Automotive News - November 17, 2008 - (Page 4) 4 • NOVEMBER 17, 2008 Ford cuts subsidies for dealer closings Amy Wilson awilson@crain.com DETROIT — After Ford Motor Co. finishes this year’s round of subsidized dealership closings, it will sharply curtail funding for such deals, said sources with knowledge of the plan. This fall, Ford told dealers involved in consolidation or closure talks that they had until the end of October to decide whether to go forward with arrangements under discussion, company spokeswoman Marisa Bradley said. “We had a significant amount of deals pending,” Bradley said. “If we were to close these out by the end of the year, we needed to give them a deadline.” ‘I’m looking for a deal,’ there would be nothing. MARK JOHNSON Dealership consultant “ I think if you approached them today and said, ” Ford was involved in fewer than 100 such closure discussions during September and October, Bradley said. She would not say how many dealerships accepted Ford offers. Ford executives want to speed up dealership closures because market conditions have deteriorated dramatically since spring. Ford’s U.S. sales are down 19.6 percent through October. The company has eliminated more than 500 stores since its dealership consolidation program began in the summer of 2006. As of late August it had about 3,900 domestic-brand dealerships in the United States, down from 4,056 at the beginning of 2008. Dealers and dealership brokers have reported payments ranging up to $700,000 or more to encourage closures. In some cases, Ford has spent the money to encourage outright closures. In other cases, Ford and neighboring dealers each kick in buyout money to a closing dealership to encourage the consolidation of stores in a specific market. Several dealers and a dealership consultant said they expect the incentive money to dry up in 2009. Ford continues to lose money, and cash reserves are dwindling. As industry sales decline and dealership finances worsen, Ford no longer needs to provide incentives for the closings, they said. “I think if you approached them today and said, ‘I’m looking for a deal,’ there would be nothing,” said Mark Johnson, a dealership consultant in Seattle who has assisted several Ford Motor dealership clients on franchise resignations. “With so much blood in the water, they know there are going to be a bunch of resignations regardless.” Ford had 500 to 700 offers pending this fall, Johnson said. While Ford will reduce significantly the amount of money to subsidize closings and consolidations, it won’t eliminate the help in 2009, a company insider told Automotive News. But the available money will be used more carefully to encourage closings that are considered crucial in certain metropolitan markets. c Marketers tap social Web sites: Seeking face time through Facebook Mary Connelly mconnelly@crain.com Working the Web Online social networks — Web sites that allow millions of Internet users to meet and share content they create — are becoming prime marketing turf for automakers. Car companies not only are advertising on such popular networking sites as Facebook, MySpace and YouTube; they also are posting videos, games and other content tailored to the sites’ subscribers. The sites allow companies to reach owners and enthusiasts and promote their vehicles in novel ways, marketers say. Automakers won’t disclose what they are spending to market on social networks. But Deborah Meyer, chief marketing officer of Chrysler LLC, says the sites guide large numbers of Internet users to the company’s Web pages. “The knowledge and awareness level is extremely high,” Meyer told Automotive News. “We can see that from the Web site visits.” Jeep is displaying videos on several networking sites that feature “The Urban Ranger.” The fictitious character gets testimonials from real Jeep owners. Chuck Sullivan, Chrysler LLC’s director of interactive, says social networks “help build enthusiasm.” He notes that Jeep creates only a small fraction of the content on the brand’s Facebook page, which he says has attracted nearly 58,000 fans. BRENDA PRIDDY & CO ■ The spring Equinox Examples of automakers’ marketing on social networking Web sites Jeep/Facebook (above): “The Urban Ranger” talks to Jeep owners. Chevrolet/MySpace: A treeplanting effort promotes alternative-fuel vehicles. Scion/Kongregate: A video game contest builds brand awareness. attract older and more mainstream users, he says, “We are starting to build that out.” Mark LaNeve, General Motors’ vice president of North American marketing, says social networks extend word-of-mouth advertising to cyberspace. “The most powerful thing in our business is the advocacy of one customer to the next,” LaNeve says. “These sites get that done digitally.” This year, Chevrolet and MySpace developed a promotion that focused on conservation and alternative-fuel vehicles. A “tree widget” allowed MySpace users to plant virtual seeds on the site that grew into trees. As part of the promotion, Chevrolet and MySpace also agreed to plant as many as 225,000 real trees. The program generated more than 8 million downloads and “millions of positive comments,” GM spokeswoman Kelly Cusinato says. A ribbon of black tape that splits the grilles is all that hides the identity of the next-generation 2010 Chevrolet Equinox. General Motors’ development team targeted several areas for refinement, including reducing noise and vibration, improving ride and handling, and creating a premium-looking interior. The redesigned Equinox goes on sale in late spring. Higher CAFE standards loom as Detroit 3 fight for survival Harry Stoffer hstoffer@crain.com Keeping score Despite economic troubles, automakers face increasing demands from the corporate average fuel economy, or CAFE, program. Today’s standards for each manufacturer: 27.5 mpg, cars; 23.1 mpg, light trucks Expected industrywide car and truck standard in new rules: About 31.6 mpg by 2015 What the law