Automotive News - November 24, 2008 - (Page 8) TIMES Ford: We still want Mazda expertise ARE TOUGH. Cutting stake in Japanese partner, but not ventures Amy Wilson and Kathy Jackson awilson@crain.com 8 • NOVEMBER 24, 2008 RELYING ON YOUR AD AGENCY SHOULDN’T BE. In a time when the auto industry is in crisis, you need an advertising agency that understands and has real experience in driving next day sales, even when your ad budgets are at their lowest point ever. That’s what Zimmerman is all about. We have over 25 years of skill, knowledge and experience when you need it most. We measure our success by the numbers on your balance sheet, not ours. This guiding principal of true partnership is what motivates us to bring you the best advertising and marketing strategy. It really is about being there for you 24/7, seriously. Ford Motor Co. is giving up control of Mazda, but it won’t give up access to the Japanese automaker’s engineering and product development expertise. Executives for both companies said Mazda and Ford will continue joint ventures and sharing of vehicle platforms and powertrains. Last week, Ford raised $540 million by cutting its stake in Mazda from 33.4 percent to just over 13 percent. The sale underscores Ford’s in- creasing financial troubles, not dissatisfaction with its relationship with Mazda. Ford is burning through cash — $7.7 billion in the third quarter — and needs to shore up its balance sheet by selling any assets it can. Ford leaders determined they could sell a chunk of Mazda without sacrificing advantages gained from the collaboration. “The equity change has no impact on the relationship. It is still very strong,” said Jim O’Sullivan, a veteran Ford employee who currently heads Mazda’s North American Operations. “We are still working as a team on product development issues, cycle-plan decisions and manufacturing facilities.” O’Sullivan told Automotive News that the 50-50 ownership of a plant in Flat Rock, Mich., which produces the Mazda6 and Ford Mustang, will remain the same. During the 30-year relationship, Mazda has made important contributions to Ford. One that will change is Mazda’s position as a training ground for Ford executives (see story, Page 30). Mazda-schooled executives include current CFO Lewis Booth and Americas President Mark Fields. Two Ford executives recently assigned to Mazda, David Friedman and Daniel Morris, have been returned to Ford. Another, Phil Spender, stays on as assistant to the president. His previous responsibilities as executive vice president in charge of activities such as r&d and marketing have been reassigned to Japanese board members. O’Sullivan said he doesn’t know whether he will retain his Mazda job. Mazda will continue to be a model for Ford’s product development system. Ford copied the Japanese automaker’s template for engineering and building vehicles. And Mazda has delivered significant platform engineering. The Ford Fiesta subcompact, slated to go on sale in the United States in early 2010, is based on a platform engineered at Mazda. The Ford Fusion mid-sized sedan and its Lincoln and Mercury siblings are updates of the original Mazda6. Sharing with Mazda has paid off for Ford. With purse strings tight and staff reductions widespread, Ford needs those ties to keep on paying.c Hans Greimel contributed to this report Imports clog ports as sales plunge Alysha Webb and Mark Rechtin awebb@crain.com MARK RECHTIN These are some of the marketing solutions we offer to our partners: Advertising LOS ANGELES — Acres of unsold import vehicles are piling up on the docks at some U.S. seaports. Carmakers won’t say much about it, but the visual evidence can be striking. You need only drive by the Ports of Long Beach and Los Angeles, where three manufacturers are scouting for places to park cars and trucks while waiting out the industry storm. The Port of Long Beach handles Toyota and Mercedes cargo ships, and the Port of Los Angeles, right next door, handles arriving Nissans. “All three are looking for additional space,” says Art Wong, spokesman for the Port of Long Beach. Nissan General Manager Al Castignetti says U.S. inventories “are in line with sales.” But the Port of Los Angeles says it’s looking for more space to handle a car glut for Nissan. Toyota and Mercedes have a similar problem. days, they are looking at many weeks” until shipping. Wong says Mercedes has two lots and is looking for a third. Toyota is also seeking additional space, he says. Toyota is “moving cars out of here, but much more slowly,” Wong says. “I don’t think anyone would have foreseen this situation. Toyota has 150 acres, and (usually) a couple of thousand come in on the weekend, and they’re all gone in a couple of days.” “The port inventory is higher than normal for Toyota,” said company spokesman Xavier Dominicis. “But this is not entirely unexpected. This is one of the most challenging times in the auto industry.” Meanwhile, Nissans