Automotive News - May 26, 2008 - (Page 3)

MAY 26, 2008 • 3 82nd year — No. 6309 VW predicts 5% U.S. sales gain Launches of 4 key vehicles raise expectations Diana T. Kurylko dkurylko@crain.com Lawsuit in Florida targets congressman’s dealership The former finance director of Sarasota Ford in Florida claimed in a lawsuit late last week that he was fired in November 2007 for protesting illegal business practices at the dealership. Sarasota Ford is part of Buchanan Automotive Group, whose chairman is U.S. Rep. Vernon Buchanan, a first-term Republican lawmaker. Citing a Florida law that prohibits retaliation against whistleblowers, the suit filed by Joe Kezer seeks damages from the dealership, two of its managers and Buchanan. A Buchanan spokeswoman said the congressman is not involved in day-to-day dealership operations. Darrin Chrisman, Sarasota Ford’s general manager and operating partner, said he is responsible for “all the decisions” at the dealership. He said Kezer’s allegation that the store fraudulently altered credit reports and sales contracts is “a very false statement.” — Harry Stoffer Despite a sluggish market, Volkswagen brand’s marketing chief expects new products in new segments to boost its U.S. sales 5 percent this year. VW is launching four key vehicles in new segments for the brand. VW also will launch a 50-state diesel Jetta in August. In 2009, when the new vehicles have been on sale for a year, they could sell more than 100,000 units, according to VW projections. That forecast does not include diesels. Through April, VW sold 69,970 units in the United States, 0.8 percent above last year. To reach a 5 percent gain for the year, it must sell 162,878 units for the rest of the year — a 6.8 percent increase over the last eight months of 2007. The new key products are: The Tiguan compact SUV. Sales began this month. VW expects annual sales of 20,000 to 25,000 units. The Jetta station wagon. Sales begin in July. VW estimates full-year sales of 15,000 units. The Chrysler-based Routan mini- Volkswagen launched the Tiguan compact SUV this month. Other key VW models will go on sale through October. van. Sales begin in September. The vehicle is priced in the mid-$20,000s. VW projects full-year sales of 45,000 units. The CC, a coupelike sedan placed above the Passat with a base price of about $27,000. Sales begin in October. VW expects annual sales between 20,000 and 30,000 units. Volkswagen Group of America Inc., says VW won’t try to compete on incentives with the Detroit 3, Japanese or Korean makes. “Instead of discounting the product, we add value,” Bennett says. “We want to sell the car, the brand and aspiration of driving a Volkswagen.” Nor will VW try to boost sales of the slow-moving Touareg large SUV. VW see VW SALES, Page 55 New VWs 2008 launches will put VW in several new segments. This month: Tiguan compact SUV July: Jetta station wagon August: 50-state diesel Jetta sedan, wagon September: Routan minivan October: CC sedan Adding value Toscan Bennett, vice president of product marketing and strategy for GM’s American Axle strike tab: $2.82 billion DETROIT — The UAW strike against American Axle & Manufacturing Holdings Inc. cost General Motors a total of $2.82 billion, according to a report GM filed Friday with the Securities and Exchange Commission. GM estimated that it suffered a $1.8 billion impact in the second quarter. That’s on top of $800 million from lost output during the first quarter and $215 million GM offered to American Axle to finance employee buy-downs and buyouts. — Craig Trudell Toyota pushes N.A. suppliers to match offshore prices Lindsay Chappell lchappell@crain.com Toyota plans 3 plants for hybrid batteries TOKYO — Toyota is preparing for big hybrid vehicle demand with plans for three hybrid battery factories, including one for next-generation lithium ion packs. Toyota Motor Corp. will spend ¥70 billion ($673.1 million) on the plants, Japan’s Nikkei newspaper said. The goal: annual battery output of 1 million units by 2011. A factory that will make nickelmetal hydride batteries will be built in northern Japan, and a lithium ion battery plant will rise southwest of here in Shizuoka, the Nikkei said. Also, an existing nickel-metal hydride factory in Shizuoka will be expanded. — Hans Greimel Toyota is putting the squeeze on its North American suppliers, trying to bring component costs in line with parts from low-cost countries