Automotive News - February 18, 2008 - (Page 66)

66 • FEBRUARY 18, 2008 GM posts massive loss; eyes N.A. profits by 2011 Jamie LaReau and Richard Truett jlareau@crain.com DEALERS Family stores could be hard to combine continued from Page 4 Hayden Elder of Dodge’s national dealer council says of the consolidation plan: “Let me tell you, it’s going to work.” “There was no anger in the room,” says Michael Rouen, owner of Rouen Chrysler-Dodge-Jeep in Woodville, Ohio, referring to the make meeting, which some thought might be rancorous. Count Hayden Elder, owner of Elder Chrysler-Dodge-Jeep in Athens, Texas, and Dodge national dealer council chairman, as a firm believer. “Let me tell you, it’s going to work,” Elder said. “There is no doubt in my mind.” Whether it works depends on how well Chrysler executes the plan, says Sheldon Sandler, founder of Bel Air Partners. His Princeton, N.J., firm offers dealers financial advice and brokers dealership sales. Chrysler will find facilitating deals costly and filled with tough issues, Sandler says. Nowhere is that more true than dealership real estate. Says Sandler: “We have found out the hard way that if you look at the real estate, you’ll find out where these deals get stuck.” c GM’s earnings Full year 2007 2006 DETROIT — General Motors posted its biggest yearly loss last week. But it said it has the right processes in place to improve automotive earnings this year and possibly make money in North America by 2010 or 2011. GM reported an adjusted net loss of $23 million last year, compared with an adjusted net gain of $2.2 billion in 2006. GM had previously announced it took a $38.3 billion charge for the way it calculated certain tax assets. Consequently, GM’s 2007 net loss was an all-time record $38.7 billion. Annual revenue fell from $206 billion to $181 billion. Before taxes, GM lost $1.4 billion in 2007, compared with earnings of $628 million in 2006. GM’s worldwide automotive business was profitable. When stripping away one-time charges and writedowns, GM earned $553 million for the year, compared with an adjusted $339 million loss in 2006. “GM’s worldwide vehicle sales increased 3 percent, or 277,000 units, to 9.4 million vehicles in 2007, marking the second-best year in units sold in the company’s 100-year history,” the company said in a statement. “For the third consecutive year, a majority of the company’s sales — almost 60 percent — were outside of the U.S.” Revenue Earnings before tax profit/(loss) Total automotive profit/(loss) North American auto profit/(loss) 4th quarter $181 billion $(1.4) billion $553 million $(1.5) billion $206 billion $628 million $(339) million $(1.6) billion Revenue Pretax profit/(loss) Total automotive profit/(loss) North American auto profit/(loss) $47.1 billion $(1.58) billion $(803) million $(1.06) billion $50.8 billion $(646) million $8 million $(129) million Note: These are adjusted numbers that do not include one-time items. GM still is losing money in North America, its largest market. In 2007, GM recorded a pretax loss of $1.5 billion. But during a conference call with reporters, CFO Fritz Henderson said GM expects to begin to realize savings from the latest round of UAW buyout offers in the second half of 2008. One way GM expects to reduce costs is by replacing older, high-cost workers with new employees who will do the same jobs for less money. Last week, GM offered all 74,000 of its hourly UAW workers buyout packages that could average about $100,000 per worker. GM then would hire new workers at lower wages. Henderson would not say how many workers GM expects to accept the buyout package. But he did say about 1,700 of the union jobs are in noncore positions, such as housekeeping and plant maintenance. Other highlights of 2007: GM ended 2007 with about $27.3 billion cash on hand — up from $26.4 billion a year earlier. GM gained a $1.6 billion tax benefit in the fourth quarter. GM’s sale of its Allison transmission unit netted $4.3 billion after taxes. The Asia-Pacific region generated $744 million in pretax adjusted income in 2007.c “These businesses have been in families for generations. You’re talking about good dealers, close to each other. They don’t talk about the human part too much.” And it’s not just the families of dealers who are affected. Hodos employs more than one member of several families. Says Hodos: “I have husbands and wives, mothers and daughters, fathers and sons. In individual stores, you get treated more like family.” Chrysler co-President Jim Press says the company is not turning its back on family-operated stores. Those dealerships, particularly in rural areas, routinely register the highest customer satisfaction scores, he says. Salesman extraordinaire So far, Chrysler has succeeded in convincing some dealers that the Project Genesis plan will be good for them. Credit Press, one of the industry’s most convincing speakers and salesmen. PRODUCTS How would lineup look under one roof? continued from Page 4 That leaves Chrysler in need of something to fight the Buick Enclave and GMC Acadia. The Pacifica