Automotive News - March 3, 2008 - (Page 32d)

32D • MARCH 3, 2008 German automakers aren’t worried about U.S. recession Pia Krix and Henning Krough pkrix@craincom.de MUNICH — A possible U.S. recession threatens the sales outlook for German automakers there, but executives say they are well positioned to handle a downturn. The United States accounts for more than 20 percent of the total sales of Porsche, BMW and Mercedes-Benz, but executives say they would be less affected by a recession there than other automakers because of their upscale customer base. Porsche relies on the United States for 36 percent of its worldwide sales. Despite the shaky economic outlook, the Stuttgart sports car maker remains confident. “Especially in the U.S., we have a very solvent German automakers are sticking with their U.S. investment plans. BMW, for example, is expanding production at its Spartanburg, S.C., assembly plant, above. clientele,” Porsche CEO Wendelin Wiedeking told shareholders. “Porsche is prepared for a possible slump.” In addition, he said, sales held up in the earlier crises triggered by falling share prices in 2000, the Sept. 11 attacks in 2001, and the beginning of the Iraq war in 2003. Audi also says it will avoid letting the threat of a recession hold up its growth plans. “We generate 90 percent of our sales outside the U.S., and our growth in those areas is unabated,” a spokesman said. The situation seems different for the Volkswagen brand. It has recorded losses in the United States for years. “The high-volume manufacturer is closer to the average consumer,” said Arndt Ellinghorst, an analyst at Credit Suisse in London. The VW brand generates just 6 percent of its worldwide sales in the United States. “But it’s well positioned in growth markets such as Chi- na, South America and eastern Europe,” said Juergen Pieper, an analyst at Bankhaus Metzler in Frankfurt. Credit Suisse analyst Ellinghorst advises companies “to keep their inventory of vehicles low in the United States, sell only as many as necessary, and then sell the vehicles with higher contributions to profit in emerging markets.” Porsche leads the way: “Inventories in the U.S. have already been sharply reduced,” Wiedeking said. Automakers are sticking with their U.S. investment plans. BMW is expanding its factory in Spartanburg, S.C., and VW is close to announcing the site for a new U.S. factory. Albrecht Denninghoff of BHF-Bank believes the timing is right for the move: “Land is cheap, the dollar is cheap, real property is cheap.”c NEWSCOM At Porsche’s annual meeting, CEO Wendelin Wiedeking said he wants to transform Volkswagen. Porsche’s Wiedeking: We must retool VW Bettina Mayer bmayer@craincom.de STUTTGART — Porsche CEO Wendelin Wiedeking says he will push ahead in transforming Volkswagen, Europe’s biggest carmaker, into a leaner, meaner rival to Toyota Motor Corp. Wiedeking, 55, said Porsche’s acquisition of a 31 percent stake in Volkswagen group has been a good investment. “We care about our investment,” Wiedeking said. “We will ask further questions until we have a broad picture. That will cause resistance, but we see this as our responsibility.” He made the comments during Porsche’s recent annual meeting here. As chairman of Porsche Automobil Holding SE, the company that will control the Porsche family’s stake in VW group, Wiedeking, who also sits on the VW group supervisory board, wants to have a major say in what happens at VW. The new order As an example of the tighter VWPorsche relationship, Wiedeking said the body of the new Porsche Panamera four-door coupe will be produced in Hanover, Germany, and the interior and engine will be added to the coupe in Leipzig. The Hanover and Leipzig plants are VW facilities. “This business model is successful because it saves unused production capacities, saves money regarding fixed costs, and brings money into Volkswagen’s cash box,” Wiedeking said. Sharing parts and related costs for development in the future will create a solid basis for a long-term relationship and business model, Wiedeking said. For example, the strong-selling Porsche Cayenne, VW Touareg and Audi Q7 SUVs share a platform. After taking charge of Porsche in 1993, Wiedeking turned the struggling sports car maker into the world’s most a profitable car company. He copied Toyota’s lean production methods to help achieve Porsche’s turnaround. Porsche has a 10 billion euro (about $14.7 billion) credit line to raise its stake in VW to a controlling 51 percent, a move that industry insiders expect to happen within the next few months. More like Porsche? Ferdinand Dudenhoeffer, director of the Center for Automotive Research in Gelsenkirchen, Germany, told Automotive News Europe last October that Porsche’s influence will mean that VW’s corporate culture will become more like Porsche’s. Financial performance will be more important. Wiedeking already has warned that there will be no “sacred cows” at Volkswagen and “no toys” in the group’s product portfolio. A potential future trouble spot is Wiedeking’s relationship with IG Metall, the metal workers union that represents almost all of the workers in VW’s German plants. Wiedeking already has worried VW workers by saying the company should focus on productivity and profits. Until now, its former biggest stakeholder, the Lower Saxony government, has protected VW workers from management efforts to trim pay or alter contract terms.c http://fanucrobotics.com http://fanucrobotics.com

