Automotive News - July 28, 2008 - (Page 3) JULY 28, 2008 • 3 82nd year — No. 6318 American Axle blames strike for big quarterly loss DETROIT — American Axle & Manufacturing Holdings Inc. on Friday said the $644.3 million loss it posted in the second quarter is fallout from the near-three-month strike that halted production this year. The supplier said sales plunged 47 percent to $490.5 million, from $916.5 million in the second quarter of 2007. The quarterly loss compares with a profit of $34.6 million for the same quarter in 2007. The strike by 3,650 union workers, which was settled in May, put a $274.9 million dent in sales for the quarter and cut operating income by $86.6 million, the company said. The quarterly loss also included one-time charges of $575.6 million related to plant closures, buyouts and attrition programs, inventory write-downs and other moves as the company shifts production overseas. — Craig Trudell Ford banks on Mulally’s small-car plan Strategy stresses fuel economy, global vehicles Amy Wilson awilson@crain.com Ford Credit takes a hit ➤ 34 In the meantime, Michigan Truck’s body shop could help produce car bodies for the current-generation Focus, which is made at neighboring Wayne Assembly. “That all came about really in the last few weeks,” Hinrichs says. Michigan Truck’s makeover is concrete evidence of the intense effort Ford executives are mounting to deal with rising gasoline prices. The result: Ford Motor is doubling down on CEO Alan Mulally’s small-car bet. The new Ford is going to look a lot different from the Ford he took over in 2006. GM expands employee discount plan through July DETROIT — General Motors is allowing U.S. employees the opportunity, through July, to offer an employee discount to any one person they choose. The program is not as broad as GM’s 2005 Employee Discount for Everyone event. It’s an effort to boost sales, talk up GM products and clear inventory, a company spokesman said Friday. An employee discount provides substantial savings. For example, a Buick Lucerne with a sticker price of $34,200 would have an employee price of $29,758.03 after cash incentives, said a GM spokesman. — Jamie LaReau DETROIT — When marketing chief Jim Farley walked down the hall of Ford Motor Co.’s world headquarters late one night this summer, he had a problem he thought his manufacturing counterpart could help solve. “Hey, Joe, we could really use some more Focus,” Farley said after strolling into the office of Ford’s manufacturing boss, Joe Hinrichs. “What do you think?” Sales of the compact Focus were up a red-hot 53.2 percent in May, and dealer inventories were sinking. Hinrichs and product chief Derrick Kuzak had a candidate: the Michigan Truck plant in suburban Detroit, producer of the Lincoln Navigator and Ford Expedition. Just a few years ago, it would have been a stunning choice. Back then, Michigan Truck was reputed to be the world’s most profitable assembly plant. The plant produced its SUVs around the clock, and those vehicles carried profit margins exceeding $10,000 per unit. No longer — the Navigator and Expedition just weren’t selling. Hinrichs, Kuzak and Farley hammered out a new plan: Close down Michigan Truck in December, and retool it to produce Ford’s next generation of compact cars — the Focus or its variants — in 2010. Mulally priorities Last week’s announcement that Ford will convert three North American truck plants to car production has roots in two priorities Mulally set from his first day on the job. 1. The company must become a fueleconomy leader because gasoline likely would get more expensive. 2. Ford could save money by developing global vehicles for sale around the world. Mulally quickly funded the plan with a $23.4 billion financing package. Over time, he put together the triumvirate of Kuzak, Hinrichs and Farley to handle day-to-day execution of the strategy. So when gasoline spiked to $4 a gallon in May, Mulally’s team had a head start on bringing see MULALLY, Page 34 Ford CEO Alan Mulally: A new vision for Ford’s future Amid the gloom, Mercury celebrates Andrew Grossman and Amy Wilson agrossman@crain.com Changing lineup Ford Motor Co. moves to small-car production with the changes announced last week at these plants. Michigan Truck Wayne, Mich. Now builds: Ford Expedition and Lincoln Navigator full-sized SUVs Next product: Small cars on its global C-car (Focussized) platform in 2010 Kentucky Truck Louisville, Ky. Now builds: F-series Super Duty pickup Next product: Adds Ford Expedition and Lincoln Navigator full-sized SUVs in 2009 Louisville Assembly Louisville, Ky. Now builds: Ford Explorer, Explorer Sport Trac and Mercury Mountaineer mid-sized SUVs Next product: Dropping SUVs, building Focussized cars in 2011 through the spring and summer. The downturn has Ford marketing chief Jim Farley pushing for the consolidation to happen faster. c Wanted: A few innovative dealers Have you created a showroom that shoppers can’t resist? Discovered a recipe for loyal salespeople? Found a way to put some fun into F&I? If you are a franchised new-car dealer and have pioneered a winning strategy in any part of your business, tell us about it. We’re gathering ideas for a special Insight section on Innovative Dealers to be published Oct. 13. Send a note to Insight Editor Karen Faust O’Rourke at korourke@crain.com or call her at 313-446-0386. CORRECTION A story on Page 19 of the July 21 issue gave the wrong name for a telematics company and misspelled the name of the company’s president. Steve Millstein is president of ATX Group Inc. Amid the gloom surrounding Ford Motor Co.’s huge losses last week, one group was celebrating: Mercury dealers. Ending speculation that they planned to kill Mercury, Ford executives said Mercury will get a new small car by 2010. But specifics were sparse, Mercury’s vehicle lineup will be cut, and the company will reduce the number of dealerships. “Contrary to all of the news articles I’ve been reading for the past six months, Mercury’s not dead,” said Michael Adamson, chairman of the Lincoln Mercury National Dealer Council. “I think it’s a great start.” The only new vehicle announced for Mercury is an unnamed small car that will go on sale in 2010. Officials won’t say whether the new Mercury is Focus-sized or smaller. Ford spokesman Mark Truby said the car will be a derivative of a Fordbrand vehicle, which continues Mercury’s strategy. The number of Mercury nameplates will be reduced, Lincoln Mercury spokesman Mark Schirmer said. Mercury won’t be a small-car channel, but it will focus on good fuel economy, he said. Count on the Milan, Mariner and new small car sticking around longterm, Schirmer said. He wouldn’t comment on the future of the Sable, Mountaineer and Grand Marquis. CEO Alan Mulally told Automotive News that he decided to keep the brand alive because “there’s a good market for the Mercury customers.” Some Mercury dealers praised Ford’s announcement that it would “broaden and accelerate dealer consolidation.” Recently, much of that consolidation was achieved by combining stand-alone Ford and standalone Lincoln-Mercury dealers. Lou King, general manager at Ourisman Ford-Lincoln-Mercury in Alexandria, Va., said switching to a dual dealership was a boon to her business. Ourisman sold only Ford for 14 years. In late 2006, it bought the inventory and customer database of a LincolnMercury dealership that was closing. After the deal, the service department grew 40 percent, she said. Ford Motor ended 2007 with 4,056 domestic-brand dealerships in the United States. It trimmed 214 dealer- Twin Cities Assembly St. Paul, Minn. Now builds: Ford Ranger small pickup and Mazda B-series pickup Next product: Production was to end in 2009; will continue through 2011 for both trucks Cuautitlan Assembly Cuautitlan, Mexico Now builds: F-series pickups Next product: Fiesta small car, by early 2010 ships last year and 126 in 2006. With sales plummeting in the wake of $4 per gallon gasoline, the financial pressure on dealers intensified http://www.nxtbook.com/nxtbooks/crain/an3635587301BBCPL/index.php?startpage=22
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)
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