Automotive News - January 28, 2008 - (Page 58) 58 • JANUARY 28, 2008 final assembly comment JANUARY SALES >> Get live coverage of January sales results on Friday, Feb. 1, at www.autonews.com. Time for private equity dealers?number of aging auto dealers want to leave the business, but big public dealership groups aren’t snapping up properties the way they used to. What to do? Automakers must cooperate with and cultivate private equity investors looking to buy private dealership groups of five to 15 stores, says Sheldon Sandler, CEO of Bel Air Partners, a financial advisory firm for auto retailers. Sandler, speaking last week at the Automotive News World Congress in Detroit, said large public dealership groups were snapping up such properties in the second half of the 1990s. From 1996 through 2001 there were 27 such sales of private groups on the Automotive News list of the top 100 dealership groups, he said, but from 2002 through 2006 there were only five. Last year there were none. “In my opinion, there won’t be in the ensuing three, four, five years,” Sandler said. “What I see is a liquidity crunch for the aging car dealer.” Middle-sized private equity firms have been trying to get into auto retailing, he said, but “haven’t received a warm welcome from the manufacturers.” Sandler said automakers must accept — and maybe even partner with — private equity investors to get some deals done: “It’s time for the manufacturers to reach an accommodation with the equity people who are willing to take the risk and are motivated to do these deals.” Tiny Tata leads to Mork-speak at World Congress M ork from the planet Ork would have been right at home at last week’s Automotive News World Congress in Detroit, because everywhere you turned you heard Nano, Nano. It seemed that everyone was talking about Tata’s new entry-level vehicle. I’m not sure if Robin Williams, who created the Mork character for TV, is a car guy. Even though EDWARD LAPHAM his late father IS EXECUTIVE was a Ford exec EDITOR OF and Williams AUTOMOTIVE played a car NEWS. salesman in the movie Cadillac Man, he might not appreciate the global significance of a $2,500 car produced in India for sale in less developed countries in Asia and Africa. But last week, the Nano-Nano buzz was everywhere. I even spoke with two guys who say they recently saw, touched and sat in a real, live Tata NanoNano in India. Among the socially conscientious, the talk went like this: The good news is the Nano-Nano might give millions of Indians the freedom of mobility; the bad news is the NanoNano might give millions of Indians the freedom of mobility. Still, there were more questions than answers. Is the Nano-Nano real? Can Tata make money on the Nano-Nano? Can suppliers make money supplying parts to the Nano-Nano? I even found myself asking the EPA’s Margo Oge — in front of 600 of our closest friends — whether we in the United States should worry about millions of NanoNanos caught in traffic jams and spewing pollutants and carbon dioxide into the atmosphere over the Indian subcontinent, adding to global warming — and if there was anything we could do about it. In a nutshell, her reassuring response was not to worry because technology developed by automakers in the United States can save the world. Nano-Nano! ■ Edward Lapham writes five commentaries each week for autonews.com. You can read them at autonews.com/edwardlapham. Washington roulette: You can’t win if you don’t play. Nissan and Renault will test EVs in Israelortified by Israeli subsidies, Nissan and Renault are poised for a bold experiment with electric vehicles starting in 2011 — complete with an infrastructure of 500,000 recharging stations. The automakers say the vehicles — powered solely by lithium ion batteries, skipping the supplementary gasoline engine of rival hybrids — will have the performance of vehicles with a 1.6-liter gasoline engine. The automakers see electric vehicles as a top option for crowded cities such as London, Paris or Tokyo, where short distances and stop-and-start traffic rule. And they say Israel will be a good test market because 90 percent of car owners drive less than 43 miles a day. A new company, Project Better Place, will set up 500,000 recharging stations. The automakers didn’t talk price but said government subsidies would make the cars competitive with gasoline-powered rivals. Detroit 3 are warned: Sitting out climate debate will be costly W Toyota: Can a green car take the checkered flag? A priest, a rabbi and an atheist walk into a steel mill . . . I T Tata’s Nano raises many questions. oyota has shown that hybrids can compete on the streets and in the showroom. Now it might try the racetrack. Toyota