are stacking up in the L.A. port. “We are looking for extra space for Nissan,” says Theresa Adams-Lopez, a spokeswoman for the Port of Los Angeles. Wong says Nissan also has been talking with Long Beach authorities about additional space. we don’t want to kill the dealers.” Overall, the supply of import brands, including vehicles built in North America, reached an all-time high of 87 days on Nov. 1, up from 70 days on Oct. 1 and 58 days on Nov. 1, 2007. The Detroit 3 brands averaged 115 days’ supply on Nov. 1, also a record. Not all ports are jampacked. Byron Miller, spokesman for the Port of Charleston, says cars are not piling up in the South Carolina port, which handles mostly BMWs. Charleston processes both imported and exported vehicles from BMW’s Spartanburg, S.C., assembly plant. Says Miller: “The vehicles are coming and going at a brisk pace.”c Kathy Jackson and Arlena Sawyers contributed to this report Inventories under control Al Castignetti, general manager of Nissan Division, says inventory numbers are under control. “We have 91 days’ supply in dealer inventory, plus less than 30 days in central stock” — what Nissan calls vehicles in transit to dealers, or simply parked, he says. “Our inventories are in line with sales,” Castignetti says. “We had a July and August dealer volume bonus for trucks and SUVs, and that got our inventories down. Our inventories have built back up since then. We are making production adjustments because ‘Many weeks’ until shipping When the Toyota and Mercedes vessels arrive, he says, “Instead of just putting the cars on trains and shipping them out in a couple of Volvo’s N.A. boss will resume leases to boost volume Diana T. Kurylko dkurylko@crain.com call tracking system advertising 1-888-878-ZADV email us: or visit: zauto@zadv.com www.zadv.com ROCKLEIGH, N.J. — Sales at Volvo Cars of North America Inc. are likely to slump to 70,000 vehicles this year — a level the brand hasn’t fallen to “in a number of decades,” says its CEO. “We would be closer to 80,000 if we hadn’t gotten out of leasing our smaller cars,” Doug Speck, head of Ford Motor Co.’s Swedish brand, said during an interview at Volvo’s New Jersey headquarters. Volvo is moving its U.S. operations back from California, where the brand was based for several years after its acquisition by Ford. To hit the 70,000 figure, Speck, 49, wants to quickly return to leasing the S40 sedan, V50 wagon and C30 compact hatchback. Because of the lower profits on those three vehicles, Volvo stopped leasing them at the end of the first quarter, Speck said. Volvo CEO Doug Speck: North American sales will fall to 70,000 this year, a figure not seen “in a number of decades.” “We brought in half the volume that we sold previously,” he said. In the past three months, the dollar has strengthened and the Swedish krona has weakened by a third, giving Volvo a higher profit on the cars. “This allows us to be more aggressive with small cars,” said Speck. Speck said he is discussing the matter with Sweden. If given the go-ahead, the U.S. unit could import small cars to meet the 70,0000-unit forecast. The last time Volvo’s U.S. sales dipped below 100,000 was in 1997 when it sold 90,894 units. Next year, Volvo expects sales to grow 3 to 5 percent in the United States despite forecasts that sales will decline further in 2009, Speck said. The major growth will come from the new five-seat XC60 crossover, which debuts in March. The vehicle will compete with the BMW X3 and two new vehicles: the Audi Q5 and Mercedes-Benz GLK, which also goes on sale next year. Speck expects to sell 10,000 to 15,000 XC60s next year. “One of the questions for this industry is how big is this segment,” he said. On the other hand, Volvo, like its competitors, is suffering from a massive decline in sales of its large crossover — in Volvo’s case, the XC90. That is the brand’s biggest-volume vehicle in the United States. Sales fell to 16,193 units for the first 10 months. Last year, Volvo sold 31,336 XC90s, down from a high of 39,183 in 2004. The XC90 is also suffering from a dramatic drop in residual values. A 2005 XC90 is now worth $25,000, down from $31,000 for a 3-year-old vehicle with the same mileage, Speck said. Competitors have suffered similar, if not larger, drops in residuals on their larger SUVs and crossovers, he said. “All of us will have to react to that,” Speck said. “We will have to raise payments.” Speck anticipates that over time, demand will shift from the XC90 to XC60 because of concerns over the price of fuel. With a new vehicle about to launch, he hopes Volvo has the answer “to provide the customer the kind of product they want, given their life situation.” c http://www.zadv.com http://www.zadv.com