filled that niche; Chrysler will need a replacement with an upmarket design and a Chrysler badge. Big-truck sales fall 33.5% in Jan. U.S. truckmakers began 2008 with a continued decline in sales of medium- and heavy-duty trucks. Sales of both tumbled 33.5 percent to 26,055 in January compared with a year earlier. Sales of large trucks remained soft. Heavy-duty Class 8 trucks fell significantly in January, collapsing 48.3 percent to 9,600 units. Sales of Class 6 and Class 7 trucks each fell by about a third. Class 4 trucks were the only medium- or heavy-duty category to show a slight sales increase, rising 4.1 percent to 5,183 units. Ford Motor Co. was the sales leader, thanks to gains by its Class 4 and Class 6 trucks. Ford’s total sales declined just 0.3 percent to 6,604. International lagged behind Ford with sales of 5,413, down 39.5 percent. Navistar International Corp. makes International trucks. Sales by Daimler AG’s Freightliner unit fell 48.6 percent to 5,176. That left it third among medium- and heavy-duty truck brands. In January 2007, Daimler was first. — Bernadine Williams U.S. medium- and heavy-duty truck sales, January Jan. 2008 Jan. 2007 Jan. 2008 Jan. 2007 SUVs would probably be the Sebring. But the Sebring convertible, Chrysler’s only convertible, perennially is among the segment leaders. Press hinted to dealers that some of the most radical pruning could take place in the SUV lineup. He estimated the company sells about 400,000 SUVs spread over 11 models. The Jeep Liberty, launched a year after the Dodge Nitro, already is outselling the Nitro. This one should be a no-brainer: Look for the Liberty, which brought a lot of women into the Jeep fold, to survive. The Dodge Durango and Chrysler Aspen SUVs are classic badge-engineered products. Chrysler created the Aspen because its Newark, Del., factory was underutilized. With that factory closing next year, both could go away. That would leave only the Jeep Grand Cherokee, made at Chrysler’s Jefferson North plant in Detroit. Class 4 Class 5 Class 6 Class 7 Chevrolet* Dodge Class 5* Class 4 Class 5 Class 6 Class 7 Ford Class 3 & 4 Class 5 Class 6 Class 7 Class 8 Freightliner Class 4 Class 5 Class 6 Class 7 GMC* Class 4 Class 5 Class 6 Class 7 Hino* Class 4 Class 5 Class 6 Class 7 Class 8 International Class 3 & 4 Class 5 Class 6 Class 7 Isuzu 339 340 39 81 799 563 3,644 1,395 1,273 292 6,604 319 30 629 1,762 2,436 5,176 302 228 48 170 748 20 14 263 83 380 37 114 1,256 1,550 2,456 5,413 370 157 16 5 548 314 464 84 153 1,015 – 3,428 1,754 990 455 6,627 297 113 1,362 2,415 5,887 10,074 245 385 83 353 1,066 17 10 316 111 454 56 227 2,479 2,220 3,968 8,950 452 153 13 49 667 Class 7 243 Class 8 1,015 Kenworth* 1,258 Mack Class 8* 545 Class 3 & 4 88 Class 5 34 Class 6 44 Class 7 9 Mitsubishi Fuso 175 Class 3 & 4 23 Class 5 18 Class 6 49 Class 7 1 Nissan Diesel 91 Class 7 302 Class 8 1,085 Peterbilt* 1,387 Class 4 41 Class 5 44 Class 6 50 Class 7 170 Class 8 471 Sterling* 776 Volvo Class 8 1,474 Western Star Class 8* 100 Other Class 8 18 Class 4† 5,183 Class 5 2,937 Class 6 3,667 Class 7 4,668 Class 8 9,600 TOTAL CLASS 4-8 26,055 Total Class 1-3 528,155 TOTAL SALES 554,210 347 1,947 2,294 1,468 149 61 87 7 304 11 23 40 3 77 458 1,814 2,272 10 – 83 327 1,079 1,499 2,031 322 39 4,979 3,190 5,537 6,898 18,555 39,159 562,536 601,695 Sporty cars The much-anticipated Dodge Challenger arrives in dealerships this spring, proudly bearing the standard for Dodge’s long muscle-car heritage. Wolkonowicz expects the rear-drive coupe to generate about 40,000 sales annually. Minivans Here lies Chrysler’s most agonizing dilemma. The Dodge Grand Caravan traditionally has outsold the Chrysler Town & Country, but the fortunes of the two have reversed since the fall 2007 launch of the fifth generation. The Town & Country now enjoys a slight edge, partly because of Chrysler’s decision to eliminate the shortwheelbase Caravan. Minivans are Chrysler’s bread and butter, and the company might find a way to fudge by keeping both but widening the gap between them. The Town & Country could be the luxury choice, while the Grand Caravan could be geared to youth and performance. Dodge displayed a bright red Grand Caravan concept van with a hood scoop at the Detroit auto show that gave a hint of how such a strategy might play out. Pickups Pickups are one of Chrysler’s strong points and an area where the status quo likely will endure. Wolkonowicz expects Chrysler to pare its truck lineup down to the Ram 1500, the Ram heavy-duty, the Dakota compact pickup, a sportutility pickup, the Sprinter van and “a Honda Ridgeline-style vehicle.” *Reported by Ward’s Communications †Includes Class 3 trucks for Freightliner, Isuzu, Mitsubishi Fuso and Nissan Diesel Source: Automotive News Data Center Thumbs up or down The plan makes sense on paper, but dealers will have fewer vehicles to sell — creating pressure to merge into three-brand stores under

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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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