such as China and India. Company executives won’t say how much suppliers are being asked to cut parts prices. But they want the entire North American supply chain “globally cost competitive” by 2010. Toyota is halfway to reaching that goal, said Chris Nielsen, vice president for purchasing at Toyota Motor Engineering & Manufacturing North America Inc. The effort began a year ago. For example, Nielsen said stamped metal or interior parts sourced in the United States must cost the same as the parts that could be sourced in China — “from a total cost standpoint.” That includes the cost of transportation, material handling and other factors. Nielsen said gains made so far were “low-hanging fruit.” He said the next wave of cost cuts will be more difficult to achieve. Toyota’s Chris Nielsen: Initial cuts were “low-hanging fruit.” The next wave will be more difficult to achieve. global automakers has intensified its push for price cuts more than Toyota in the past year. More than a third of the 133 suppliers who responded to the survey were North American. “They are more focused on this than I’ve ever seen them in the past,” said a supplier CEO who asked that his name not be used. “They’ve had other costreduction programs, just like everyone else. But Toyota has made it clear to all of us that they are really concerned with getting North American costs in line with the rest of the world.” Toyota said it wants to avoid resourcing North American production parts and materials to low-cost markets — the strategy pursued by other automakers, including Chrysler LLC and Nissan North America Inc. Said Nielsen: “Rather than kneejerking and saying, ‘We’re going to start buying all this stuff overseas,’ and then dealing with the challenges that come with that, our focus was ‘Let’s help these guys improve their competitiveness here.’” “Whenever you change suppliers or Toyota’s footprint Toyota’s North American purchasing profile Suppliers: 500 Annual spend: $30 billion Vehicle and engine plants: 9 Local content: 75 to 90%, depending on model 2007 production: 1,671,009 vehicles, 1,571,872 engines Source: Toyota Motor Engineering & Manufacturing North America Inc. taled $3.54 billion. That volume is roughly the same as in the first quarter of 2007, even though North American vehicle production was about 10 percent higher at that time. Toyota’s North America-made vehicles differ in the amount of NAFTA content they use, ranging from about 75 percent to 90 percent, depending on the model. Long-term view Nielsen said Toyota’s suppliers have reduced costs so far largely through productivity gains, not labor rate cuts. “We’re never going to see wages in North America that are competitive with wages in China,” he said. “How can we overcome the higher wage structure here? One way is to find ways to simplify manufacturing processes. You can overcome a lot of issues on the labor rate side by focusing on productivity and efficiency. Is the supplier using the latest technology? Is he adequately managing his labor?” Nielsen said Toyota is looking for cost savings “that will take some leaps forward in innovation.” “But we’re not going to go chasing short-term opportunities like currency exchange rates or lower-wage regions,” he said. “Those things can change quickly,” Nielsen said. “A country may be hot for a time and then turn cold. Our interest is maintaining the lowest costs long term.” c Local approach Suppliers have taken note of Toyota’s tougher stance. A new OEM Supplier Relations Study by consultancy SupplierBusiness in the United Kingdom and Automotive News Europe suggests that only BMW among even change locations, it can lead to quality issues,” he said. “We’re reluctant to make those changes.” Toyota also must weigh the political ramifications of shifting part of the $30 billion it spends annually on purchasing in North America to places such as China or Vietnam. Toyota’s growth in the United States has come with criticism that it still imports 45 percent of the vehicles it sells in North America. By comparison, Nissan and American Honda Motor Co. import only about 20 percent of their vehicles. Local parts sourcing also remains a sticky issue as many U.S. suppliers reel from depressed production volumes at Chrysler, Ford Motor Co. and General Motors. Trade data from the U.S. Commerce Department show that Japanese parts exports to the United States in the first quarter to- CORRECTION