says: At least 35 mpg by 2020 Environmentalists’ request for aid recipients: 40 mpg by 2015 Obama campaign position: 4% gains every year that, in exchange for the emergency federal assistance the companies are seeking, automakers should have to boost fuel efficiency even more. really think about that right now. A framework for networking “We provide a framework that enables social networking,” Sullivan says. “Occasionally we will do fun games related to Jeep, or videos. But the real dynamics occur when you look at the conversations” among users. Visitors to the Flickr site, which encourages users to share photographs, have posted more than 243,000 Jeeprelated photos, Sullivan says. The Yahoo Web site hosts hundreds of online discussion groups about the Wrangler, he adds. Social networking efforts by Dodge and Chrysler brands are in their “infancy,” Sullivan says. But as the sites Getting in the game Toyota Motor Sales’ youth-oriented Scion brand has appeared on social marketing sites for five years, says Adrian Si, Scion’s interactive see SOCIAL, Page 36 WASHINGTON — Talk about timing. Within days, the Bush administration will adopt final rules raising fuel economy standards for cars and light trucks by about 4 percent a year through 2015, the biggest increases since the early years of energy regulation, nearly three decades ago. The rules are to be effective with the 2011 model year, beginning Oct. 1, 2010. Both industry officials and environmental activists believe that the Bush administration wants to finalize the rules at least 60 days before President-elect Barack Obama’s Jan. 20 inauguration. That will make it more difficult for the new administration to make changes. Automakers have known the rules were coming. They even say they support higher standards. But in the economic crisis surrounding the industry, the demands will no doubt feel like a low blow to some. Regulators calculated early this year that the Detroit 3 will have to invest more than $30 billion to change vehicles so that they are in compliance for the 2011-15 model years. Longtime advocates for higher standards are not sympathetic. They argue The road ahead A preliminary version of the pending fuel economy rules called for an industrywide average of 31.6 mpg by 2015. Because the government plans to vary the requirements for vehicles of different sizes, automakers that produce more large vehicles would have lower targets to reach, and companies with more small vehicles would have higher targets. The rules are the first big step in implementing a new fuel economy law enacted last December. It says cars and trucks together must average at least 35 mpg by 2020, about 40 percent higher than when the law was enacted. Today’s federal standard for cars is 27.5 mpg. For light trucks, the standard is 23.1 mpg.c Quid pro quo? One such advocate, Dan Becker, said he has been lobbying congressional offices to require any aid recipient’s vehicles to average 40 mpg by 2015 — nearly 60 percent higher than today. “That’s my benchmark,” said Becker, formerly of the Sierra Club and now director of the advocacy group Safe Climate Campaign. General Motors spokesman Greg Martin scoffed at the notion of negotiating still tougher standards amid the Detroit 3’s attempts to get loans just to keep operating. As for the demands of the pending rules, Martin said, in effect, GM can’t
Table of Contents Feed for the Digital Edition of Automotive News - November 17, 2008 Automotive News - November 17, 2008 Automotive News - November 17, 2008 - (Page Intro) Automotive News - November 17, 2008 - (Page BB1) Automotive News - November 17, 2008 - (Page BB2) Automotive News - November 17, 2008 - (Page 1) Automotive News - November 17, 2008 - (Page 2) Automotive News - November 17, 2008 - (Page 3) Automotive News - November 17, 2008 - (Page 4) Automotive News - November 17, 2008 - (Page 5) Automotive News - November 17, 2008 - (Page 6) Automotive News - November 17, 2008 - (Page 7) Automotive News - November 17, 2008 - (Page 8) Automotive News - November 17, 2008 - (Page 9) Automotive News - November 17, 2008 - (Page 10) Automotive News - November 17, 2008 - (Page 11) Automotive News - November 17, 2008 - (Page 12) Automotive News - November 17, 2008 - (Page 13) Automotive News - November 17, 2008 - (Page 14) Automotive News - November 17, 2008 - (Page 14a) Automotive News - November 17, 2008 - (Page 14b) Automotive News - November 17, 2008 - (Page 15) Automotive News - November 17, 2008 - (Page 16) Automotive News - November 17, 2008 - (Page 17) Automotive News - November 17, 2008 - (Page 18) Automotive News - November 17, 2008 - (Page 19) Automotive News - November 17, 2008 - (Page 20) Automotive News - November 17, 2008 - (Page 21) Automotive News - November 17, 2008 - (Page 22) Automotive News - November 17, 2008 - (Page 23) Automotive News - November 17, 2008 - (Page 24) Automotive News - November 17, 2008 - (Page 25) Automotive News - November 17, 2008 - (Page 26) Automotive News - November 17, 2008 - (Page 26a) Automotive News - November 17, 2008 - (Page 26b) Automotive News - November 17, 2008 - (Page 27) Automotive News - November 17, 2008 - (Page 28) Automotive News - November 17, 2008 - (Page 29) Automotive News - November 17, 2008 - (Page 30) Automotive News - November 17, 2008 - (Page 31) Automotive News - November 17, 2008 - (Page 32) Automotive News - November 17, 2008 - (Page 33) Automotive News - November 17, 2008 - (Page 34) Automotive News - November 17, 2008 - (Page 35) Automotive News - November 17, 2008 - (Page 36) Automotive News - November 17, 2008 - (Page 37) Automotive News - November 17, 2008 - (Page 38) Automotive News - November 17, 2008 - (Page 39) Automotive News - November 17, 2008 - (Page 40)
For optimal viewing of this digital publication, please enable JavaScript and then refresh the page. If you would like to try to load the digital publication without using Flash Player detection, please click here.