Table of Contents Feed for the Digital Edition of Automotive News - November 24, 2008 Iacocca tip: 'Equality of sacrifice' Ch. 11 would hit dealers hard â fast Detroit 3: Bankruptcy = doom Down the road and a continent away Used-vehicle demand shrivels O'Neill will lead Power GM tweaks production plan Mitsubishi: No to Detroit Ford will cut more output Nardelli: Chrysler is running on fumes GMAC on brink of bankruptcy, S&P warns Off with their heads! (But whose?) In defense (kind of) of Detroit Bailout Motors? Britain went down that road CEOs could have pre-empted the grilling Ford: We still want Mazda expertise Imports clog ports as sales plunge Volvo's N.A. boss will resume leases to boost volume Nissan expects Chrysler pickup deal will survive Toyota: Venza is a trendsetter, not a crossover It's time to put partisanship aside; Detroit needs help What GM needs is GMAC.2 'Buy American' talk won't help industry Readers weigh in on auto industy woes No one bailed out Oldsmobile It's time to move to mass transport We still need manufacturing Bankruptcy is a bet Let's get wages under control Will America be better off? First step: Bring the jobs home America owes it to GM to help The answer is simple: Leasing What about dealerships? Detroit 3 CEOs must offer to quit Oct. truck sales fall 17.4% Honda plant adds parts center They're sold on Camaro Drawn to Ferrari Japan poised to control key batteries Europe's worst month hits all automakers Dealers BMW: Diesel 7 series could come to U.S. Honda's FC Sport mixes green and go Infiniti G37's hard top retracts in 30 seconds Redesign of Lexus RX series hard to see Mini electric: Jolt comes from sticker Ford hybrid sedans aim at Camry After only 3 years, Ford revamps Fusion Hyundai plans new crossover, turbo engine Restyled Mustang: More refinement, horsepower Honda: Don't count on CR-Z gasoline variant '09 Nissan Z delivers more of what fans like Mazda3 gets new look, powertrains Nissan Cube joins the box brigade Infiniti upgrades powertrains Lincoln MKZ gets a makeover Porsche won't stall Panamera 2010 GLK priced below rival Bentley's Azure T gets 500 hp Detroit 3 squeezed by credit, cash â politics Waxman could mean trouble for Detroit GM formulates a 'Plan B' if it doesn't get federal loan Infiniti replaces Igo Sharks vs. Jets, D.C.-style What's good for â uh, how'd that go again? Mazda deal imperils Ford training ground More like Toyota, Honda? Careful what you wish for Maybe he's Buck-a-year Bob now Romney: Bankruptcy, not bailout Automotive News - November 24, 2008 Automotive News - November 24, 2008 - (Page Intro) Automotive News - November 24, 2008 - Detroit 3: Bankruptcy = doom (Page 1) Automotive News - November 24, 2008 - Detroit 3: Bankruptcy = doom (Page 2) Automotive News - November 24, 2008 - Ford will cut more output (Page 3) Automotive News - November 24, 2008 - Off with their heads! (But whose?) (Page 4) Automotive News - November 24, 2008 - Off with their heads! (But whose?) (Page 5) Automotive News - November 24, 2008 - CEOs could have pre-empted the grilling (Page 6) Automotive News - November 24, 2008 - CEOs could have pre-empted the grilling (Page 7) Automotive News - November 24, 2008 - Volvo's N.A. boss will resume leases to boost volume (Page 8) Automotive News - November 24, 2008 - Volvo's N.A. boss will resume leases to boost volume (Page 9) Automotive News - November 24, 2008 - Toyota: Venza is a trendsetter, not a crossover (Page 10) Automotive News - November 24, 2008 - Toyota: Venza is a trendsetter, not a crossover (Page 11) Automotive News - November 24, 2008 - 'Buy American' talk won't help industry (Page 12) Automotive News - November 24, 2008 - 'Buy American' talk won't help industry (Page 13) Automotive News - November 24, 2008 - Detroit 3 CEOs must offer to quit (Page 14) Automotive News - November 24, 2008 - Drawn to Ferrari (Page 15) Automotive News - November 24, 2008 - Japan poised to control key batteries (Page 16) Automotive News - November 24, 2008 - Dealers (Page 17) Automotive News - November 24, 2008 - Dealers (Page 18) Automotive News - November 24, 2008 - Dealers (Page 19) Automotive News - November 24, 2008 - Dealers (Page 20) Automotive News - November 24, 2008 - Dealers (Page 21) Automotive News - November 24, 2008 - Dealers (Page 22) Automotive News - November 24, 2008 - Mini electric: Jolt comes from sticker (Page 23) Automotive News - November 24, 2008 - Restyled Mustang: More refinement, horsepower (Page 24) Automotive News - November 24, 2008 - Bentley's Azure T gets 500 hp (Page 25) Automotive News - November 24, 2008 - Bentley's Azure T gets 500 hp (Page 26) Automotive News - November 24, 2008 - GM formulates a 'Plan B' if it doesn't get federal loan (Page 27) Automotive News - November 24, 2008 - Infiniti replaces Igo (Page 28) Automotive News - November 24, 2008 - Infiniti replaces Igo (Page 29) Automotive News - November 24, 2008 - Romney: Bankruptcy, not bailout (Page 30) Automotive News - November 24, 2008 - Romney: Bankruptcy, not bailout (Page 31) Automotive News - November 24, 2008 - Romney: Bankruptcy, not bailout (Page 32)
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