Automotive News - July 28, 2008 - (Page 1) autonews.com ® JULY 28, 2008 Entire contents © 2008 Crain Communications Inc. All rights reserved. $155/YEAR; $5/COPY No-lease edict stuns Chrysler dealers Bradford Wernle bwernle@crain.com Chrysler LLC dealers were stunned by news that they no longer will be able to offer leases through the automaker’s captive finance arm, Chrysler Financial, starting Aug. 1. “We’re shocked,” said Tom Vann, owner of Team Hillsdale ChryslerDodge-Jeep in Hillsdale, Mich. “Leasing is about 70 percent of our new-car business.” But Vann said the competitive impact depends on whether other manufacturers follow Chrysler’s footsteps: “If it becomes Chrysler’s Jim Press: Looking for alternatives to leasing the trend, it doesn’t matter.” Vann, whose business is dominated by Internet customers, said his sales staff is “going to target the lease clients right now. Boy, let’s jump on the train because it’s left the station on July 31, and it’s not coming back.” Chrysler co-President Jim Press told dealers and journalists Friday that Chrysler will try to redirect resources from leasing into retail offers to reduce payments. Leasing is attractive because it lowers monthly payments. But Chrysler and other automakers are losing money on leases as residual values of big vehicles, such as SUVs and pickups, fall far below predicted levels. John Schenden, owner of Pro Chrysler-Jeep in Denver, said leasing has declined at his dealership this year as leasing companies tightened conditions for deals. “Two years ago we used to do 40 percent leasing, and this year it’s about 10 percent,” he said. “We’ll adapt; we’ll sell cars, make a buck and serve our customers.” But Earl Hesterberg, CEO of Group 1 Automotive, the fourthlargest U.S. dealership group, disagrees. Hesterberg, whose company is suing Chrysler Financial over floorplanning issues, said: “I really don’t see how they can be competitive at all in the marketplace with this kind of action.” c Want a Mini? Sign up — and wait Mini sales have soared, production capacity is limited, and the brand’s 82 U.S. dealers are out of cars. So they’re taking orders and urging customers to be patient. | PAGE 6 | ISTOCKPHOTO Hummer: Bonuses, buyouts GM works quietly to acquire dealerships Craig Trudell ctrudell@crain.com Meltdown From July through December, North American vehicle production will continue its downward slide. Only Honda will boost output. Here is CSM’s production forecast, compared with the same period a year earlier. % CHANGE Big boys battle Sonic Automotive is battling Mercedes-Benz in court for the right to buy a store in Charlotte, N.C. If Sonic wins, it could limit automakers' ability to determine who can buy their dealerships. | PAGE 8 | With its dealers struggling to sell vehicles from a brand that might be sold, General Motors has paid Hummer dealers early bonuses and is in talks to buy out stores. “Hummer is quietly getting dealers to sign off on their stores and making deals with each one,” Tim Kelly, a Hummer dealer in Chattanooga, Tenn., told Automotive News. Kelly said GM is “tiptoeing through a legal minefield” by trying to shed Hummer, trying to avoid the lawsuits that ensued when it killed Oldsmobile. He said he doesn’t think that dealers “are going away without a fight, but I think GM is handling it the right way by making peace with each dealer, one by one.” In early June, GM had said it was considering “all options” for Hummer, including sale of the brand. Last week, a GM spokeswoman wouldn’t say whether GM is making bonus payments or is buying out dealers. But several dealers confirmed that see HUMMER, Page 35 –11.6 –17.0 –22.8 9.7 –9.8 –11.5 –3.1 GM Ford* Chrysler Honda Toyota Nissan Other * Includes Mazda Source: CSM Worldwide REBECCA COOK/REUTERS Chevy will get new subcompact Remember the Groove and Trax minicar concepts? General Motors introduced them at the 2007 New York auto show. One of them will join the Chevy lineup. | PAGE 4 | A jittery industry stomps