A story on Page 3 in the May 19 issue had the wrong first name for the general sales manager of Cass Burch Chrysler-Dodge-Jeep. It also gave the wrong location for the dealership. Keith Phillips is general sales manager of the store, which is in Quitman, Ga. Automotive News gets new marketing communications director DETROIT — Colleen Robar has rejoined Automotive News as director of marketing communications. She is responsible for the newspaper’s sales promotion, special events, branding and communications efforts. Robar, 44, continues as director of corporate communications for Automotive News’ parent company, Crain Communications Inc. She was president of Robar PR in Detroit before rejoining Crain last fall. Prior to launching the PR company in 2005, Robar was vice president/account director of Mullen Advertising in Detroit. From 1990 to 2000, she worked at Crain Communications, the last five years at Automotive News as group marketing director. She holds a journalism degree from Central Michigan University and an MBA from the University of Phoenix. c Colleen Robar: Leads efforts in sales promotion, special events, and communications for A

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Automotive News - May 26, 2008 Bad times? Not for CEO paychecks GM seeks Volt tax break to avoid $40k sticker Ford's big cuts aim for a Honda-sized lineup Automotive News gets new marketing communications director Toyota pushes N.A. suppliers to match offshore prices VW predicts 5% U.S. sales gain Toyota plans 3 plants for hybrid batteries GM's American Axle strike tab: $2.82 billion Lawsuit in Florida targets congressman's dealership Orbiting the blogosphere Kia to build small cars in U.S. plant VW Mexico exec will run North American purchasing Fiat mulls 500 minicar for U.S. GM scraps big rwd sedans for Chevrolet and Buick Hyundai spends like never before to launch Genesis luxury sedan Surprise: Suzuki slides as fuel prices rise GM paid Walter Chrysler a whopping $600,000 a year Chrysler sends mystery shoppers to dealerships Toyota owes royalties on some hybrids GM, American Axle to resume output Ford predicts bigger demand for smaller engines in Escape This is Volvo? Ads sell chic, not just safety An overnight success in 50 years Obama's comments were out of line Japan does it; why shouldn't we? 25% is high, but Chrysler is wise to revisit SCORE Safety efforts must focus on the driver Blame the dealer for poor service Don't judge Ford quality by just one car Ford quality is best in many years Mitsubishi considers piggybacking with Caterpillar suppliers to cut costs Nissan to make lithium ion batteries 'Boss Ket,' Connery inspire Tim Jackson Germany leads rise in Europe sales Court: Buyers must act in good faith to win lemon law damages Nissan wants suppliers to reduce utility bills Bajaj: From scooters to autos The next $2,500 car? Infiniti will look different, add engine power in Europe Lamborghini boss wants to keep the big engines Lamborghini ups ante in 'entry' supercars Continental exec: We're done selling VDO assets Honda plans Fit hybrid Outgoing Visteon CEO to receive $2.5 million Audi production chief: Cooperation with Porsche will grow Picture this RV shipments fall in March M-B will buy Chrysler studio Supplier personnel VW expects to reap big share of U.S. diesel market Valeo CEO Morin: Pass rising costs to consumers Suppliers to the 2008 Nissan Altima Dealers Auction workshops demystify Web buying April used-vehicle prices: Light trucks fall and cars rise Volvo certified plan offers free satellite radio Mulally: Full speed toward smaller Toyota plans credit card Sanfilippo switches agencies International idles plant Honda Pilot starts at $28,230 Plastech plans assets auction What counts GM's 2-pronged strategy for Calif. rules: If you can't beat 'em . . . meet 'em New wheels for the cop shop The cost of luxury? For Hyundai, it would have been $2.5 billion New tools allow early design input from consumers Lexus in the sky with carbon: How ex-Beatle's PR effort tanked Buy an '08 . . . get a .44 $4 gasoline gives new cachet to aging econo-beaters Time tips its hat to Tata Car marketers: Magazines must widen ad reach Automakers seek 'one-to-one' approach to magazine ads Auto ads go to the movies Here's the next big thing: Ads tailored to you GMC courts women with Acadia

Automotive News - May 26, 2008

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