Automotive News - November 17, 2008 - (Page 8) TIMES ARE TOUGH. RELYING ON YOUR AD AGENCY SHOULDN’T BE. In a time when the auto industry is in crisis, you need an advertising agency that understands and has real experience in driving next day sales, even when your ad budgets are at their lowest point ever. That’s what Zimmerman is all about. We have over 25 years of skill, knowledge and experience when you need it most. We measure our success by the numbers on your balance sheet, not ours. This guiding principal of true partnership is what motivates us to bring you the best advertising and marketing strategy. It really is about being there for you 24/7, seriously. 8 • NOVEMBER 17, 2008 Detroit crash could halt transplant output Lindsay Chappell lchappell@crain.com NASHVILLE — Could the financial collapse of a Detroit automaker halt production at Asian- or Europeanowned auto plants in the United States? That hypothetical scenario suddenly looks painfully plausible. The reason? Import-brand automakers rely on many of the same North American suppliers as General Motors, Ford Motor Co. and Chrysler LLC. If GM halted operations and was unable to pay a big North American supplier, the damage to the supplier’s cash flow and creditworthiness could force the company to shut down. That would cut off the supplier’s parts to Japanese and German assembly plants. All over North America, financially vulnerable GM suppliers provide critical parts to the transplants. “The number of parts for which there are double- or triple-sourced suppliers is very small,” says Carlos Tavares, Nissan Motor Co. executive vice president for corporate and product planning. Cockpits for crossovers For instance, Delphi Corp. is the exclusive supplier of cockpits for Mercedes M-class crossovers built in Vance, Ala. Johnson Controls Inc. sends seats and interior components to Nissan North America’s plants in Smyrna, Tenn., and Canton, Miss. Magna International Inc. supplies transfer cases to the X5 crossover at BMW’s Spartanburg, S.C., factory. Dana Holding Corp. sells truck frames to Toyota’s plant in Princeton, Ind., and the Japanese automaker’s New United Motor Manufacturing Inc. joint venture with GM in Fremont, Calif. ArvinMeritor Inc. produces door modules for the Hyundai Sonata built in Montgomery, Ala. The latter four of those North American-based supplier giants last week had their credit ratings placed on CreditWatch by Standard & Poor’s. The suppliers may not be able “to withstand the liquidity shock of a sudden bankruptcy filing by one or more” of the Detroit 3, S&P said. “We are deeply concerned,” says Mike Goss, a spokesman for Toyota Motor Engineering & Manufacturing North America Inc., the Erlanger, Ky., headquarters for Toyota production. “We share many of the same suppliers with the Detroit 3. “We are trying to monitor a fastchanging situation. I think we are watching to see who is at risk, but I can’t go any further. We are vulnerable in a few cases.” Tavares of Nissan dismissed the idea that contingency plans could eliminate the risk to his company of a Detroit 3 failure. “No company can do that,” he said. A former Toyota U.S. manufacturing executive who asked not to be identified said a supplier’s business failure typically gives an automaker the right to step in and continue producing its parts. But he added that in the event of a major supply-chain collapse, “not even Toyota would be able to retool suppliers and financially support such a downward spiral.” Months of turmoil Bill Diehl, CEO of BBK, an international consulting firm that works for suppliers, warned that the failure of any major supplier could result in months of interrupted production. “The notion that an automaker can simply turn over the production tooling to another supplier and keep right on moving is sadly mistaken,” he says. “In some cases, there are proprietary patents. There are regulatory issues, logistics issues, not to mention dealing with the courts.” c Dealer: Chrysler unit yanked my credit by surprise Kathy Jackson kjackson@crain.com These are some of the marketing solutions we offer to our partners: Advertising Minnesota megadealer Dennis Hecker is scrambling to cope after Chrysler Financial pulled the plug on his credit on Nov. 7. Asked whether a Chapter 11 filing is possible, Hecker’s lawyer, Timothy Thornton, said, “Any and all options are under consideration.” The credit line is critical because Chrysler Financial provided floorplanning for most of Hecker’s dealerships and credit lines for his national leasing and rental-car business. Chrysler has “turned out the lights,” says Thornton. Last week Hecker sued Chrysler Financial in U.S. District Court in Minnesota, saying the credit line was cut off without warning. Amber Gowen, a Chrysler Financial spokeswoman, declined to comment on the suit. She said the company hasn’t filed a response. Thornton said no court dates have been set. Sideways with Chrysler Hecker, 56, has a high profile in Minnesota. He has a vast business empire, donates generously to chari- ty and has been sued by business associates and employees. His Web site lists investments in dealerships; auto rental, leasing and fleet operations; real estate; the mortgage and insurance business; and restaurants. In 2003 Hecker made an unsuccessful bid for Alamo Rent-A-Car, and in 2006 he bought Advantage Rent A Car, of San Antonio. In May he paid $13.8 million for more than 1 million shares, or just over 5 percent, of Dollar Thrifty Automotive Group Inc. Over the past two decades, Chrysler Financial has provided floorplanning for almost all of Hecker’s dealerships, including non-Chrysler brands such as Ford, Hyundai and Volkswagen. Hecker has 18 dealerships in Minnesota and three in California, according to the Star Tribune in Minneapolis. The suit says the relationship began to sour after the acquisition of Chrysler by Cerberus Capital Management LP in August 2007. In March, the suit contends, Chrysler Financial told Hecker that it no see HECKER, Page 35 NELS NORQUIST High-profile Minnesota dealer Dennis Hecker, shown in a 2005 photo, sued Chrysler Financial, saying his credit was cut without any warning. call tracking system GM slashes ’09 marketing spend by ‘double-digit’ percentage Jamie LaReau jlareau@crain.com advertising 1-888-878-ZADV email us: or visit: zauto@zadv.com www.zadv.com DETROIT — In an effort to preserve liquidity, General Motors has cut its 2009 marketing budget by a “doubledigit” percentage, its advertising chief says. GM executives also are asking all advertising agencies to continue to cut costs and consolidate “back-office operations,” Mark LaNeve, GM North America vice president of vehicle sales, service and marketing, said in an interview with Automotive News. GM’s Mark LaNeve: “Our marketing spend will be down in every category.” According to TNS Media Intelligence, GM spent about $2.76 billion in its 2005 advertising. That dropped to $1.83 billion in spending in 2006 and $1.81 billion last year. “We think we have adequate mon- ey in our marketing budget next year to run our retail go-to-market plays and do our vehicle launches,” LaNeve said. “Our marketing spend will be down in every category, though — print, digital, TV. “But we think everyone will spend less, so it’s going to be a very weak media market. That should allow our marketing dollar to go further.” LaNeve said GM also will do less “sustained advertising.” That means fewer brand campaigns such as Chevrolet’s “Gas friendly to gas free.” “We won’t run as much of that, but we’ll have normal advertising and promotions,” LaNeve said. GM is cutting across all its operations after issuing a warning with its third-quarter earnings report that the company is strapped for liquidity. GM went through $6.9 billion in cash during the third quarter and ended the period with $16.2 billion in cash. The company has said it needs $11 billion to $14 billion in cash to operate, so without federal assistance it could run out of cash by year end or shortly thereafter. c http://www.zadv.com http://www.zadv.com
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