Automotive News - November 3, 2008 - (Page 42)

42 • NOVEMBER 3, 2008 final assembly comment SALES COVERAGE >> Watch the October auto sales numbers roll in today on www.autonews.com. Buy Chrysler? GM should sell Buick to SAIC S o General Motors is lobbying Washington for money to buy Chrysler. But before tax money is approved for the deal, I’d like GM to try harder to sell assets and raise private capital. Here’s an idea: Sell Buick to its partner in China, Shanghai Automotive Industry Corp. I claim no special insight from decisionmakers at GM or SAIC, but the CHARLES CHILD deal makes sense IS INTERNATIONAL for various EDITOR OF reasons. AUTOMOTIVE First, the NEWS. obvious: GM is burning through an estimated $1 billion of cash a month. Moreover, its lending arm, GMAC Financial Services, is so short of capital that it can’t adequately provide auto loans to consumers. So it’s time for difficult decisions. Buick has long been a core brand for GM. But in today’s crisis, it’s expendable. GM does not have the money to reinvigorate Buick’s product lineup, now down to just two sedans and a crossover in the United States. GM already has too many brands, which it has recognized by putting Hummer up for sale. The problem will only worsen if it acquires the Jeep, Dodge and Chrysler brands. It’s best for GM to sell Buick while the brand still has value. It’s hard to say how much Buick is worth, but India’s Tata Motors paid $2.3 billion for Jaguar and Land Rover. So I’m guessing Buick might fetch $1 billion. While Buick is drifting down in America, it’s sound in China. Chinese consumers’ regard for the brand predates the Communist revolution. Buick sales are higher in China than in the United States. Last year, GM sold 185,791 Buicks in the United States and 331,780 in China. GM and SAIC jointly operate an important product development engineering center in China. In North America and Asia, Buick’s manufacturing, product development and dealers are embedded in GM’s organization. SAIC could start with a modest role as Buick’s new owner but gradually assume more operational responsibility. In today’s crisis, creative solutions are imperative. Nowadays, nothing is sacred in Detroit. You may e-mail Charles Child at cchild@crain.com Ghosn: Your best partner is a president in your pocket R enault-Nissan chief Carlos Ghosn says the global financial crisis may deter automakers from forming partnerships — such as, oh, the one Nissan is reported to be considering with Chrysler. As for the current credit crunch, what is the key to survival? Cash … lots of cash, Ghosn told a business management forum in Tokyo last week. Companies aren’t “going to ISTOCKPHOTO be risking cash for a strategic move while they have absolutely no clue how long this crisis or meltdown is going to last,” he said. Ghosn’s comments counter media reports that Nissan, which was rescued by Renault almost a decade ago, may be poised to buy 20 percent of Chrysler. He dismissed the reports as speculation. “I don’t think you’re going to see many companies venturing in strategic operations involving cash,” Ghosn said. He also predicted that the U.S. market downturn will last through 2010 — at least. “We have not yet seen the worst. This is not going to be a short-term crisis,” Ghosn said, predicting rising unemployment. “I don’t think we’re going to get out of it in 2009 or even in 2010.” Ghosn: Cash is the key to survival. Sonic wins, but Mercedes wants last word S onic Automotive has scored a victory in its nasty skirmish with Mercedes-Benz USA — the one in which Sonic President Scott Smith accused Mercedes of trying to “extort” millions of dollars in unneeded dealership improvements. In February, publicly held Sonic agreed to buy Beck Imports of the Carolinas in Charlotte, N.C. But Mercedes jettisoned the deal in March, saying it didn’t like the job Pickups pumped up by pump price plunge W ow. Driving through week, Brownsburg, Ind., last one of our far-flung correspondents found a filling station selling gasoline for $1.83 a gallon. True, gasoline is not that cheap everywhere. But the price of fuel sure has come down. So, is the reduced pain at the pump affecting vehicle sales? One indication: For the first time this year, full-sized pickup truck loyalty in September and October was higher than in the same month a year ago. Through Oct. 26, 73.1 percent of buyers who traded in a large pickup during the month bought another one, according to Power Information Network. That was up from 72.3 percent in October 2007. Large-pickup loyalty had dropped year on year in each month from January through August. The low point was May, when the percentage who traded one large pickup