Automotive News - October 27, 2008 - (Page 38) 38 • OCTOBER 27, 2008 final assembly comment EARNINGS >> Several automakers, suppliers and dealer groups release third-quarter financial reports this week. Go to www.autonews.com for live coverage. Chrysler heir: Get back to basicsrank Rhodes Jr., the greatgrandson of Walter P. Chrysler, wants Chrysler to return to basics. “Now is the opportune time to offer a car similar to the ‘people’s car’ in Germany during the 1930s,” he wrote in a letter to Stephen Feinberg, the head of Chrysler’s owner, Cerberus Capital Management. Rhodes sent copies to Chrysler CEO Bob Nardelli, A 2008 Renault Logan it down to bare bones and do it NOW.” That sounds like the 2005 Renault Logan. The Logan, designed for eastern Europe, was priced at about $7,600. It became a sellout in western Europe. Says Rhodes: “Too many folks in this country are simply out of funds but will flock to any affordable car, with engineering integrity and quality.” Jim Farley: Offer a new lease on life Names familiar? NADA leadership is a family affairespite the era of consolidation, the rise of public dealership groups and the looming specter of another oppressive death tax, many dealers still bring their children into the business to become the family’s second, third or even fourth generation to run a dealership. Now the pattern has spread to the National EDWARD LAPHAM Automobile IS EXECUTIVE Dealers EDITOR OF Association. AUTOMOTIVE Starting next NEWS. January at the NADA convention in New Orleans, the dealer group will have two consecutive chairmen whose dealer fathers also led the organization. The association’s board elected John McEleney of Iowa as chairman for 2009. His father, Warren McEleney, headed NADA in 1971, when the top elected official was called president. NADA’s directors also elected Ed Tonkin of Oregon as next year’s vice chairman, which means he’ll be chairman in 2010. His father, Ron Tonkin, was NADA president in 1989. Now before you start muttering about nepotism, remember that you can’t just stroll into NADA headquarters in McLean, Va., and expect to be anointed. By the time a dealer is elected chairman, he or she probably has been involved in dealer associations for years. Usually, the first job is at the local or state level. Then, after the group back home elects you to the NADA board, you typically serve in various offices before being elected vice chairman, which then almost automatically leads to getting the top job. (Goodness, that sounds a lot like politics, doesn’t it?) But it’s not just about fathers, sons and good old boys anymore. This year’s chairman — Annette Sykora, a third-generation dealer in Texas — is the first female to lead the group. Her husband, Patrick, is a second-generation dealer, and their teenage daughter already is learning the business. Here’s more: Marcy Maguire is the NADA director from New Jersey. Her husband and co-CEO of the family’s dealership group is Bob Maguire, a former NADA director who was chairman in 2001. And, yes, their son is in the business. But I’ll bet you guessed that. Automotive News and others. Build a car with “only three colors available, no fancy radio, no air, no frills,” he wrote. “You need to take an existing American-made model, strip Kerkorian speeds away from autos W hen even the riverboat gamblers abandon ship because it’s too risky, you know you’re in trouble. Kirk Kerkorian, the most daring auto industry investor in recent years, did a dramatic about-face last week, dumping part of his 6.5 percent stake in Ford and suggesting he might sell the rest. Tracinda, his investment company, said he was putting the money into the more promising hotel, gambling and oil industries. For the auto industry, it was a screaming vote of no confidence. As analyst John Casesa told The New York Times: “Conditions in the industry are so perilous, they are scaring away even the most fearless investors.” Selling those 7.3 million shares cost the Las Vegas billionaire about $30 million. Tracinda said the shares went for just $2.43 apiece; Bloomberg News said they cost an average of $7.07. Kerkorian still holds 133.5 million shares, a 6.1 percent stake. And Tracinda said it has taken steps to sell more, perhaps all. Kerkorian began his love-’emand-leave-’em grand tour of the auto industry in the 1990s. He was Chrysler’s biggest shareholder when it was swallowed by Daimler-Benz in 1998, and his suit against DaimlerChrysler, alleging that management misrepresented the takeover as a merger of equals, was unsuccessful. Then, after acquiring nearly 10 percent of General Motors stock, Kerkorian tried to play matchmaker with GM, Renault and Nissan. He bailed out of GM in 2006 when the plan failed. Farley has bright idea to boost auction action t a fundraising auction last week, Ford’s top marketing exec came up with an idea that would really draw the bids. Presenting a Lincoln MKS that was auctioned off for scholarship money at Northwood University in Michigan, Jim Farley noticed that Ford dealers