Automotive News - May 5, 2008 - 1
autonews.com ® MAY 5, 2008 $155/YEAR; $5/COPY Entire contents © 2008 Crain Communications Inc. All rights reserved. INDUSTRY IN DISTRESS Companies struggle in a changing industry — one with a huge revenue drop Richard Truett firstname.lastname@example.org After an awful April, nearly every industry forecaster now agrees: U.S. sales will plummet by about 1 million units in 2008 — the first time sales have tumbled that much in one year since 1991. But it’s not just the million units that matters. It’s the mix. High-profit pickups and SUVs account for most of the lost volume. Big trucks have been in a tailspin for months, but with record high fuel CRUEL MONTH April sales, story and tables � 57-59 6 Cash rebates rise � 6 Chrysler’s shrinking value � 8 GM’s big loss � down from 2.5 million three years ago, said Toyota Division boss Bob Carter. Last week, General Motors cut fullsized truck production in North America by 138,000 units for the remainder of the year, including 88,000 full-size pickups. At several dealerships in California, you can get a prices, the rate of decline has hit warp speed (see story, Page 59). The full-sized pickup segment is tracking at about 1.9 million units, $13,000 discount on a Dodge Ram (see story, below). Cash rebates industrywide had been falling for three years, but they rose sharply in April — returning to 2005 levels, according to Power Information Network (see story, Page 6). General Motors, Ford Motor Co. and Toyota have pared forecasts for U.S. light-vehicle sales to the low 15 million range. But it’s a changed industry — not just smaller, but poorer. see DISTRESS, Page 60 Going grass-roots with the Tundra To get face time with pickup drivers in a sluggish market, Toyota dealers are bringing Tundras to the workplace; Home Depot, above; and tailgate parties with some innovative promotions. | PAGE 3 | Hardball at Honda For some time, Honda has been asking dealers to add sales and service capacity to overextended stores. In a letter to some of those dealers, the tone has become: Do it or else. | PAGE 4 | Chrysler small cars are hot � 59 Dodge dealers battle to bust Ram logjam Bradford Wernle email@example.com Click on the Web sites of several auto dealers in central California and you’ll find Dodge Ram pickups offered at $13,000 below sticker. With four months to go before a redesigned 2009 Ram arrives in showrooms, inventories and incentives are sky high on the 2008 model. Dodge has a 109-day supply of 2008s, and dealers say they’re struggling to unload them. The Ram is emblematic of a difficult pickup market. Sales of full-sized pickups fell 22.1 percent in April from the same period a year ago and are down 16.6 percent for the first four months of 2008. For Dodge dealers, that has resulted in deals such as the ones offered in the Sacramento, Calif., area last week. Folsom Lake Dodge ran a newspaper ad that featured a see RAM, Page 60 Kerkorian’s buy buoys Ford stock The recent stock buy by investor Kirk Kerkorian, right, has pushed up the price of Ford shares. And Kerkorian adviser Jerry York says he likes Ford’s turnaround strategy — but would get rid of Volvo and Mercury in a heartbeat. | PAGE 8 | Toughing it out in F&I The credit crunch and sinking sales have made this a tricky time for F&I managers. A special section looks at resilient and creative dealerships that manage to keep profits up when the chips are down. | PAGES 25-42 | Mark Hodos has 120 Dodge Ram pickups on his lot — about twice the number he normally would have. MIKE HAMEL Used-car price slump slams luxury makes Arlena Sawyers firstname.lastname@example.org Used-vehicle prices are slumping in the United States, just as cars and trucks coming off lease are crowding the upscale pre-owned market. That’s bad news for several luxury import brands and their captive finance companies, which rely heavily on leasing. Their used vehicles now are selling, in some cases, for thousands of dollars less than the automakers expected. Last week, BMW AG said it had taken NEWSPAPER a $372 million charge to reflect falling U.S. resale prices. The company reported a first-quarter pretax profit of about $844 million, down 24.8 percent from the year-ago quarter. BMW CEO Norbert Reithofer said the company’s income from sales of end-of-lease vehicles in the United States was substantially less than anticipated. “The resale conditions of cars after the leasing period have worsened,” Reithofer said during an earnings conference call. “The fact see RESIDUALS, Page 60 On the Web The residual effect New: A 2005 BMW 530i, above, was projected to retain a wholesale value of $26,600 after 36 months — the length of a typical lease. 36 months later The 530i actually sold for an average wholesale price of about $23,000. Source: Black Book This week at www.autonews.com: � Monday: The Automotive News Data Center posts in-depth statistics on U.S. vehicle sales in April. � Thursday: Ford holds its annual shareholders meeting. � All week: Live updates on the UAW strikes at American Axle and General Motors.