for another fell to 49.8 percent — compared to 64.2 percent in May 2007. Sonic was doing at some of its other Mercedes-Benz stores. Sonic sued, claiming Mercedes was trying to force upgrades at four of the nine Mercedes-Benz stores Sonic owns. Now Sonic has passed the first legal hurdle. Last month the North Carolina commissioner of motor vehicles ruled that Beck Imports can go forward with the sale. The commissioner said Mercedes failed to provide acceptable reasons for rejecting Sonic. Under North Carolina law, factories can reject buyers for lack of good moral character, general business experience or financial ability, the decision said. Sonic’s suit in a North Carolina court is pending. “We disagree with the division of motor vehicles’ ruling,” a MercedesBenz spokeswoman said. The company “will be pursuing our right to judicial review of the decision.” Sticker, sticker at the mall, what’s the cheapest of them all? The Versa W hat’s the least expensive U.S. car? Starting Nov. 18, it’s the Nissan Versa. By putting in a smaller engine and taking out air conditioning, Nissan will offer a base Versa for $10,685, undercutting the $12,625 Chevrolet Aveo. Both sticker prices include shipping. Previously, with a 1.8-liter engine and air conditioning, the base Mexican-built Versa was $13,685, including shipping. The 1.6-liter engine in the new base Versa is used in vehicles exported to Europe. But previous constraints on engine production prevented Nissan from offering it here. Al Castignetti, Nissan Division vice president, says the move is not intended as a bait-and-switch — a marketing tactic that advertises lowpriced models that are not available. “Our dealers tell us there is demand for this,” Castignetti says. “We’re setting aside one-third of our sedan production capacity for the new model.” He said Nissan expects to sell 10,000 of the new models annually. The Chrysler Aspen hybrid: A cameo performance Chrysler hybrids, we hardly new ye Alfa plans to sell 84 of its 8C Competizione sports cars in the United States. I THE FINAL SAY “ I just can’t imagine that being a strategy. Your revenue would fall off so fast. I don’t know how you’d get back out. Waiting is what it’s all about, Alfa Ford Motor Co. CEO Alan Mulally on whether an automaker should file for bankruptcy protection ” T alk about on-again, off-again. American Alfisti could grow old waiting for their favorite Italian brand to return to the United States. For nearly a decade, Fiat Group has been planning, and un-planning, Alfa Romeo’s re-emergence in the United States. Alfa departed these shores in 1995 after its reputation was shattered by poor quality. The latest plan was to have sporty Alfas on sale here in 2010. Now the global financial crisis has forced Fiat chief Sergio Marchionne to postpone the relaunch until 2011. When General Motors partnered with Fiat in 2000, the plan was for GM to help develop a U.S. Alfa retail network. The U.S. comeback was supposed to happen in 2003, but got pushed back to 2005, then 2006. By 2003, with Fiat on the edge of bankruptcy, then-CEO Giuseppe Morchio cancelled the U.S. plans. Marchionne’s later revival of the Italian group — after GM and Fiat divorced in 2005 — put Alfa’s American strategy back on the front burner. Marchionne targeted 2008 for the debut, but then moved it to early 2010 — to give Fiat time to build a plant in North America. Alfa already has returned to a limited extent. A select group of U.S. Maserati dealers began delivering the Alfa 8C Competizione last month. Alfa will produce 500, and the U.S. allocation of 84 cars is sold out. t always did seem like a curious decision — Chrysler’s plan to build its first hybrid vehicles, the 2009 Chrysler Aspen and Dodge Durango Hemi hybrids, in a plant scheduled to close at the end of 2009. Chrysler began building the sibling SUVs in August, and they started appearing in dealerships in October. Now the company has announced it will close the Newark, Del., plant a year earlier than planned. That means Chrysler will cease making the two hybrids a little more than two months after they went on sale because it has no plans to make them elsewhere. “Perhaps their real mistake was putting the Two Mode hybrid in those vehicles first,” said Stephanie Brinley, an analyst for AutoPacific in Detroit. “Putting it into a product that had a better chance of surviving would have been a better idea.” The Dodge Ram 1500 pickup will get the Two Mode powertrain in 2010, and spokesman David Elshoff says other hybrids are in the works. PHILIP MEECH http://www.autonews.com

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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