Automotive News - March 24, 2008 - (Page 12)

12 • MARCH 24, 2008 opinion Autos did the job after 9/11; don’t bet on that now Here’s some cautionary advice to those in Washington who are looking for an economic miracle: Don’t automatically expect the auto industry to save the economy again this time. Most analysts and economists had predicted that at least the first six months of this year would be difficult for the industry. Some expected a sales uptick in the July-December period. But now even the second half GM, Ford and looks grim, thanks to fallout from the subprime mortgage mess, Chrysler still the collapse of the Bear Stearns are recovering from investment firm, uncertainty in the financial markets, the weak the aftereffects dollar, record petroleum prices and a looming recession. of the prolonged The growing suspicion that U.S. auto sales won’t improve heavy use anytime soon was formalized last of incentives that week when J.D. Power and Associates cut its 2008 new-vehicle began the last time sales forecast to 14.95 million. The consulting firm previously the economy had forecast sales of 15.7 million vehicles this year. needed a jolt. The last big jolt to the U.S. economy came in the dark days after the terrorist attacks of Sept. 11, 2001. Consumer confidence was shaken. Financial markets were in disarray. The U.S. economy seemed destined to collapse and possibly drag other Western economies along with it. Then a miracle happened. Just 10 days after 9/11, General Motors began advertising a new incentive program called “Keep America Rolling,’’ which offered 0 percent financing. Other automakers followed GM’s lead, and new-vehicle sales boomed. The incentives added an estimated million units to the sales tally in the final three months of 2001. The U.S. economy stabilized, and car sales continued to soar well into 2002. But like accident victims who become addicted to painkillers, GM and the rest of the industry kept using big incentives with cut-rate financing long after the economy had recovered. When the Detroit 3 finally kicked the habit, sales, market share and profits all had suffered. In some ways, GM, Ford and Chrysler still are recovering from the aftereffects of the prolonged heavy use of incentives that began the last time the economy needed a jolt. As a result, the industry is more likely to ride out the current economic downturn without resorting to another big round of incentives. Everybody knows that the Chinese are coming and that they’ll be looking for dealers and possibly distributors. The challenge is that no one knows who’s coming. It’s anybody’s guess which automaker will show up on our shores with a real car and a real distribution company. Not long ago, our old friend Malcolm Bricklin had a plan. He wanted interested dealers to invest millions in order to sell cars built by Chery Automobile, which was supposed to make everyone happy and rich. But the Chinese weren’t very cooperative, and Bricklin’s project seems to be in limbo. Now the story is about Chamco Auto, which has signed 37 dealers — for franchise fees of up to $300,000 — to sell Chinese vehicles, some of which were going to be assembled in Mexico. Right now, everybody seems to be suing DAILY AUTO NEWS >> You can get the news you need every day. Go to www.autonews.com/signup and sign up for our daily e-mail newsletter. Chinese cars? Dealer beware everybody else, and there is even some question about who is running the company. So you shouldn’t hold your breath waiting to see a vehicle from Chamco. And don’t think that Chamco will be the last offer to get rich quick by getting in on the ground floor. It takes years and hundreds of millions of dollars to get a car or truck into production for the United States. And, yes, it takes a powerful dealer network to make it successful. But if someone asks you for cash upfront, run the other way. That’s not the way it works. Yet it will keep happening because plenty of U.S. car dealers still think that the way to get in on the ground floor is to pay tens of thousands or even millions of If someone asks you for cash upfront, run the other way. That’s not the way it works. dollars for a franchise. The first Chinese car we see in the United States probably will be a Chrysler or Dodge. Chrysler is working hard to get Chery to produce a vehicle, but it’s still going to cost a ton of money and take lots of time. It may seem ridiculous to caution sophisticated automobile retailers to be wary, but that’s the name of the game. If it sounds too good to be true, chances are that it is. Really serious states could ban all forms of recreational use of motor vehicles, including all-terrain vehicles, motorcycles, pleasure boats, snowmobiles and aircraft — especially in their racing forms. THOMAS NOGLE Troy, Mich. The writer is a retired automotive engineer. Where will we get power for the Volt? To the Editor: With most of the country short of electrical power, especially highpopulation states such as California, and power-plant construction times in decades, how will we be able to charge a fleet of Chevy Volts? It parallels the disaster that would have occurred if California had gotten its wish for all-electric vehicles a few years ago. ROBERT H. BULLIS President Automotive Associates International LLC Avon, Conn. as a minimum, the following three conditions, all to be in force for at least three years before they implement the higher mpg rules. By adopting these conditions, the states would demonstrate their commitment to reducing carbon dioxide. These three steps would produce immediate effects and far greater effects in the next 15-20 years than will be obtained by higher economy of 2012-plus automobiles. 1. The states must enact and enforce 55mph speed limits. They could allow an exception for buses. 2. The states must increase their gasoline/diesel fuel tax by at least one cent per gallon every year for 10 years. 3. The states must improve traffic flow. They must eliminate thousands of stop signs and traffic lights and replace thousands more with yield signs and flashing lights. States unwilling to do those things are not very serious about CO2 emissions. THE WEEKLY NEWSPAPER OF THE INDUSTRY Established in 1925, published every Monday by Crain Communications Inc. Want higher CAFE? First, do this To the Editor: I am responding to “Calif. regulators shoot for 40-plus mpg by 2020” (Feb. 25). EPA Administrator Stephen Johnson should grant states permission to adopt higher-than-federal fuel economy standards only if those states first adopt, Keith E. Crain, Publisher and Editor-in-Chief Peter Brown, Associate Publisher and Editorial Director David Sedgwick, Editor Edward Lapham, Executive Editor HOW TO REACH US Web site: www.autonews.com Editorial staff autonews@crain.com Phone: 313-446-0361 Fax: 313-446-0383 Circulation Advertising subs@crain.com lschlagheck@crain.com Phone: 888-446-1422 Phone: 313-446-6790 Fax: 313-446-6777 Fax: 313-446-8030 Editorial data/research To locate information that has been published in Automotive News, call 313-446-1662. Customer service To start or renew a subscription or to report an address change or a delivery problem, e-mail subs@crain.com or call 888-446-1422 (in the U.S. or Canada) or 313-446-1662 (in all other locations). AUTOMOTIVE NEWS (ISSN 0005-1551) is published weekly at 1155 Gratiot Ave., Detroit, MI 48207-2997. Periodicals postage is paid at Detroit, MI and at additional mailing offices. Postmaster: Send address changes to AUTOMOTIVE NEWS, Circulation Department, 1155 Gratiot Ave., Detroit, MI 48207-2912. Canadian Post International Publications Mail Product (Canadian Distribution) Sales Agreement #40012850, GST#136760444. Canadian return address: 2-7496 Bath Road, Mississauga, ON L4T 1L2 Printed in the U.S.A. Solar power is the only answer To the Editor: The problem with electric cars is the energy source. By far, the greatest polluters of our planet are coal-fired electric plants, which supply 85 percent of our electricity. Furthermore, there is not enough electrical generation capability in this country to fuel a society of electric cars. The only way to solve the energy problem is to source all our energy from sun sources (which include things we grow and make fuel from, like biodiesel). We’re maybe 20 to 30 years away from acceptable development of those sources. In the meantime, we must develop more efficient versions of our cars to see LETTERS, Page 14 We invite letters from our readers. Please limit your letter to 250 words and tell us whether we may print it. We reserve the right to edit it. Include your name and title, the name of your company, your city and your state. Also include your telephone number or your e-mail address. E-mail letters to: autonews@crain.com Or send them to: Letters Automotive News 1155 Gratiot Ave. Detroit, MI 48207-2997 http://www.autonews.com/signup http://www.autonews.com

