Automotive News - March 24, 2008 - (Page 6)

6 • MARCH 24, 2008 Lincoln: MKS will make up for brand’s slow start in ’08 Amy Wilson awilson@crain.com DETROIT — Lincoln will make up for its yearto-date sales declines during the second half of 2008, Ford Motor Co.’s top marketer says. The new 2009 Lincoln MKS sedan, which goes on sale this summer, will help Ford’s luxury brand reverse its sales slide for the year, said Jim Farley, Ford group vice president of marketing and communications. Through February, Lincoln had sold 17,558 vehicles, down 13.7 percent from the year ago period. Ford executives have said that Lincoln’s total The 2009 MKS will go on sale this summer. sales for all of 2008 will be higher than the 131,487 sold in 2007. Lincoln sales rose 9.1 percent last year, the first annual increase since 2003. But 2008 sales gains won’t be readily apparent for several months. “When we end the year, Lincoln will be much higher than it was the year before, thanks to (MKS) all in the second half,” Farley said. The decline so far in 2008 is due in large part to a 77.8 percent slide for the Lincoln Town Car, which was the brand’s top seller during the first two months of 2007. Ford is trimming fleet sales, which has hurt Town Car sales. Town Car assembly moved to the St. Thomas, Ontario, plant in January following a seven-month production hiatus after the Wixom, Mich., plant closed. Officials aren’t revealing volume targets for the MKS sedan. But they have said it will be one of Lincoln’s volume nameplates, along with the MKX crossover. Lincoln sold 37,953 MKXs in 2007. Farley said he expects sales of the MKX and the entry-level MKZ sedan to continue to build in 2008. Those planned increases, combined with the introduction of the MKS, are expected to more than make up for the fleet declines and the discontinuation of the Lincoln Mark LT pickup this spring. c Penske’s Smart start: He’d like 15,000 more Diana T. Kurylko and Richard Truett dkurylko@crain.com Deal’s no big deal: Styling top reason to buy GM Jamie LaReau jlareau@crain.com NEW YORK — Demand for the Smart microcar is strong enough that its North American distributor figures he could sell 15,000 more than he’s likely to get from Europe this year. But the Smart factory is running full tilt and can’t produce any more cars because suppliers can’t deliver more parts, said Roger Penske, CEO of Penske Automotive Group, which imports the cars. Smart is a brand of Mercedes-Benz and is sold only by an outside distributor in this country. Penske said last week at the New York auto show that the United States is likely to get only 25,000 Smarts this year — all to be delivered to customers who ordered them on Smart’s Web site. Penske figures he easily could sell 40,000 Smarts in 2008. He said he hopes to hear from Mercedes soon about a production increase for the United States. The ramp-up of Smart sales in the United States, which began in January, has been slow but largely free of problems, said David Schembri, president of Smart USA. Schembri said Smart expects to deliver 3,000 cars by the end of the first quarter through the 67 dealers that are operating. By the end of the year, 74 dealerships will be open. With Smart’s order backlog, customers wanting a car may have to wait until next year in the hottest markets, such as California, said Schembri. But dealers are experiencing cancellation levels as high as 25 percent in some markets where customers have declined delivery of an The Smart ForTwo: So far, so good, say those running the U.S. launch. cific number of cancellations but said it’s low. Dealers can resell those cars to other customers, but dealers have agreed not to mark up the cars and risk losing their franchise if they do so, said Schembri. Penske said the company does not plan to expand beyond 74 dealerships. At that level, the average dealer investment of about $700,000 per store is protected, he said. Most Smart stores in the United States are owned by Mercedes-Benz dealers. c Roger Penske: No plans to expand beyond 74 dealerships. ordered vehicle. Buyers only have to put down a refundable $99 deposit when ordering a car. Schembri would not give the spe- Key facts What: Automotive News China Conference When: April 17-20 Where: China World Hotel, Beijing Cost: $1,195 For information: China: +86 139 18187242; Hong Kong: +852 9318 8135 or mla@netvigator.com; U.S.: +1 313 446-0420 or lirwin@crain.com Registration: www.autonewschina.com/conference Planworks keeps its role as buyer for GM ads Mary Connelly mconnelly@crain.com Beijing conference explores key issues in China market Suppliers are expanding rapidly in China as domestic sales boom and export opportunities grow. But the economic climate is becoming more challenging. Labor and raw-material costs are rising. And