is developing hybrid speedsters for the race circuit and is weighing an entry in the 2010 Le Mans 24-hour race. That would require a hybrid system cheaper, lighter, more powerful and more efficient than those now in use. A win in the prestigious French race would produce more than a trophy. It would be another achievement to cement Toyota’s image as the hybrid leader, following its success with the Prius. “We are doing r&d toward participating in auto races with hybrid vehicles,” says Toyota spokesman Paul Nolasco. “But it is not yet decided whether we will participate in Le Mans.” But according to Japan’s Yomiuri newspaper, dozens of Toyota employees from the motorsports and hybrid-vehicle divisions are working on a 2010 Le Mans entry. f comedy clubs ever Wilbur Ross Crazy?’ That’s a end up on the rocks question that my wife and look like good believes still has not been investments, maybe satisfactorily answered.” Wilbur Ross will buy a Other samples of Wilbur’s bunch. And go on stage wit: On himself: His daughter’s himself. class was asked to say what The billionare investor, Ross: “Hightheir fathers did. Because it who made a fortune priced repo man” was a ritzy New York City buying distressed steel private school, the answers makers and then built a included “ambassador to the U.N., $6 billion auto interiors company famous actor, high-profile lawyer” through bargain-basement and other glitzy jobs, Ross said. His acquisitions, displayed his wry, dry daughter then sheepishly described wit in Detroit last week at the her dad: “He’s a high-priced repo Automotive News World Congress. man.” Said the poker-faced financier: On why he won’t buy a car “When we made what turned out to company: “We don’t feel our skills be a great coup, namely the are in the consumer marketing area. investment in the steel industry, We like grungy factories. In fact, my Business Week rewarded me with wife accuses me of trying to the cover, and what it said reinvent the 19th century.” underneath the picture was: ‘Is hen it comes to federal law about emissions, energy and fuel economy, the rule of thumb has been: Congress proposes, the auto industry opposes. But an environmental activist said that approach to the Climate Security Act, approved by a Senate committee late last year, would be bad business. “If this industry — Detroit and its allies — plays its cards right, I believe that Washington will provide you with the kind of assistance that would be very helpful for you to make this transition to a world where you have to build cars that reflect the reality of global warming,” Roland Hwang, vehicles policy director of the Natural Resources Defense Council, said last week in Detroit at the Automotive News World Congress. Under the act, Detroit automakers and suppliers could get up to $40 billion over 20 years from the federal government to retool assembly plants, Hwang said. That’s the carrot. The stick: The bill, sponsored by Sens. Joseph Lieberman, I-Conn., and John Warner, R-Va., would call for a 70 percent reduction in greenhouse gas emissions by 2050 for the electric utility, transportation and manufacturing industries. Although file cabinets in Detroit are filled with speeches over the years from auto execs making mock of the scientific debate on climate change, Hwang noted that the political debate is now an undisputed reality. And the rule of politics is that if you don’t get in the game, you don’t get any of the goodies. Said Hwang: “There’s an old saying in Washington: ‘If you’re not at the table, you’re on the menu.’ ” Swedish motorists, beware . . . T he overserved Swede who made headlines two years ago by smashing up his $1 million Ferrari Enzo on a California highway will be on the road again soon, figuratively speaking: He’s being booted out of the country. Businessman and convicted racketeer Bo Stefan Eriksson will be sent back to Sweden from his current home, a Los Angeles area jail, The Associated Press reported. Eriksson had been in a California prison since November 2006. Plowing into a pole on the Pacific Coast Highway near Malibu at 160 mph in his Enzo — one of only 400 made — earned him a drunken-driving conviction. There were a couple of other problems: the illegal firearm found in the car and the embezzlement charges because he had brought the car, and two others, into the United States illegally. Eriksson was released on parole in December — into the hands of the feds, who are doing the paperwork that will return him to the land of Ikea. We doubt he’ll be allowed to drive to the airport. http://www.autonews.com http://autonews.com http://autonews.com/edwardlapham
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