Automotive News - May 5, 2008 - (Page 6)

6 • MAY 5, 2008 Ford domestic dealer count dips below 4,000 Amy Wilson awilson@crain.com DETROIT — Ford Motor Co.’s U.S. dealership count has dropped beneath 4,000 stores for the first time in decades. During the first four months of 2008, several dozen of Ford’s domestic brand stores closed to put the automaker below that mark, said Mark Fields, Ford’s president of Ford Motor’s Mark Fields: Consolidation has boosted dealership profitability and sales per store. the Americas. Ford isn’t providing the exact deal- ership count, but the company had 4,056 domestic brand stores at the end of 2007. The current count is closer to 4,000 than 3,900, a Ford official said. This is the lowest total since Ford began building its dealership network in the early part of the 20th century, according to Automotive News records. Ford is nearly two years into a plan to shrink its dealership network because of lower sales and declining market share. The effort is concentrated on consolidating stores in major metro areas. Dealership profitability and sales per store are going up in markets where consolidation has taken place, Fields said last week. Ford took a $108 million charge in the first quarter related to the dealership consolidation program. More costs are expected as the program continues, an official said. Some of that money is going to help buy out dealers. “Where it makes sense, we’ll participate financially,” Fields said. “But everybody has to have some skin in the game, so we’ll look at that on a case-by-case basis.”c Suzuki to offer standard navigation in $16,000 car Kathy Jackson kjackson@crain.com Toyota sister car poses a challenge for Subaru Hans Greimel hgreimel@crain.com LOS ANGELES — Suzuki says it will soon offer the least expensive vehicle on the market with a navigation system that comes as standard equipment. Navigation will be standard on the 2009 SX4 sedan and hatchback, which go on sale in late summer at an estimated base price of less than $16,000. According to Edmunds.com, the least expensive vehicle currently with standard navigation is the Honda Civic EX at $21,095, including $635 for shipping. Suzuki’s system, called Suzuki T.R.I.P. (travel, real-time traffic, in- KGP PHOTOGRAPHY � Cadillac’s CTS wagon Cadillac is planning a CTS wagon, pictured here during testing, as part of a range of CTS models to take on the BMW 3 series and Mercedes-Benz C class. Cadillac unveiled the stylish CTS coupe concept in January; production is expected next year. The lineup will be completed with the introduction of the CTS wagon in 2009. Although camouflaged, the rear-end styling is expected to be highlighted by long, thin taillights that start at the top of the D-pillar and reach to nearly the bottom edge of the tailgate. For the first three months of 2008, sales of the SX4 were 7,586, up 93.0 percent over the previous year. formation and play), uses a 4.3-inch touch screen. It includes traffic, weather forecasts, local events and a gasoline station locator. The system, developed by Garmin Ltd., has Bluetooth hands-free technology that can receive and play text messages audibly. The navigation system will be standard on the sedan and the front-drive version of the hatchback. It’s optional for the all-wheel-drive hatchback. Suzuki introduced the SX4 hatchback for the 2007 model year and the sedan as a 2008. The hatchback was launched with standard awd, another unusual feature for a budget car. For the first three months of 2008, sales of the SX4 were 7,586, up 93.0 percent over the previous year. The 2008 model has a base price of $15,395 including $625 for shipping. c - Daimler cuts Chrysler value, again Bradford Wernle bwernle@crain.com Daimler AG still owns 19.9 percent of Chrysler LLC, but the German carmaker has slashed the book value of its stake by nearly two-thirds to reflect ongoing losses at its former U.S. unit. Last August, when Daimler sold 80.1 percent of Chrysler to Cerberus Capital Management LP, Daimler valued its remaining 19.9 percent at about $2.19 billion. Daimler since has lowered that twice and pegged it at $845 million at the end of the first quarter. Since Daimler owns one-fifth of Chrysler, you could do an exercise in simple math: Multiply that $845 million by five. That would mean the total book value of Chrysler is $4.2 billion — down, by Daimler’s assessment, from about $11 billion at the time of the deal with Cerberus. But nothing is that simple in the world of private equity ownership and international finance. For one thing, the two companies don’t use the same Chrysler CEO Bob Nardelli: “We are very pleased, in spite of some of the economic winds that are hitting us.” accounting standards. Also, Chrysler is the only privately owned major carmaker and as such doesn’t have to share details of its financial performance. Chrysler CEO Bob Nardelli has said only that Chrysler will not be profitable in 2008. But he says the company is on target to hit the goals set by Cerberus. Chrysler issued a statement last week saying it has “enjoyed positive operating earnings” since the Cerberus takeover on Aug. 3, 2007. Nardelli said recently: “We are very pleased, in spite of some of the economic winds that are hitting us.” c BEIJING — A sporty car due in 2011 will challenge Subaru’s carefully crafted image as an independent, somewhat contrarian developer of all-wheel-drive vehicles. The car is being co-developed by Subaru and Toyota in Japan. Toyota will market its own version. Subaru’s marketing will have to “be very smart” to keep its car from being overshadowed by the Toyota sister model, said Masatsugu Nagato, Subaru’s overseas marketing chief, at the Beijing auto show. Subaru’s and Toyota’s versions will have rear drive and be powered by Subaru’s horizontally opposed boxer engine. Volume, price, design and engine size still are being decided, Nagato says. Subaru, whose sales equal just 7 percent of Toyota’s global sales, fears the rear-drive sporty car could erode its niche image as an all-wheel-drive specialist. “We may lose our long-standing territory, or we may lose the great niche brand image,” Nagato says. “The potential risk is there. We can avoid this. On this occasion and opportunity, we can grow more.” The car was announced in April and will debut in late 2011. Subaru is beginning to consider how to differentiate its model from Toyota’s. Nagato says it is unlikely the companies will divide global markets into Subaru-only and Toyota-only areas because of antimonopoly concerns. The smaller partner at least will be able to tout its model for carrying an original Subaru powerplant. The boxer engine will give the car a lower center of gravity and better handling, Nagato says. Says Nagato: “Definitely, we are going to sell that value.”c Seems like old times: More cash on the hood Cash rebates rose in April, near the levels of 2005 — when automakers said they were getting serious about “value pricing” and cutting incentives. Rebates had been declining for three years. But in 2008, customer cash incentives are up from 2007, according to Power Information Network. In April they soared to an average of $2,532 per new-vehicle transaction, up from $2,273 in the first quarter and $2,131 in April 2007. Two segments getting lots of rebate Running the numbers action: large pickups (a $4,465 average cash come-on this April, compared with $2,838 in April 2007) and large SUVs ($3,659 in April, compared with $2,353 a year ago.) A navigation system will be standard on the 2009 Suzuki SX4. Still, industrywide spiffs are well below the peak in 2004. In the second quarter of that year, the average rebate was $2,858. The figure shot up to a record $3,383 in the third quarter of 2004. The Detroit 3 and import brands are playing a part in the resurgence of cash incentives. The Detroiters’ average rebate has gone from $2,443 in April of last year to $2,921 this year. Asian brands have gone from $1,345 last April to $1,657 this year. c Rebates resurge Average customer cash rebate per retail new-vehicle transaction during April 2008 2007 2006 2005 2004 $2,532* $2,131 $2,281 $2,468 $2,730 * April 1-20 Source: Power Information Network

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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