Automotive News - May 5, 2008 - (Page 12)

opinion Ford Motor must stay focused on recovery Even though the turnaround at Ford Motor Co. has a long way to go, it’s encouraging that investor Kirk Kerkorian and his Tracinda Corp. see value in the automaker. But as the financial drama unfolds, it is crucial that Ford Motor stay focused on executing its game plan. A distraction could hamper the fledgling turnaround. So far, Ford Motor’s financial recovery is mostly attributable to cost-cutting. That’s a necessary first step in the process, but it is not sufficient to sustain the automaker for the long haul. The financial results, including a net profit of $100 million in the first quarter, don’t reflect victory in the domestic marketplace. Ford Motor has been restructuring its North American operations since January 2006, so it is time that cost savings paid off. There wouldn’t seem to be much more that an activist investor reasonably could want to cut just to force more improvement on the bottom line. Cost-cutting can put a company into a position to prosper — when it has some hit products in a decent market. The modest sales success of the Ford Edge, Ford Focus and Lincoln MKX suggest that Ford Motor may be moving in the right direction. But in the current depressed North American auto market, the company’s sales volume and market share remain well below last year’s anemic numbers. As Kerkorian must know, the key to Ford’s recovery will be the product development output that comes to market in the next three years. Those vehicles will determine whether Ford Motor can replace its historic huge profits on F-series, Explorer and Expedition sales with proceeds from attractive new products. To distract the company now and disrupt its product flow could be catastrophic. By Memorial Day, we will probably be paying about $4 for a gallon of regular gasoline. Don’t even think about how much we’ll be paying for premium. Sales of pickups and SUVs are already suffering. How much of that is because of the slowdown of the economy and how much is because of fuel costs is anyone’s guess, but I’m putting most of my money on fuel. Americans are stunned when they go to the pump to fill up. We’ve seen a rapid rise in the cost of crude oil and a corresponding price rise for gasoline and diesel fuel. It hurts consumers, but they have options. For example, they could drive less. But airlines and trucking companies don’t have a lot of choices. The high cost of crude is going to hit us in a thousand big and small ways. It’s going to hit vehicle sales. The 12 • MAY 5, 2008 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. Is it real, or is it just temporary? question is whether buyers will downsize, decide that they don’t care or sit on the sidelines until they can figure out what is going on with the economy and fuel prices. I don’t know anyone who’s predicting that gasoline prices are going to go down in a little while. Over the years, the automobile industry has seen a lot of economic ups and downs, and many people have felt that if they stick around long enough, the cycle will reverse and go back to the way it was before. That’s not going to happen this time. You can get into a lively discussion about whether gasoline will stop at $4 a gallon or whether it will go to $6. But as the Third World stops being the Third World and becomes part of the Until we can figure out how to increase the production of everything from rice to steel to crude oil, prices will continue to rise. industrialized world, we will be competing for energy and commodities with more nations, and it’s going to cost us a lot more. Competition does that to products. Until we can figure out how to increase the production of everything from rice to steel to crude oil, prices will continue to rise. So expect to spend more money on fuel, and plan accordingly — if you can figure it out. vehicles actually cut margins from 25 percent to 6 percent, and dealers have fought to get decent gross ever since. Please get some air! Let the manufacturers make the vehicles, and let the dealers sell them. Federal oversight? No wonder Detroit is the blight of the industrial world. - RED McCOMBS Red McCombs Ford San Antonio No gas tax holiday ‘Have you lost your mind?’ To the Editor: Have you lost your mind? More federal oversight for the auto industry? Get real! DELRAY LENTZ General Manager Henson Ford Madisonville, Texas Talk about a mixed message: Newly proposed rules by the Bush administration call for an aggressive effort to increase the fuel economy of cars and light trucks. But in the political silly season, presidential candidates John McCain and Hillary Clinton have proposed a gasoline tax holiday between Memorial Day and Labor Day. Such pandering may not go far since state and local highway projects depend on fuel tax revenues. But it raises the question: Are Washington politicians serious about cutting dependence on imported oil? If so, encouraging more consumption by taking the sting out of rising gasoline prices is a bad idea. Dealers are victims of Axle strike THE WEEKLY NEWSPAPER OF THE INDUSTRY Established in 1925, published every Monday by Crain Communications Inc. Geoff Polites: A salute good, loyal GM customer. The order went to Ford. That business is gone forever. That is the tip of the iceberg. All the big lease companies and their customers have nearly 100,000 orders yet to be built. I normally stock about 350 white work trucks. I have 70 on my lot, and all I have heard from GM reps is “We’re not on strike.” Let’s get this industry back to work. LEWIS OLIPHANT Fleet Salesman Lone Star Chevrolet Houston To the Editor: The motor industry in Australia owes a big debt to the late Geoff Polites (“Geoff Polites: A passion for cars and for life,” April 28). He turned Ford in Australia around, and he was the only person who could have done it. Ford needed him at that time, and so did the other manufacturers. There would have been a catastrophe in the automotive and aligned industries if Ford had not turned things around. Geoff achieved that. Geoff was my dealer principal at City Ford in Sydney, and the guidance, mentoring and personal help that he gave me helped me to become a much better person and a better manager. I will miss him. KEN LANE Beverly Hills, Calif. The writer, a dealer principal in Australia, recently moved to the United States. 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 rgreer@crain.com Phone: 888-446-1422 Phone: 313-446-6050 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. To the Editor: Just a note to express my total frustration with General Motors and the whole American Axle mess. The managers at the top of GM and American Axle have lost touch with their customers — who are the dealers, not the public. As a fleet salesperson who has sold more than 1,000 Chevrolet trucks in each of the past two years, I am amazed by how GM executives do not have a clue. I read the other day that a GM fleet executive acknowledged that the American Axle strike has cost GM 5,0007,000 sales, but he said GM will get those sales back after the strike. No way. Once a sale is gone, it is gone. Everyone at GM thinks it sells cars to the American public. Wrong. It sells cars to dealers. Dealers and their salespeople sell cars to the public. Until the folks at GM figure that out, they will never understand this market. I just lost an order of 200 chassis from a Federal oversight? Good heavens, no To the Editor: Please say it’s not so. Did you really say service contracts need federal oversight (“Service contracts: Federal oversight is needed,” Opinion, April 21)? Dealers’ insisting that the federal government put price stickers on see LETTERS, Page 14 http://www.autonews.com/signup http://www.autonews.com

