Automotive News - July 28, 2008 - (Page 38) 38 • JULY 28, 2008 final assembly comment THE BOTTOM LINE >> Several auto suppliers and dealership groups report second-quarter financial results this week. For live coverage, go to www.autonews.com. Detroit 3 should put Mini under the microscope W hen Mini confounded industry expectations by selling a premium small car — a hatchback, no less — in the SUVloving United States, mainstream brands seemed to shrug. No doubt volume-brand executives thought of Mini as a nice little business. A very nice little business, actually, if you can sell 40,000 subcompacts a year for 25 or 30 grand. Still, rival companies seemed to regard Mini as one of those quirky microniches that DAVE GUILFORD pop up in a IS NEWS EDITOR market that OF AUTOMOTIVE totals 17 million NEWS. — well, 14.5 million — vehicles annually. Fascinating … now, let’s get back to selling pickups and SUVs. But things have changed. As the Detroit 3 hastily move to get small, fuel-efficient vehicles into their lineups, you can bet they’re dissecting the Mini model. Basically, Mini has what the Detroit 3 desperately need. The critical question for Ford, General Motors and Chrysler may well be whether they can make serious money on small cars. They aren’t going to rebuild their profits by trading $10,000 margins on big SUVs for $100 margins (if that) on bare-bones subcompacts. All of which made it doubly interesting to listen to Mini brand boss Jim McDowell talk to a group of journalists in Detroit last week. McDowell, riding high on three strong months of sales that have cleared Mini inventories, said U.S. car buyers are willing to consider new kinds of vehicles. So a small car might have zippy performance, good crash ratings, striking styling and nice interior quality. That might seem like good news for brands such as Ford, Dodge and Chevrolet. Could they credibly sell a $25,000 small car? Maybe. McDowell said an upmarket small car must deliver a superior driving experience. That requires a premium suspension and, especially, a premium powertrain. So U.S. automakers thirsting for small-car profits must ponder how much to invest in what they have long regarded as moneylosing CAFE cars. They do have one advantage: Mini builds its cars in England. Perhaps the weak dollar will help them match Mini’s on-road elan. Then we’ll see whether Mini’s success is repeatable or the exception that proves the rule. A dart for Smartonsumer Reports has panned the Smart ForTwo in its August issue, calling the ride “horrendous,” the handling unresponsive and the engine noisy. “A car like this should be fun and zippy. Sadly, the Smart is neither,” the magazine says. Consumer Reports also criticizes the transmission, saying it shifts “in an uncomfortable way, with pauses and heaves between gears.” While the magazine says the fuel economy of 38 mpg that its tests have averaged is a high point, the fact that the Smart requires premium fuel is simply “unforgivable.” Smarting from the rebuke, a Smart spokesman said: “Ultimately, the customer decides a vehicle’s popularity. You can look no further than the 10,000 Smart ForTwos on U.S. roads in less than six months and an order bank of The ForTwo: A “horrendous” ride, says Consumer Reports. more than 30,000 reservations to understand the enthusiasm for this brand.” Ford’s 2nd qtr: The reddest ink ever T The new Camaro with GM executives Ed Peper, standing, and Ed Welburn RICK KRANZ 422 hp — and, uh, easy at the pump H ow do you market a 422-hp, 23-mpg muscle car in an era of $4-a-gallon gasoline? By touting the fuel economy. “We’ll be promoting the fuel economy story very much,” Chevrolet’s Ed Peper told reporters last week, showing off the 2010 Chevrolet Camaro. Peper is General Motors vice president for the brand. “We are 2 or 3 mpg ahead of the competition.” The rear-drive Camaro goes into production in February in Oshawa, Ontario. GM views the competition as the Ford Mustang, Nissan 350Z and Dodge Challenger, said Cheryl Pilcher, the Camaro’s product manager. Peper said the 304-hp V-6 version will get an estimated 26 mpg, and the 422-hp V-8 version will get an estimated 23 mpg. “And we are still working on it,” he said. He hinted that a turbo four-cylinder