in the audience were joined by many colleagues who run General Motors and Chrysler stores. To boost the take, he suggested, the school should be “auctioning off some of Ford Motor Credit’s lease financing capacity” to those in the audience who didn’t have access to credit. Says an attendee: “He got a great ovation.” REBECCA COOK/REUTERS The Chrysler saga: Wooed, won, spurned, purchased — and now up for grabs. Mitsubishi bucks trend on profitsor Mitsubishi, currency rates trump unit sales. Mitsubishi’s vehicle sales, like those of other carmakers, have collapsed this year around the globe. So last week, when Mitsubishi revised its forecast for the fiscal first half ending Sept. 30, it cut its prediction for revenues by 2.9 percent, to $12.52 billion. It cited lower unit sales. But Mitsubishi raised its profit forecast. And not just a little. It now expects operating profit of $257.7 million for the fiscal first half, up more than $100 million from its earlier target. It also expects net income of $128.9 million for the first six months, instead of just breaking even. It’s all thanks to the smoke and mirrors of exchange rates. Despite the U.S. financial meltdown, the dollar has been stronger against the yen than Mitsubishi initially predicted. So for every dollar in profit that Mitsubishi takes in from dollar-denominated sales, it reaps more yen on its books. It’s a welcome reversal of fortune for a company still recovering from years of losses. Toyota by contrast, uses a different dollar-yen rate in its forecast. It predicts net this fiscal year will fall 27.2 percent to $13.27 billion. Beware the ‘vital’ dealormer DaimlerChrysler CEO Juergen Schrempp may have a hefty resume as a dealmaker, auto exec and corporate street fighter. But his credentials as a historian are in dispute. Last week, Schrempp was in a German court defending the deal that joined Daimler-Benz and Chrysler Corp. in 1998. In a lawsuit, a disgruntled investor from Stuttgart alleges that Schrempp misrepresented the deal, shafting Daimler shareholders by undervaluing Daimler shares to push through the stock swap. Nein, retorted Schrempp. He testified that the valuation of assets was appropriate and the deal was “vital” to Daimler-Benz, according to a Reuters report. At the time of the deal, Schrempp touted it as a “merger of equals” and a “marriage made in heaven.” The word “vital,” not surprisingly, raised eyebrows. The marriage turned out to be more Alec Baldwin-Kim Basinger than Ozzie and Harriet. Billions in shareholder value bit the dust, profits plunged on both sides of the Atlantic, and the promised synergies — the magic word in acquisitions — never appeared. Daimler sprinted into divorce court, and the mess is still unraveling in Auburn Hills. New trade debate in the works? R Edward Lapham writes commentaries each week for autonews.com. Read them at autonews.com/edwardlapham. Dealer Ron Tonkin tells KATU-TV in Portland, Ore., why it makes sense to offer a tax break to people who buy domestic brand vehicles. emember the auto trade disputes of the 1980s? We may be seeing the beginnings of an encore. Last week Ron Tonkin, former president of the National Automobile Dealers Association, sent a letter to the Detroit 3 CEOs asking them to urge President Bush to push a $2,500 tax credit for people who buy a Detroit 3 vehicle (see letter, Page 12). Tonkin owns an 18-store dealership group bearing his name, but only two sell new domestic brands. The tax credit would get customers in the showroom, keeping Detroit 3 employees at work, he wrote. Tonkin sent copies to the U.S. heads of Toyota and Honda, and Toyota’s Jim Lentz wasn’t sympathetic. Favoring the Detroit 3 over other carmakers “is a path to protectionism, and none want to relive those days,” Lentz wrote in an e-mail to Tonkin. “Let’s stay away from creating additional class warfare in the open market.” Tonkin wasn’t buying it. He responded: “If Detroit ‘closes down,’ then thousands are out of work and no one will buy Toyotas or anything else.” http://www.autonews.com http://www.autonews.com http://www.autonews.com/edwardlapham
Table of Contents Feed for the Digital Edition of Automotive News - October 27, 2008 Chrysler dealers under GM? States would rule Survey: Worried dealers flee GMAC Va. dealers turn to local credit unions Anxiety over Chrysler: Deal or no deal? Ford, GM execs join panels looking at eco-friendly options Big pickups, SUVs gain share Chrysler will cut 4,300 salaried jobs by year end BMW seeks joint vehicle electronics effort Runkle: Give tiny suppliers a chance VW goal: 80% N.A. content for Tenn. plant April Wortham China's BYD plans U.S. hybrids Lucky Icahn lost Lear Mahindra's U.S. launch to get $60 million ad drive Toyota may renew no-interest loans Hesterberg, Thomson will address congress Desperate industry begs feds for help Hyundai dealers want ads to pitch favorable loans Toyota, GM top global r&d spending After Detroit 3 take back design, supplier sitting pretty Germany's Preh supplies F-150 