Table of Contents Feed for the Digital Edition of Automotive News - March 24, 2008

Ford lists 6 to succeed Mulally GM pushes luxury superstores Industry straps in for rough ride Bob Irvin is a worthy addition to Hall of Fame Debate at Scion: How to grow Ford moves executives in Asia to new jobs CEO of lanelogic: We're still here Kia's N.Y. duo Chrysler's exec trio: Reports of friction mostly fiction Where others see gloom, Honda chief sees boom in U.S. Fukui: Nickel battery is best bet for hybrid Beijing conference explores key issues in China market Planworks keeps its role as buyer for GM ads Lincoln: MKS will make up for brand's slow start in '08 Deal's no big deal: Styling top reason to buy GM Penske's Smart start: He'd like 15,000 more Dodge's pitch for Challenger: A halo that you can afford Chrysler plans 'We listen' ads You go, Bob With zest, activist Ditlow remains on lemon patrol Autos did the job after 9/11; don't bet on that now Chinese cars? Dealer beware Solar power is the only answer Where will we get power for the Volt? Want higher CAFE? First, do this In N. California, hybrids are hot Detroit 3 can learn from the Marlboro Man The Prius is a phenomenon Wait 3 years, then judge Ford How many Jeeps will India buy? Lithia looks into improper sales reports at dealerships AutoNation's lead shrinks as largest U.S. dealer group Honda ad agency creates unit to build Acura brand Study: Consistent theme in auto ads builds viewer recall Big-truck sales continue slide in Feb. -- off 27.1% MazdaSpeed revs up racing accessory sales Calif. company eyes electric charging stations for Volt, Vue Indictment: Bribe scheme cost GM $83.3 million The greening of Toyota dealerships 6 more finalists in race for PACE recognition Tenneco expands Japanese work, seeks more Bosch buys diagnostic equipment firm in China JV will design vehicle platforms Citation moves headquarters NxtGen tests emissions system VW stake may help Porsche on fuel economy rules Chrysler's Project Genesis wins over Ore. dealer Germany, new EU members send up European sales Saturn will choose store system soon VW thinks modular for flexibility at auto plants Automakers eager as axles turn high-tech Talking drivetrains with American Axle Dollar halts U.S. retail sales of Audi Q7 hybrid Hyundai: Genesis Coupe offers more go for dough Maxima's target: Luxury Euro makes Pontiac adds 3 sporty variants Outsider Elmer Johnson shook up GM Importer Yanase was Hall of Fame member Obituaries Redesigned TSX has many Acura firsts Dealers Certified sales up 7.5% in Feb.; Audi leads the way eBay's new Web site has new look, more features Big pickups and SUVs lead plunge in used-vehicle prices Ex-Reynolds CEO O'Neill joins J.D. Power Auto Hall of Fame will induct 8 Liberatore looks beyond Daimler Molina gets the top job at GMAC F&I pioneer Pat Ryan to retire from Aon Study: Hydrogen research worth the cost Gulf States trial halted As yuan rises, so do prices of Chinese parts Personnel exec Laymon: Ford still seeking outside talent GE gives supplier credit Dana CEO wants Asian growth Tesla launches production Todt steps down as Ferrari CEO Union pursues Toyota effort Chrysler offers spiffs for military Land Rover ads focus on heritage Mark Rechtin Fresh heir: To turn green, must BMW create brand? GM ponders mini-muscle Camaro New Ford ads coming in April With a spiffier image, Lincoln would rock abroad Rival says Nardelli's OK Ford hails its cab, but mpg is an issue

Automotive News - March 24, 2008

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