Automotive News - February 18, 2008 - (Page 12)

12 • FEBRUARY 18, 2008 opinion Not many folks think this year is going to be a barn burner for car sales in the United States. Most people think it probably will be something around a million less than in 2007, which is still good. But it didn’t matter at the National Automobile Dealers Association gathering. I love going to the annual NADA convention. Sure, lots of folks have lots of problems, but the best part is getting a pep talk from everyone about how great the business is these days. You can’t be a pessimist for long when you hang around a lot of car dealers. They are the most upbeat folks I know. Besides having the opportunity to say hello to a lot of friends that I see only once a year, I think it’s fun to hear a lot of people who believe that the car business is going to be great this year. DAILY AUTO NEWS >> You can get the news you need every day. Go to www.autonews.com/signup and sign up for our daily e-mail newsletter. Face it, Detroit: Dealer is makers’ best voice in D.C. Trimming dealers will be expensive The Detroit 3 are eager to right-size their retail networks, matching their declining U.S. market shares with dealer bodies that are smaller and more profitable. That’s a suitable strategy, but it won’t happen by itself. The automakers must steer the process by spending some money. Chrysler wants single-brand stores to merge under multibrand rooftops, but it doesn’t plan to open its checkbook very wide. General Motors wants fewer dealers but puts in money only here and there to sweeten the pot for a particular deal. Natural attrition will occur, but that means a prolonged grinding down of the GM, Chrysler and Ford networks. Consolidation ought to come quickly, and it should be done well, not slowly over years of degradation. Because the process is critical to the carmakers’ health, they have to make a financial commitment. Big dealership groups don’t want to buy Detroit 3 stores. Meanwhile, Detroit 3 dealers can’t invest to compete with prosperous Toyota, Honda, Nissan, BMW, Mercedes and Lexus stores while spending to buy out their brethren. Prodding dealers is not enough. It will take more than merely encouraging buy-sells and offering business advice. The factories must put some real money behind this process. This industry faces plenty of challenges, and they were discussed frequently during the convention. I’m not sure that they all were solved, but there was no lack of suggestions. Although the exhibits were scattered among three halls, which has never made San Francisco an ideal trade show venue, the show was packed with products and services from new companies and old. No one was ignoring the obvious, such as the overpopulation of dealers that some brands have in major markets, but there were few or no cantankerous meetings, except perhaps for an Asian make whose top folks departed just before the convention began. That make meeting, I’m told, was a little weird. But there have been times when there was a lot more confrontation between dealers and factories at NADA. This year, it was obvious that the folks who can take the water to Washington are the dealers, not the factories. The automobile companies have little or no credibility in Washington, but that’s certainly not the case with the American automobile dealer. He or she seems to have a key to the heart of every member of Congress. In the past few years, the manufacturers’ best allies have been the nation’s automobile dealers. It doesn’t matter what they sell, they are local for Congress, and it matters. It’s a different world, but then it’s always changing in the car business. Heck, NADA even elected a woman as its head. AIADA did that a few years ago. Everything is changing, and let’s assume for the better. Get real, Kia, Hyundai The chronic management churn at Kia and Hyundai in the United States only harms the two Korean brands. The corporate cousins need stable leadership if they want to attract top talent. Two more U.S. sales executives have left suddenly and unexpectedly. This time, the departees are Kia Motors America CEO Len Hunt and Ian Beavis, the company’s vice president of marketing. Both left just before the National Automobile Dealers Association convention last week in San Francisco. Hunt joined Kia in October 2005 after his predecessor, Peter Butterfield, was hauled out of a dinner at a national dealer meeting and fired. The same kind of turmoil has plagued Hyundai Motor America. In September, Steve Wilhite resigned abruptly as COO and head of sales and marketing after 13 months. He was under pressure to meet an unrealistic sales target set by headquarters in Seoul. Dealers don’t like the volatility. The brands need good distribution systems in the United States, with loyal dealers. They need executives who know the market and their retailers. And those executives must be allowed to run the sales and