ventilation part Buehler is Volt supplier Freescale: New infotainment chip Are they too big to fail? A goal for GM: Buy back full control of GMAC Tax credit would move domestic cars GMAC loan bonus is a bad idea Take a good look: Toyota is losing its halo What flexibility is and what it isn't Toshiba joins battery battle Personnel Hyundai slows Ala. output of Sonata, Santa Fe Picture this LaNeve: GM marketing budget faces '09 hit Hyundai counts on luxury, hybrid hopes Keogh: Audi belongs with top luxury brands Dealers Court overturns class-action status in Blue Oval suit 2 major lemon-law lawyers lose right to practice in Md. Auctions offer more online for just-in-time dealers Used-truck prices higher in September Lack of used Minis limits certified program Wood trim maker expects to avoid worst of woes VW: U.S. may get Scirocco after all Ford's new F-150 is built for jobs, not jaunts Think of it as GPS for tools Feds look at China-made valves on Ford tires Shareholder value tumbles in 3rd quarter Shareholder value tumbles in 3rd quarter Ford truck marketing exec: Hybrid pickup 'publicity stunt' Survey: Ford Motor reliability improves Chrysler heir: Get back to basics Farley has bright idea to boost auction action Kerkorian speeds away from autos Names familiar? NADA leadership is a family affair Mitsubishi bucks trend on profits New trade debate in the works? Beware the 'vital' deal Automotive News - October 27, 2008 Automotive News - October 27, 2008 - (Page Intro) Automotive News - October 27, 2008 - (Page Bellyband1) Automotive News - October 27, 2008 - (Page Bellyband2) Automotive News - October 27, 2008 - Va. dealers turn to local credit unions (Page 1) Automotive News - October 27, 2008 - Va. dealers turn to local credit unions (Page 2) Automotive News - October 27, 2008 - Chrysler will cut 4,300 salaried jobs by year end (Page 3) Automotive News - October 27, 2008 - VW goal: 80% N.A. content for Tenn. plant April Wortham (Page 4) Automotive News - October 27, 2008 - VW goal: 80% N.A. content for Tenn. plant April Wortham (Page 5) Automotive News - October 27, 2008 - Hesterberg, Thomson will address congress (Page 6) Automotive News - October 27, 2008 - Hesterberg, Thomson will address congress (Page 7) Automotive News - October 27, 2008 - Toyota, GM top global r&d spending (Page 8) Automotive News - October 27, 2008 - Toyota, GM top global r&d spending (Page 9) Automotive News - October 27, 2008 - Freescale: New infotainment chip (Page 10) Automotive News - October 27, 2008 - Freescale: New infotainment chip (Page 11) Automotive News - October 27, 2008 - GMAC loan bonus is a bad idea (Page 12) Automotive News - October 27, 2008 - GMAC loan bonus is a bad idea (Page 13) Automotive News - October 27, 2008 - What flexibility is and what it isn't (Page 14) Automotive News - October 27, 2008 - What flexibility is and what it isn't (Page 15) Automotive News - October 27, 2008 - Hyundai slows Ala. output of Sonata, Santa Fe (Page 16) Automotive News - October 27, 2008 - Picture this (Page 17) Automotive News - October 27, 2008 - Picture this (Page 18) Automotive News - October 27, 2008 - Picture this (Page 19) Automotive News - October 27, 2008 - LaNeve: GM marketing budget faces '09 hit (Page 20) Automotive News - October 27, 2008 - Hyundai counts on luxury, hybrid hopes (Page 21) Automotive News - October 27, 2008 - Keogh: Audi belongs with top luxury brands (Page 22) Automotive News - October 27, 2008 - Keogh: Audi belongs with top luxury brands (Page 23) Automotive News - October 27, 2008 - Dealers (Page 24) Automotive News - October 27, 2008 - 2 major lemon-law lawyers lose right to practice in Md. (Page 25) Automotive News - October 27, 2008 - Lack of used Minis limits certified program (Page 26) Automotive News - October 27, 2008 - Lack of used Minis limits certified program (Page 27) Automotive News - October 27, 2008 - Lack of used Minis limits certified program (Page 28) Automotive News - October 27, 2008 - Lack of used Minis limits certified program (Page 29) Automotive News - October 27, 2008 - Lack of used Minis limits certified program (Page 30) Automotive News - October 27, 2008 - VW: U.S. may get Scirocco after all (Page 31) Automotive News - October 27, 2008 - Feds look at China-made valves on Ford tires (Page 32) Automotive News - October 27, 2008 - Ford truck marketing exec: Hybrid pickup 'publicity stunt' (Page 33) Automotive News - October 27, 2008 - Ford truck marketing exec: Hybrid pickup 'publicity stunt' (Page 34) Automotive News - October 27, 2008 - Survey: Ford Motor reliability improves (Page 35) Automotive News - October 27, 2008 - Survey: Ford Motor reliability improves (Page 36) Automotive News - October 27, 2008 - Survey: Ford Motor reliability improves (Page 37) Automotive News - October 27, 2008 - Beware the 'vital' deal (Page 38) Automotive News - October 27, 2008 - Beware the 'vital' deal (Page 39) Automotive News - October 27, 2008 - Beware the 'vital' deal (Page 40)
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