Automotive News - February 18, 2008 - (Page 1)

autonews.com ® FEBRUARY 18, 2008 Entire contents © 2008 Crain Communications Inc. All rights reserved. $155/YEAR; $5/COPY Lenders shun subprime market As credit standards tighten, customers switch to cheaper models, used cars Donna Harris dharris@crain.com SAN FRANCISCO — As the credit crunch deepens, many independent lenders are cutting back on loans to customers with tarnished credit histories. In January, more than 4 percent of subprime auto loans were at least 60 days delinquent, according to Fitch Ratings. That rate was up 43 percent from January 2007 and the highest in 10 years. Some small regional banks have stopped making loans through auto dealerships altogether. The credit crunch is forcing many would-be consumers to buy cheaper models, or purchase a used vehicle instead. If customers with shaky credit can get loans at all, often they must make a bigger down payment, pay higher interest rates and accept loans of shorter duration. For dealers, tighter credit policies sometimes force them to shoulder more liability when loans go sour. And in some cases, independent lenders are ending long-term relationships with dealers. That will create a significant drag on vehicle sales. According to industry estimates, consumers with subprime credit ratings buy nearly 30 percent of all new vehicles. The bottom line: Dealers are more dependent than ever on automakers’ captive lenders. The captives appear more willing than independent lenders to make subprime loans in what is shaping up as the worst year in a decade for new-vehicle sales. see CRUNCH, Page 67 What to cut? Tough choices at Chrysler With Project Genesis, Chrysler wants to ax redundant models so dealers can sell all three company brands under one roof. Read about some of the toughest choices. | PAGE 4 | Toyota dealers test satellite service centers Mark Rechtin mrechtin@crain.com NADA convention SAN FRANCISCO — Overwhelmed by the increased number of service customers flooding dealerships, Toyota Division has unveiled two plans to help dealers cope. For landlocked dealers hamstrung by pricey expansion costs, Toyota has launched a pilot program that allows satellite service centers. For all dealers, Toyota has a service-drive template that funnels oil changes and other light work to dedicated bays. Since 2000, Toyota’s vehicles in operation have soared from 15 million to 22 million. Many of those vehicles are hybrids or have high-tech features that might prove troublesome to an independent repair shop. Meanwhile, the number of Toyota Division franchises has stayed relatively static at around 1,225. Although several hundred Toyota dealers have performed recent dealership upgrades and expansions, it has not been enough to keep pace with the increased service business, said Ernest Bastien, Toyota vice president of retail market development. Satellite service centers are “the only viable solution where we’ve carefully studied and exhausted all options,” Bastien said. Other solutions — such as double-shifting the service department — are encouraged see TOYOTA, Page 67 Plastech showdown Chrysler is poised to pull tooling from supplier Plastech and close its assembly plants for a week as it moves the business elsewhere. A court hearing is scheduled this week. | PAGE 3 | GM CEO Rick Wagoner, left, and GMAC President Bill Muir, right, visit with Ernest Guzman, president of Ernie Guzman Pontiac-GMC Truck, at the GM Minority Dealers Association reception. JOE WILSSENS Comprehensive coverage of the annual dealer convention is on Pages 32-59. Promising start for XF Jaguar says 10,000 customers have put down deposits for the new XF sedan — a car Jaguar considers crucial to its future. | PAGE 6 | When the going gets tough . . . Volvo offers cash to trim dealer ranks ➤ Page 50 Saab dealers to get new vehicles ➤ Page 54 Mitsubishi CEO sets tough U.S. sales goal ➤ Page 55 Execs’ exit stuns Kia dealers ➤ Page 59 Ford cuts equipment combinations on ’09s Amy Wilson awilson@crain.com DETROIT — As part of Ford Motor Co. CEO Alan Mulally’s campaign to reduce complexity, the company is slashing the number of available equipment combinations on 2009- model vehicles. Ford will reduce vehicle order combinations by more than 50 percent, say dealers who have been briefed on the plan. Ford marketing chief Jim Farley told Automotive News that the cuts are in that “order of magnitude,” but he didn’t offer specifics. All nameplates will have fewer options and more standard features. Ford is using sales data to determine the most popular configurations. Mulally is betting that the reduction will make ordering easier for dealers and customers. Dealerships will be more likely to have models that match customer preferences, thereby reducing inventory expenses. “I like it,” said Clark Spikes, a Ford dealer in Mission, Texas. “You’ll sell more cars, and you’ll have the car in stock that the customer wants.” NEWSPAPER If inventory turns quicker, Ford will be able to avoid raising incentives to clear out vehicles. The automaker also will benefit in the assembly plants. With fewer combinations, Ford can cut manufacturing costs and complexity while improving quality. The Lincoln MKS, which goes on sale this summer, is an extreme example of Ford’s simplification strategy. With three options packages and half a dozen stand-alone options, the MKS will be offered in about 300 combinations, Ford executives say. see FORD, Page 67 On the Web This week at www.autonews.com: Tuesday: U.S. Bankruptcy Judge Phillip Shefferly rules on Chrysler’s tooling dispute with troubled supplier Plastech. Tuesday: Auto retailer Penske Automotive Group reports 2007 results. Wednesday: Auto retailer Lithia Motors reports 2007 results. http://autonews.com http://www.autonews.com