the yuan has strengthened to 7.1 to the dollar, compared with 8.3 three years ago, making Chinese parts more expensive outside China. The Automotive News China Conference will explore the world’s second-largest auto market April 17-20 in Beijing. Speaking will be two top suppliers executives: Frank O’Brien, executive vice president of Asia Pacific, Magna International China. Rakesh Sachdev, president of Asia Pacific, ArvinMeritor Inc. Executives from four automakers in China also will speak: Li Shufu, chairman, Zhejiang Geely Holding Group Ltd. Masaya Nagai, president, Honda Automobile (China) Co. Ltd. Wang Fengying, president, Great Wall Motor Co. Nick Reilly, president of GM Asia Pacific, General Motors. On April 19, attendees may tour Great Wall Motor Co.’s factory in suburban Beijing. They also will receive tickets and transportation to the opening press day of the Beijing auto show, Auto China 2008, on April 20. c The account team that handles General Motors’ media buying and planning will keep those duties even though the unit, called GM Planworks, has been integrated into a larger agency. “This group of people was a standalone unit, and now they won’t be,” says GM spokeswoman Ryndee Carney. “But the same people who have been purchasing and planning media for GM are still doing it. They will now have more access to the parent company’s resources.” GM spends about $3 billion a year to advertise in U.S. media. GM Planworks is a unit of Starcom MediaVest Group. This month the parent company said it is reinventing Planworks along “a more integrated model.” GM’s “dedicated service team will be fortified” by closer contact with “experts and resources across SMG,” the agency said in a statement. Ken Taylor, who becomes president of GM Planworks on April 1, offers this example: “If we are tackling a social media issue within GM, in- Betsy Lazar: “This is an evolution of the Planworks operations.” stead of trying to invent from the ground up, we can go to the broader network and say, ‘What is going on in social media?’ ” Adds Betsy Lazar, GM’s executive director of advertising and media operations: “This is an evolution of the Planworks operations. We have been headed on a path to be better connected to the larger pool of resources within the SMG agency group.” The Starcom MediaVest statement said “GM’s dedicated print team will now collaborate more closely with counterparts at Starcom on key issues facing the industry. … The GMfocused branded entertainment team will have greater access to MediaVest’s successful New York-based entertainment marketing group as well.” c Exterior styling has bumped “the deal” as the top reason consumers give for buying a General Motors product. In 2003, 26.5 percent of those who bought a GM vehicle listed the deal as the top reason for their purchase, according to J.D. Power and Associates data. Performance followed, and exterior styling came in third. But in 2007, that changed. Exterior styling led the rankings, with 12.6 percent of buyers listing it as the most influential reason to buy a GM car. Fuel economy and performance followed. The deal landed in fourth place, with 10.1 percent listing it as the top reason to buy a GM vehicle. “We’re talking to 6,500 GM product buyers, and when 26 percent used to say the deal was the top reason for buying the vehicle and now, in 2007, only 10 percent list the deal as the number-one reason, that’s significant movement,” said Jon Osborn, research director for J.D. Power and Associates in Westlake Village, Calif. GM credits newer products and standard equipment such as the OnStar telematics system, XM radio and stability control for part of the shift in consumers’ reasons for buying a GM vehicle, a company spokesman says. He also points to “differentiated design” and higher quality. Finally, GM’s strategy has emphasized base pricing and incentives that are more in line with actual transaction prices. The strategy encourages selling the product rather than promoting the price. Ironically, exterior styling also ranked as the top reason that all buyers, not just GM customers, chose not to buy a vehicle, Osborn said. For the industry, the main reasons that buyers made their purchases last year were gas mileage and reliability, Osborn said. Only 6 percent of all buyers listed the deal as the top reason to buy a car, compared with 13 percent in 2003. The greatest shift away from the deal as a reason to buy occurred among GM buyers, he said. “It’s very good news for GM. You want to create desire,” Osborn said. “When vehicles are perpetually on sale and priced to move, one will always question the product’s integrity.” c http://www.autonewschina.com/conference

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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