Table of Contents Feed for the Digital Edition of Automotive News - May 5, 2008

Automotive News - May 5, 2008 Dodge dealers battle to bust Ram logjam Used-car price slump slams luxury makes INDUSTRY IN DISTRESS Tesla opens first dealership in L.A. Los Angeles Top auto execs to talk marketing at seminar Nader and the Corvair: GM edition tells whole story Dealers take Tundra to the people UAW official expects American Axle buyouts Ford plans more UAW buyouts at 2 plants Honda to some dealers: Upgrade or else Hyundai: Powertrains will take us halfway to mpg target Diesel dynamo Daimler cuts Chrysler value, again Ford domestic dealer count dips below 4,000 Seems like old times: More cash on the hood Toyota sister car poses a challenge for Subaru Suzuki to offer standard navigation in $16,000 car Mpg plan fuels states-rights battle Kerkorian interest buoys Ford stock Henderson: GM will keep tight rein on inventory Is it real, or is it just temporary? Ford Motor must stay focused on recovery 'Have you lost your mind?' Dealers are victims of Axle strike Federal oversight? Good heavens, no Geoff Polites: A salute Save a board seat for the UAW A car for everyone or cut, cut, cut, cut? Think of Buick as part of B-P-G Costs up in China, but bargains still abound Mexico sales fall 17% in March Obituary Hyundai reworks Sonata sooner rather than later Nissan's Dominique gets to the big dance Dana seeks new business with Japanese companies ZF will supply Nissan Certified Tool closes a plant German engineering company plans Ala. factory Dealers A Lexus colossus Used-vehicle leasing boosts showroom traffic Certified buyers opt for extended service contracts Repossessed vehicles offer dealers a profit opening Prepaid plans spark service visits beyond oil changes Key to managing floorplan costs: Be realistic Long-term loans: Convenience or bad deal? Dealers hunt upside-down buyers with leases, incentives and long-term loans Where have all the investors gone? Dealer rebounds from contract mess Dealers must choose: Reynolds, GM — or start over AutoTrader.com makes big pitch to bump up new-vehicle sales CAW, Ford reach extensive early labor deal Infiniti asks: Do you smell something? Sure, Nissan GT-R is impractical — but what a rush Faurecia: We'll break even in N.A. Suppliers join carmakers' charge into Russia Chrysler small cars, Jeep crossovers are hot A dreary April in Detroit Penske earnings rise in 1st quarter Lithia posts $1.9 million loss GM makes 2nd ethanol deal Group 1's earnings slip Magna profits down; sales rise AIADA picks dealer of the year Vox(wagen) populi — plus a sales pitch Wagoner's pension shift: More earlier, less overall COMMENT: Bargaining barbs will sting for a long time Bugging the boss: Who's listening to Porsche CEO? New models from the post office Critics have kind words for Pontiac's G8 Ford can't picture kids at design studio

Automotive News - May 5, 2008

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