marketing operations with a minimum of interference. resin removed the need for an expensive paint shop, and the bonding and plastic welding of the body panels required a body assembly shop a fraction the size of a traditional steel body shop. So, Chrysler was 10 years ahead of Tata in creating the 1 lakh car. The story we suppliers heard was that market research and/or discussions with local authorities about safety regulations had not been encouraging for Chrysler, resulting in the shelving of the project. Maybe Chrysler LLC should check the warehouse to see whether it can find a running start to a Nano competitor. MARK RYHORSKI London The writer, a former Ford marketing executive, now works for a supplier of marketing services to the Detroit 3. A workable idea: GM dealer buyouts To the Editor: In reference to the Detroit 3 dealer count, I often hear the excuse that General Motors (as just one example) could never fund the “early retirement” of 30 percent of its dealers. GM can, however, spend billions on the early retirement of factory workers without blinking an eye. I would imagine if it offered $400,000 to the first 2,000 GM dealers willing to terminate, it would get plenty of response. At $800 million, it would be GM’s least expensive early retirement buyout to date. I understand the long-term savings of the reduced work force, but just think of the possibility of 60 to 70 percent of GM’s best dealers (those who want to be GM dealers) sticking around. It might be a force to reckon with. They might even step up the investment in facilities and marketing. At minimum, they’d be more profitable and loyal. PONCHO REDFERN President Thomason Auto Group Fairfield, Calif. Thomason Auto Group handles Chevrolet, Chrysler, Dodge, Hyundai, Jeep, Kia, Mitsubishi, Nissan, Scion, Suzuki and Toyota. see LETTERS, Page 14 GM has confidence in the Chevy Volt THE WEEKLY NEWSPAPER OF THE INDUSTRY Established in 1925, published every Monday by Crain Communications Inc. It’s deja vu again with reborn 2CV To the Editor: I read with interest — and deja vu — Edward Lapham’s Feb. 4 column about how a 21st century version of the iconic Citroen Deux Chevaux (2CV) could be a strong Tata Nano fighter in developing markets (“Deux Chevaux could be reborn as Nano fighter”). I was tangentially involved in exactly such an effort in the mid-1990s when Francois Castaing, then the chief engineer of Chrysler, created exactly such a prototype for Chrysler. He had brought a 2CV back from a trip to his native France and challenged his engineers to create a modern-day version, targeted at emerging markets. The cost target? $2,500. The team achieved that with a twocylinder, air-cooled engine (Briggs & Stratton in the prototype); a steel chassis; and a body composed of injection-molded plastic panels created from recycled plastic bottles. Including coloring agents in the plastic Keith E. Crain, Publisher and Editor-in-Chief Peter Brown, Associate Publisher and Editorial Director David Sedgwick, Editor Edward Lapham, Executive Editor HOW TO REACH US Web site: www.autonews.com Editorial staff autonews@crain.com Phone: 313-446-0361 Fax: 313-446-0383 Circulation Advertising subs@crain.com lschlagheck@crain.com Phone: 888-446-1422 Phone: 313-446-6790 Fax: 313-446-6777 Fax: 313-446-8030 Editorial data/research To locate information that has been published in Automotive News, call 313-446-1662. Customer service To start or renew a subscription or to report an address change or a delivery problem, e-mail subs@crain.com or call 888-446-1422 (in the U.S. or Canada) or 313-446-1662 (in all other locations). AUTOMOTIVE NEWS (ISSN 0005-1551) is published weekly at 1155 Gratiot Ave., Detroit, MI 48207-2997. Periodicals postage is paid at Detroit, MI and at additional mailing offices. Postmaster: Send address changes to AUTOMOTIVE NEWS, Circulation Department, 1155 Gratiot Ave., Detroit, MI 48207-2912. Canadian Post International Publications Mail Product (Canadian Distribution) Sales Agreement #40012850, GST#136760444. Canadian return address: 2-7496 Bath Road, Mississauga, ON L4T 1L2 Printed in the U.S.A. To the Editor: The column about the Chevrolet Volt was surely one of the most farfetched, hypothetical, deliberately alarmist and nonnewsworthy contributions I have ever seen in Automotive News (“Who might kill the Chevy Volt?” Feb. 11). Does Bradley Berman really believe we would take risks with batteries? As usual, the old exploding Dell laptop is trotted out as a boogeyman, despite the fact that the Volt’s battery chemistry is in no way similar. We would not be expressing confidence if we did not feel confident. The column was completely pointless. Berman and Automotive News can and should do better. BOB LUTZ Vice Chairman, Product Development General Motors Detroit http://www.autonews.com/signup 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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