Automotive News - July 7, 2008 - (Page 1) autonews.com ® JULY 7, 2008 Entire contents © 2008 Crain Communications Inc. All rights reserved. $155/YEAR; $5/COPY CAUGHT FLAT-FOOTED As car buyers flee bigger engines, dealers scream for 4-bangers Mary Connelly mconnelly@crain.com der product from us. We have adjusted our plants to do everything we can to supply them.” It’s a panic — but don’t panic Peter Brown pbrown@crain.com June’s horrible U.S. sales numbers would have been better if automakers had enough four-cylinder engines to meet demand. Rising gasoline prices have pushed new-vehicle buyers back to fourbangers to a degree not seen since the last energy crisis in the early 1980s. More than half of all new cars and trucks purchased in June had fourcylinder engines, reports the Power Information Network. A year ago, barely a third of new-vehicle buyers chose four-cylinders. Last month, General Motors lost TALES & TABLES: A STORY OF WOE 29 Big sales drop in 1st half ➤ Small-car transaction prices rise ➤ 32 28-30, 32 Sales tables ➤ 10,000 sales — and the auto industry lost a cumulative 40,000 — because of shortages of four-cylinder engines, says GM sales chief Mark LaNeve. For consumers, the availability of a four-cylinder engine is at least as important as the size of the vehicle, says Jim Farley, Ford Motor Co.’s group vice president of marketing and communications. Says Farley: “You have dealers screaming for any type of four-cylin- A wild swing All the major automakers are shifting production away from sixes and to fours. GM, Ford, Toyota, Honda, Nissan and Hyundai all confirmed they are scrambling to produce more four-cylinder engines. You’d have to go back to the early 1980s — when gasoline prices also were at a record high — to find such strong demand for four-cylinder engines. “I have been in the car business for 38 years. It is as wild a swing toward four-cylinders as I have ever seen,” see SALES, Page 32 Fiat’s Sergio Marchionne: Industry leader of the year Amid the storm, stars shine Over the past year, auto executives have endured the industry’s version of the biblical plagues. Starting on Page 20, Automotive News unveils its annual list of automotive AllStars — those resourceful executives who weren’t deterred by recession, soaring steel prices, bankruptcy rumors or $4-pergallon gasoline. The crisis has been especially acute for the Detroit 3. Alan Mulally, Rick Wagoner and Bob Nardelli have launched turnaround plans. But Ford Motor Co., General Motors and Chrysler LLC face a long, hard slog. Readers may be surprised to note that Toyota’s brain trust did not earn a single award, despite the company’s strong performance. That’s just the way the voting went this year. If companies were All-Stars, Toyota would be a perennial winner. See our All-Stars photo gallery and audio podcasts on the Web at autonews.com/allstars. ALESSANDRO GAROFALO/REUTERS Face it, we’re in a panic. Guys who three months ago were bragging about their Hummer are trying to trade the uncomment sellable bad boy for a Prius or Malibu. Every auto company is trying to squeeze another mile per gallon out of its cars and trucks. Automakers are tearing up their future-product plans and reassigning engineers to design new, fuel-efficient vehicles. And they’re trying to conserve cash. June’s sales were a catastrophe almost across the board — except for Honda. Buyers are panicking. Car companies are panicking. Dealers are panicking. I’ve received some e-mails from dealers complaining that Automotive News has been horribly negative lately. I called one of them, a small domestic multibrand dealer, and asked him how his business was. “We’re pretty much down to selling only used cars now,” he said. Here’s just about the only good news: This too shall pass. Like bubbles, panics never last. But they’re a good time to reassess strategy and culture. The culture of each of the Detroit 3 has been about profiting from the tastes of the consumer. The consumer wants an SUV, you give him an SUV. But what might the consumer need tomorrow? The stunning run-up in the price of gasoline to more than $4 a gallon changed everything overnight — and probably in the long run, too. And some companies were caught flat-footed. Everyone has known for years that oil prices would rise … someday. Unlike the finance people, the product folks at some companies — especialsee PANIC, Page 29 With half off sticker, the trucks go quicker Dodge dealer Ken Zangara’s lot was clogged with Ram pickups, and he was desperate. So he cut the price to half of sticker — and suddenly June wasn’t such a bad month. | PAGE 34 | Arbitrator knocks Reynolds’ upgrades Arbitrators awarded a Ford store nearly $300,000, saying a Reynolds and Reynolds