on the brakes Production will plunge in 2nd half Jesse Snyder jsnyder@crain.com Hummer’s summer GM negotiates buyouts with dealers. GM pays 2nd- and 3rd-quarter dealer bonuses in advance. GM will launch H3T pickup in September. That high-pitched wail of grinding gears you hear coming from the auto industry these days? It’s the sound of carmakers downshifting madly as they swerve into the third quarter. So how low will second-half production go? Analysts were busy revising their forecasts last week. They now see North American output crashing to its lowest level since 1992. Nearly all automakers are slashing production to avert big inventories of unwanted low-mpg models. Consulting firm CSM Worldwide forecasts industrywide second-half output of 6.39 million units in North America, 11.4 percent lower than the same period a year earlier. CSM pegs the full year at 13.35 million units, which would be the lowest output since 1992 and a huge drop-off from last year’s 15.1 million units. Other forecasters are even more pessimistic. Global Insight expects 2008 output to be 13.2 million, as does J.D. Power and Associates. IRN Inc. in Grand Rapids, Mich., sees production of 13.3 to 13.4 million. Deep cuts at Ford The depths of the industry’s decline came into sharper focus last week, with Ford Motor Co. the latest bearer of bad news. Ford CEO Alan Mulally said industrywide U.S. light-vehicle sales could fall as low as 13.7 million this year, an eye-popping 2.5 million units below 2007 and 2 million less than Ford’s outlook at the start of the year. It is the most pessimistic sales view yet. “Demand has declined substantially,” Mulally told Automotive News. Ford announced deep second-half production cuts last week. The comsee PRODUCTION, Page 35 On the Web This week at www.autonews.com Tuesday: Group 1 Automotive Inc., ArvinMeritor Inc. and Lear Corp. release quarterly financial reports. Wednesday: Penske Automotive Group Inc. and Visteon Corp. release quarterly financial reports. Thursday: BorgWarner Inc. and Tenneco Inc. release quarterly financial reports. Friday: Automakers release July U.S. sales results. NEWSPAPER http://autonews.com http://www.autonews.com
Table of Contents Feed for the Digital Edition of Automotive News - July 28, 2008 Automotive News - July 28, 2008 A scared-stiff industry stomps on the brakes No-lease edict stuns Chrysler dealers Hummer: Bonuses, buyouts Amid the gloom, Mercury celebrates Ford banks on Mulally's small-car plan PACE awards open for innovative suppliers GM expands employee discount plan through July American Axle blames strike for big quarterly loss Mercedes expects U.S. sales to fall; B class may come in 2011 Chevy plans new U.S. subcompact by '11 GM or Reynolds? Dealers must decide now Ralph Kisiel Ghosn: It's wrong time for a new partner GM geniuses turned their auto dreams into realities Dealers fresh out of Mini Coopers Chrysler, Ford, Honda top NAACP report card GM alters bonus for dealers who outperform their region Automakers angle for Chrysler's idle engine plant Chrysler revokes franchises in Pa. Sonic-Mercedes case could allow big dealers to add stores Buick's new LaCrosse It's still true: Product is king Still a bad idea NHTSA's Nason is leaving some big jobs undone Don't advertise them until they're on sale Safety matters much more than mpg Chrysler's no 'fuel economy laggard' $4 gas won't turn the U.S. into Europe For Europeans, America still spells opportunity Challenges travel with OnStar to China Personnel Mexico sales rise 1.2% in June Picture this Europe's worst sales result? Toyota Kia spends big to launch Borrego Kia launches Borrego just as SUVs lose favor Detroit 3: Goodbye, bailouts Dealers Eaton: Supercharger sales will grow Fla. appeals panel overturns class status in Kia brake suit Audi certified push pays off Used-car rule goes to the shop for tuneup Big-truck prices take a tumble in June Automaker tax break piggybacks on mortgage bill Honda rides high in 2nd-quarter rankings