version is in the works. The price: Not announced. The volume? “We will build as many as we can sell,” Pilcher said. he financial news from Ford was dismal last week: an $8.67 billion net loss — the company’s worst-ever quarterly result. Ford reported an operating loss of $1.38 billion for the second quarter as high gasoline prices drove consumers away from its big trucks. The automaker earned $258 million on operations during the same quarter of 2007. Ford also took an $8 billion charge, mainly for reducing the value of various troubled assets, bringing the total net loss to $8.67 billion. Ford had a net profit of $750 million in the second quarter of 2007. The North American unit posted a $1.3 billion pretax loss in the quarter, compared with a $270 million loss during the same period a year ago. Ford said it posted a pretax profit of $582 million in Europe during the quarter, up from $262 million. It also turned profits in Asia and South America. The Volvo unit lost $120 million, compared with a loss of $91 million a year ago. CFO Don Leclair told Automotive News that Ford has done “a lot of stress testing and planning for a significant downturn, which clearly we’re in now.” Ford: $8.67 billion net loss Bill Gates joins the car-dealer club S What’s a Gov. to drive? Tesla gets good reviews at Bentley T You can e-mail Dave Guilford at dguilford@crain.com. o what’s the deal with computer moguls and car dealerships? First it was Michael Dell, teaming up in May with former Sonic Automotive President Jeffrey Rachor to start a joint dealership venture. And last week, documents filed with the Securities and Exchange Commission revealed that Microsoft gazillionaire Bill Gates has acquired 5½ percent of the dealership chain AutoNation. The stake makes Gates AutoNation’s third-largest shareholder, according to Bloomberg. But he’s far behind the leader, hedge fund manager Edward Lampert. As of May 28, Lampert’s firm owned 39.9 percent of AutoNation. Lampert is best known for acquiring Kmart out of bankruptcy and merging it with Sears Holdings. Cascade Investment, a fund controlled by Gates, owns 2.9 percent of AutoNation. The Bill and Melinda Gates Foundation H YANNIS KOLESIDIS/REUTERS Microsoft founder Bill Gates has placed a major bet on AutoNation. owns 2.6 percent. AutoNation stock closed at $9.74 last week, up 18 percent from $8.25 last Friday. That makes Gates’ 9.9 million shares worth about $96.4 million. AutoNation, of Fort Lauderdale, Fla., ranks No. 1 on the Automotive News list of the top 100 dealership groups in the United States, with retail sales of 328,963 new vehicles in 2007. ow’s a governor to keep all carmaking constituents happy? Now that Volkswagen has announced plans to build an assembly plant in Chattanooga, Tennessee Gov. Phil Bredesen must choose among vehicles from three manufacturers with factories in or planned for his state: General Motors, Nissan and VW. He’s not the only politico who has to juggle rides if he doesn’t want to woo some voters and snub others. Here are other states with multiple vehicle manufacturers. Four makers: Indiana: General Motors, Honda, Subaru and Toyota Ohio: Chrysler, Ford, GM and Honda Michigan: Chrysler, Ford, GM and Mazda Three makers: Alabama: Daimler, Honda and Hyundai Illinois: Chrysler, Ford and Mitsubishi Kentucky: Ford, GM and Toyota Missouri: Chrysler, Ford and GM he Tesla Roadster electric sports car won’t go on sale in Europe until the fall of 2009 (for a hefty price of about $160,000). But at least one early version has found its way across the Atlantic: Bentley, which specializes in heavyweight luxury cars, has one of the light electric runabouts. The aluminum roadster, with 6,831 laptop batteries jammed into its rear section, has been tested by Bentley CEO Franz-Josef Paefgen and development chief Ulrich Eichhorn. Says Eichhorn: “Not as hot as a Lotus, but absolutely a great driving experience.” Lotus delivers the Tesla chassis. But don’t look for an electric Bentley; the required batteries would be too heavy. And Bentleys would have to shrink. The Tesla: Bentley execs like it but will leave electrics to others. 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)
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