unit improperly forced it to buy a new computer system to run upgraded software. Reynolds is fighting the award. | PAGE 4 | VIJAY MATHUR/REUTERS As steel soars, Tata scurries to cut costs Soaring steel prices are complicating Tata’s push to price the tiny Nano at $2,500. The automaker is leaning on suppliers to help. | PAGE 8 | Turnaround trouble: Mitsubishi back on the skids Kathy Jackson kjackson@crain.com LOS ANGELES — Mitsubishi’s once-promising U.S. comeback has ground to a halt. For most of the decade, Mitsubishi has been in a deep funk in the United States. Then sales last year rose 8.8 percent to 128,993 — the first annual increase since 2002. But North America CEO Hiroshi Harunari’s turnaround plan has hit the skids in 2008. Sales were off 23.4 percent in the first half, after plunging 42.4 percent in June. And the one car in demand during the recent rise in fuel prices, 9 ad associations are history ➤ 31 the little Lancer, is in short supply. Dealers complain that Harunari has focused too much on cutting costs. They say the brand suffers from slim product offerings, a paltry ad budget and prices that aren’t competitive. Mitsubishi executives say they remain committed to the U.S. market, but retailers are worried. The company recently closed two of its four field offices and cut 49 sales positions at its U.S. sales division, including the headquarters in Cypress, Calif., and the regional offices. The see MITSUBISHI, Page 31 Grinding out the ounces in Japan With the lowhanging fruit gone, Japan’s automakers are picking apart car designs to see how precious ounces can be shaved. | PAGE 3 | NEWSPAPER The Lancer: A bright spot — clouded by a shortage http://autonews.com http://autonews.com/allstars
Table of Contents Feed for the Digital Edition of Automotive News - July 7, 2008 Automotive News - July 7, 2008 Turnaround trouble: Mitsubishi back on the skids It's a panic — but don't panic CAUGHT FLAT-FOOTED Japan's new diet plan: Slim down, ounce by ounce Amid sale rumors, Volvo has upmarket plans Reynolds sues dealer over computer upgrade Chrysler and dealers to improve Internet marketing strategies Seat strategy: Lear aims to make more profits by producing more parts Nissan: Despite a truck glut, Titan gets no more incentives American Axle cuts staff; boosts India business, CEO bonus Bosch sees N.A. red ink this year Bill Mitchell's designs blew away the past Hyundai Santa Fe to get a 4-cylinder GM Europe exec: Curbing CO2 is 'around the clock' effort Supplier input varies in Nissan's tech plans Great Wall becomes Chrysler's 2nd Chinese partner Steel prices nudge up Nano's costs Analyst: GM could tap UAW benefits fund Automakers create opportunities for Mexican molders Chrysler pitches gas savings on hybrid SUVs Researchers test capturing CO2 before it leaves the car Some execs win even when their companies lose Tata's personal touch Show me the money Obituaries Study: Dealership service shops extend their hours New Web tool promotes GM service Fiat CEO Marchionne is Industry Leader of Year Jim O'Sullivan Johan de Nysschen Sergio Marchionne Ratan Tata Dick Colliver Fritz Henderson Martin Thall Jim Farley Jack Stavana Roger Penske Walter de' Silva Mike Stanton Tim Manganello David Friedman Jim Hallett Larry Jutte Kim Kosak Ron Gettelfinger Tom Stephens Bob Lutz Tom Shoupe Jay Amestoy June caps a dismal first half Personnel Auto roof rule due by Oct. 1 Mitsubishi dumps 9 ad associations Small-car transaction prices rise in June Turbo taboo may end for BMW M's The mpg fracas: Pick your favorite fairy tale Great news? Analysts shun the Kool-Aid at Chrysler And now, from Wall Street, a short tale of terror VW tells builders: Plan for Southeast plant Dodging a bullet: Half-off deal busts dealer's Ram jam To run the train, should you be an engineer? Automotive News - July 7, 2008 Automotive News - July 7, 2008 - CAUGHT FLAT-FOOTED (Page 1) Automotive News - July 7, 2008 - CAUGHT FLAT-FOOTED (Page 2) Automotive News - July 7, 2008 - Amid sale rumors, Volvo has upmarket plans (Page 3) Automotive News - July 7, 2008 - Seat strategy: Lear aims to make more profits by producing more parts (Page 4) Automotive News - July 7, 2008 - Seat strategy: Lear aims to make more profits by producing more parts (Page 5) Automotive News - July 7, 2008 - Hyundai Santa Fe to get a 4-cylinder (Page 6) Automotive News - July 7, 2008 - Hyundai Santa Fe to get a 4-cylinder (Page 7) Automotive News - July 7, 2008 - Analyst: GM could tap UAW benefits fund (Page 8) Automotive News - July 7, 2008 - Analyst: GM could tap UAW benefits fund (Page 9) Automotive News - July 7, 2008 - Chrysler pitches gas savings on hybrid SUVs (Page 10)
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.