Table of Contents Feed for the Digital Edition of Automotive News - February 18, 2008

Ford cuts equipment combinations on '09s Lenders shun subprime market Toyota dealers test satellite service centers Despite cost, more carmakers use laminated glass Merger produces turnaround firm Chrysler would shut to move Plastech work Jeep accessories: Mo' for Mopar Auctions: Repos are rising Automakers face more child safety rules Supplier Personnel Family-owned stores could be tough sell for consolidation What would lineup be with brands under single roof? Mercedes will pay $9.5 million to settle suit Beru revamps strategy to boost profits, growth Jaguar: Dealers take 10,000 customer deposits for XF sedans Chrysler exec: Performance segment will survive Mahindra to offer hybrids in U.S. Mazda ad agency hires VW and Mini creative whiz Icy weather and perhaps boredom chill roadster sales GM, Saturn: What's after Reynolds? Ford: Mid-sized model year for mid-sized cars Kia's new American boss: Let's boost sales Rolls gets sporty Luxury brands push to meet demand in Russia Dealer is makers' best voice in D.C. Get real, Kia, Hyundai Face it, Detroit: Trimming dealers will be expensive GM has confidence in the Chevy Volt It's no wonder auto sales are declining A workable idea: GM dealer buyouts It's deja vu again with reborn 2CV Nothing beats face to face There's a person behind that e-mail Buying cars online makes perfect sense Bush seeks to save 2008-11 CAFE rules Personnel Lear investor: No regrets about blocking buyout GM CFO is mum on more aid to Delphi Dealers Road to tomorrow is paved with plastics Council aims to keep Ford current on environmental issues VW ponders Phaeton's U.S. flop, may try again McGuffie is Covisint's president In hydrogen race, Mazda seeks quicker route Suit seeks to enforce title-washing remedy Suppliers to the 2008 Buick Enclave Mercedes, Audi warn dealers: No sales for export Sykora wants CAFE flexibility Minority dealers see tough times in 2008 Arlena Sawyers Toyota goal: Create stress-free store NADA's Taylor predicts 15.7 million U.S. sales this year Honda widens support for dealer ad groups Jay's jabs Survival 101: Get lean, work harder Microsoft will test dealership system Farley wants market-by-market sales strategy Entertaining the troops Report: Detroit 3 cutbacks curb rental-fleet sales Dilts: High interest rates hurt industry GM asks for dealer assistance on quality On the Record Fisker: We're close to making plug-in car J.D. Power exec: Internet leads are slipping away Minority auto group nears 2 deals Garmin makes navigation technology deal Tenneco wins Ford work B-P-G focuses on new product push Volvo offers cash to thin the herd Cadillac challenges dealers to boost sales Chevrolet can stay No. 1, if it will fight GM will push a green marketing message Saturn is expected to be GM's growth brand Certified used sales help Honda dealer profits Hummer counts on pickup to perk sales Mazda will boost marketing budget, unveil Mazda6 Saab dealers to get new vehicles Toyota wants even better customer loyalty Infiniti stresses profits and customer satisfaction Mitsubishi CEO sets tough U.S. sales goal Nissan exec: New models will boost per-store sales Suzuki dealers cheer return of incentives Ford to boost dealer margins Jag dealers anxiously await the XF Ford executives vague about Mercury future Subaru dealers want diesels, hybrids Acura upscale shift inspires 'great faith in the future' BMW readies national loaner-car program Land Rover: Future upbeat, unclear VW dealers get vehicles on wish list Chrysler dealers OK with consolidation plan Mercedes pushes dealership standards Porsche shrinks as luxury segment lapses Large Hyundai dealers get more room to roam Execs' exit stuns Kia dealers Ford recalls 180,000 trucks over door part, fuel hose GM posts massive loss; eyes N.A. profits by 2011 Big-truck sales fall 33.5% in Jan. WTO rips China's tariffs on imported auto parts Fiesta will rejoin the party in the U.S. UAW's Valentine to Delphi: Hands off our pensions Rx for dealership flux: NFL draft + Mideast bazaar Toyota gets the boot in Mexico Nissan triples female managers Silverado hits a million, rolls on

Automotive News - February 18, 2008

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