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

Bob Nardeli's new big-idea guy New Kia boss reaches out to restless dealers Scion hits a wall Lithia losses raise caution flag Detroit 3 shun talk of NAFTA do-over Lincoln names new marketing manager Mercedes to launch hybrid sedan in '09 Mazda has new top marketing exec M-B will hit the road with 50-state diesels Pontiac puts big ad bucks into traditional media for G8 Reynolds, ADP diverge on growth strategies Ford plans to cut fleet sales 10% in 2008 Mazda: New models, styling will boost its loyalty rate Run-up to axle strike adds to supplier woes Webasto's fast heater will debut by 2010 Russian plant wants to be world's biggest A Lancer is hatched Chrysler throws out purchasing rulebook Honda sets lofty hybrid goal, with Civic's help Honda: Use of ethanol limited, must be biomass Honda CEO Fukui: No recession in U.S., despite soft sales in spots 550 hp? 620 hp? Is GM crazy? Doug Fraser was a great leader How ironic: Lyons learns caution Well done, Doug Don't let Calif. impose fuel rules on the nation Blame the dealer, not the brand Cutting weight doesn't cut safety When Lutz dumps on global warming ... JM exec Czubay: A taste for hogs, pierogi Doug Fraser: A good man to have known Fraser led UAW with 'combination of substance, politics and charm' Autonet finds success at NADA with wi-fi for cars GM to sell medium-truck business, keep dealer network Web classified ad firms renew marketing to dealers, buyers Chery designs venture's vehicles China venture eyes 20,000 Fiesta hatchback sales Toyota plans crossovers in China Dongfeng, YuAn plan minicars BMW shakes up global marketing, sales ranks Delphi divestiture boosts forging supplier Is Blackhawk purchase bucking a trend? Repair company grows as Detroit 3 struggle BorgWarner unit expands German automakers seek more parts sourced in North America Hyundai picks ArvinMeritor Japan parts firm to build Miss. plant Nissan to increase spending on IT Purchase keeps Tenn. plant open Automakers hit with apartheid claims Mexico sales flat in January Ford prices '09 Flex atop crossover line Hamp rejoins Visteon board RV deliveries decline 3.4% in December Subaru lowers Forester price Personnel Bright future for LED headlight suppliers? Valeo's Morin to Pardus: Learn before you leap German automakers aren't worried about U.S. recession Porsche's Wiedeking: We must retool VW Europe's loud debate over quieter tires Noise level depends on the tires, the road Auto industry robotics spending jumps 43% in 2007 Electronic brakes struggle to get traction Big Texas dealer returns to some domestic brands AutoNation chief sees tough '08, better '09 In downturn, Sonic looks beyond new cars GM promotes service, parts leads for dealerships 10 cool dealership technologies found at NADA Dealers Kia will build transmissions at Georgia plant Gibson leaves DealerTrack board Akebono closing Kentucky plant Feds issue Ford fire warning Magna net income drops VW to use Siemens' software A tale of 2 exhaust systems EU wants CO2 in ads; battle looms Maize malaise stalls ethanol Tata to siesta during Ford's Fiesta Honda moves its American bike offshore Honda will recycle cycle plant Tom LaSorda's multimillion-dollar smile

Automotive News - March 3, 2008

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