Ford Credit takes a hit as truck values fall 100 years of the Tin Lizzie Lamborghini profit soars AutoNation net income falls GM names CFO for N.A. TI Automotive unit will move Mercedes to cut Ala. production Fleming was a consummate newspaperman Toyota plans to raise Prius output A dart for Smart Tesla gets good reviews at Bentley 422 hp — and, uh, easy at the pump Ford's 2nd qtr: The reddest ink ever Bill Gates joins the car-dealer club Detroit 3 should put Mini under the microscope What's a Gov. to drive? Automotive News - July 28, 2008 Automotive News - July 28, 2008 - Hummer: Bonuses, buyouts (Page 1) Automotive News - July 28, 2008 - Hummer: Bonuses, buyouts (Page 2) Automotive News - July 28, 2008 - American Axle blames strike for big quarterly loss (Page 3) Automotive News - July 28, 2008 - GM or Reynolds? Dealers must decide now Ralph Kisiel (Page 4) Automotive News - July 28, 2008 - GM or Reynolds? Dealers must decide now Ralph Kisiel (Page 5) Automotive News - July 28, 2008 - GM alters bonus for dealers who outperform their region (Page 6) Automotive News - July 28, 2008 - GM alters bonus for dealers who outperform their region (Page 7) Automotive News - July 28, 2008 - Buick's new LaCrosse (Page 8) Automotive News - July 28, 2008 - Buick's new LaCrosse (Page 9) Automotive News - July 28, 2008 - Buick's new LaCrosse (Page 10) Automotive News - July 28, 2008 - Buick's new LaCrosse (Page 11) Automotive News - July 28, 2008 - Chrysler's no 'fuel economy laggard' (Page 12) Automotive News - July 28, 2008 - Chrysler's no 'fuel economy laggard' (Page 13) Automotive News - July 28, 2008 - For Europeans, America still spells opportunity (Page 14) Automotive News - July 28, 2008 - For Europeans, America still spells opportunity (Page 15) Automotive News - July 28, 2008 - Personnel (Page 16) Automotive News - July 28, 2008 - Personnel (Page 17) Automotive News - July 28, 2008 - Picture this (Page 18) Automotive News - July 28, 2008 - Picture this (Page 19) Automotive News - July 28, 2008 - Europe's worst sales result? Toyota (Page 20) Automotive News - July 28, 2008 - Europe's worst sales result? Toyota (Page 21) Automotive News - July 28, 2008 - Detroit 3: Goodbye, bailouts (Page 22) Automotive News - July 28, 2008 - Dealers (Page 23) Automotive News - July 28, 2008 - Fla. appeals panel overturns class status in Kia brake suit (Page 24) Automotive News - July 28, 2008 - Fla. appeals panel overturns class status in Kia brake suit (Page 25) Automotive News - July 28, 2008 - Big-truck prices take a tumble in June (Page 26) Automotive News - July 28, 2008 - Big-truck prices take a tumble in June (Page 27) Automotive News - July 28, 2008 - Big-truck prices take a tumble in June (Page 28) Automotive News - July 28, 2008 - Big-truck prices take a tumble in June (Page 29) Automotive News - July 28, 2008 - Big-truck prices take a tumble in June (Page 30) Automotive News - July 28, 2008 - Big-truck prices take a tumble in June (Page 31) Automotive News - July 28, 2008 - Big-truck prices take a tumble in June (Page 32) Automotive News - July 28, 2008 - Honda rides high in 2nd-quarter rankings (Page 33) Automotive News - July 28, 2008 - 100 years of the Tin Lizzie (Page 34) Automotive News - July 28, 2008 - Mercedes to cut Ala. production (Page 35) Automotive News - July 28, 2008 - Toyota plans to raise Prius output (Page 36) Automotive News - July 28, 2008 - Toyota plans to raise Prius output (Page 37) Automotive News - July 28, 2008 - What's a Gov. to drive? (Page 38) Automotive News - July 28, 2008 - What's a Gov. to drive? (Page 39) Automotive News - July 28, 2008 - What's a Gov. to drive? (Page 40) Automotive News - July 28, 2008 - What's a Gov. to drive? (Page 41) Automotive News - July 28, 2008 - What's a Gov. to drive? (Page 42)
For optimal viewing of this digital publication, please enable JavaScript and then refresh the page. If you would like to try to load the digital publication without using Flash Player detection, please click here.