oct. 31 Closing price Oct. 24 Weekly percent change 52-week high 52-week low Winners American Axle Tenneco Inc. Cooper Tire & Rubber Superior Industries TRW Automotive Losers Visteon Corp. Lear Corp. Stoneridge Inc. Shiloh Industries SPX Corp. $3.59 4.91 7.63 14.30 6.32 $0.69 1.95 5.69 5.01 38.74 $1.96 2.76 5.74 11.43 5.07 $0.90 2.43 6.63 5.75 41.37 83.2% 77.9 32.9 25.1 24.7 –23.3% –19.8 –14.2 –12.9 –6.4 $28.00 33.46 22.07 23.04 29.66 $6.29 36.99 19.36 12.00 140.82 $1.50 1.96 4.97 10.35 4.32 $0.69 1.82 5.33 4.65 34.08 Group in New York. “It’s really the last resort and underscores how dire the liquidity situation has become.” As of this summer, GM was burning through an estimated $1 billion of cash a month. According to one informed estimate, GM may have about $17 billion in cash left. Since the company needs $11 billion to $14 billion on hand to maintain normal operations, it may face a cash-flow crisis this winter. In a research note last week, Standard & Poor’s listed GM’s credit rating at Bwith negative implications. S&P analyst Gregg Lemos Stein describes that as a “deep to speculative grade” that could deteriorate further. “The cash flow is our primary concern,” Lemos Stein said. “That’s why we have them on credit watch. There are tremendous calls for their cash just for operating the business.” Development of the Chevrolet Camaro, above, and Volt, left, will proceed on schedule. Some debuts in 2009 Nothing has been canceled, but nearly everything is delayed, sources say. For example, the Chevrolet Malibu sedan was to be re-engineered in the 2012 model year . Budget cuts will delay it until the 2013 model year. However, the budget cuts won’t affect vehicles that already are complete. The Buick LaCrosse and Chevrolet Camaro will debut as Information obtained as of 4:00 p.m. on Friday, Oct. 31, 2008. Because of a lag in the reporting of trades the closing prices disclosed above may differ slightly from the eventual closing prices. ADR = American Depository Receipt Compiled by PricewaterhouseCoopers, Intraweek data provided by Comstock. Powered by Stockgroup planned in 2009. Likewise, the Chevrolet Volt electric plug-in car is considered too important to delay. The Volt remains on schedule for its launch in November 2010. Other vehicles could be delayed anywhere from six weeks to a year. But GM executives are working to restore the Cruze to its initial intended launch date, the source noted. GM had planned to launch the Cruze in 2010 as a 2011 model. Industry analyst Doug Scott says GM should do everything possible to protect high-volume vehicles like the Cruze, which has been tentatively delayed

Table of Contents Feed for the Digital Edition of Automotive News - November 3, 2008

Credit? Come and get it, industry groups say GM's product delays signal dire health Ford sticks with small-car plans Mitsubishi CEO: Let's halt Galant production in U.S. A dealer â and his reputation â on the ballot Help vehicles shed pounds American Axle posts loss UAW hires bailout adviser Ford to spend $200 million to upgrade 2 Ky. plants No off-lease cars? Certified will find others Arlena Sawyers China's stock market plunge has spooked car shoppers Advantage, Ford: Mulally likes owning Ford Credit Supplier execs join innovation panel at congress Quietly, Mini seeks 500 drivers to lease electric car for a year Reynolds bolsters document business Winterkorn: Audi needs to build in U.S. The great revenue drop of 2008 Bidders bet they can rebuild Heard 1 size fits all NADA: Give us tax incentives, dealer loan guarantees Campaigns' climate, energy plans hit economic wall Detroit 3 need and deserve U.S. help now Chrysler needs a buyer, but not GM Dealers pay fair share of taxes Washington hurts, not helps, electrics Compressed natural gas is the best fuel New ads aim to raise Suzuki's low profile Suzuki's new ad strategist: This brand has soul Fuel efficiency is coming â it just takes time Electrics edge closer by 2010 Tougher CAFE standards loom R&d chiefs shift gears for an electric future Japan carmakers lead charge into electrics Buffett backs BYD's sketchy plan for U.S. electric car Q&A: BYD envisions 2010 exports to U.S., Europe Girding the power grid for an electric fleet Hype powers plug-in vehicles Coachbuilders see salvation in electric cars Electric vehicles are charging into Europe Expect stop-start's big start to arrive in 2010 Flexibility will help Honda survive the storm Nardelli: Bailout not perfect â but needed Audi goes high-tech to boost service Acura offers quick service to win business Toyota's fashion fan Picture this Hondaâs N.A. operating profit falls 80.6% in quarter Aug. RV shipments fall 44% VW drops hints about car for new Tenn. plant Mexico sales fall 10.7% in September Honda to boost CR-V, end Civic output in Ohio Ford and GM jockey for steel discounts Dealers Ford Credit seeks to tap $700 billion package GM will end a used-car incentive early Nissan, Mitsubishi, Mazda recast fiscal 2009 forecasts Metaldyne to bondholders: Take 30% or Chap. 11 looms Detroit 3 ties hurt profits of dealer groups GM takeover would eviscerate Chrysler ranks, model lineup Mitsubishi plans electric hauler To match Toyota, Nissan offers 0% loans Sticker, sticker at the mall, what's the cheapest of them all? The Versa Waiting is what it's all about, Alfa Buy Chrysler? GM should sell Buick to SAIC Pickups pumped up by pump price plunge Chrysler hybrids, we hardly new ye Ghosn: Your best partner is a president in your pocket Sonic wins, but Mercedes wants last word

Automotive News - November 3, 2008

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