Ford swims in red ink

Ford Motor Co. suffered its worst financial year in its 103-year history in 2006.

Announcing earnings for 2006 this morning, Ford reported it lost $12.7 billion for the year. In the last quarter of the year alone, the company lost $5.76 billion. The losses were worse than even pessimistic analysts predicted.

And company executives said they see no improvement early this year. They predict U.S. market will continue downward through the third quarter of 2007, because of lower sales to rental car fleets. Plus, Ford has cut North American vehicle production to be more in line with its lower sales and market share.

Analysts see no turnaround until 2008. Ford itself expects no turnaround in North American operations until 2009.

With former Boeing executive Alan Mulally at the helm, Ford has said it will accelerate job cuts and plant closings. About 10,000 salaried jobs – a third of the salaried work force – are gone by the end of this quarter. Nine North American factories will close by next year and seven more by 2012.

—Michelle Krebs

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Detroit's Third Q: Not So Easy as 1-2-3 for Big Three

The scores are in. Detroit's Big Three has reported third-quarter earnings. If one were to sum up those results into a movie title, it might be something called The Somewhat Good, the Bad and the Really, Really Ugly.

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Detroit show closes; attendance down

The 2007 North American International Auto Show is now history. The Detroit show closed last night (Jan. 21).

Show organizers reported public attendance was down for the fourth consecutive year. Total public attendance came to 705,226 people. The 2006 show drew 759,310 visitors. In 2003, the show broke records with 838,000 people.

The dealers who sponsor the show blamed an ice storm along with the state's sagging economy for the lower attendance.

—Michelle Krebs

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Detroit: Cheapest gas in U.S.

Image: David Guralnick / The Detroit News

The nation's lowest gas prices can be found in Detroit, which is typically in the middle of the pack. In Detroit, the average price of regular unleaded gasoline was $1.897; it was $1.95 statewide Sunday, according to AAA Michigan, as reported in the Detroit News.

AAA Michigan reports statewide regular gas is $1.90 a gallon, midgrade $2.01, premium $2.09 and diesel $2.46.

Nationwide, retail gas prices for regular unleaded dropped nearly 14 cents over the past two weeks to $2.18 a gallon.  An unseasonably warm winter combined with no supply interruptions has left crude oil prices hovering around $51 a barrel, a drop of more than $25 since August, according to AAA.

Industry experts said the prices should remain low for weeks, barring supply disruptions, but a rise is likely by summer.

Question is how long are consumers' memories? Will consumers believe cheap gas will last and shift their buying habits back toward vehicles with lower fuel economy, like SUVS? And will automakers, especially those in Detroit, believe cheap gas is here to stay and slack off in boosting fuel economy and future powertrain technologies? Let's hope not.

GM's Rick Wagoner insisted in a speech to the Automotive News World Congress here that Washington not to slack off in developing alternative energy sources.

“With the price of oil at its lowest level in 19 months, we run the risk of reverting back to our traditional energy policy," Wagoner said, referring to U.S. dependence on cheap foreign oil. "I hope oil prices stay low, but I also hope that our nation stays committed to energy security through energy diversity."

—Michelle Krebs

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Ford-Toyota Alliance?

The Wall Street Journal is reporting today that following a December meeting between Ford CEO Alan Mulally and Toyota Chairman Fujio Cho, the automakers are separately considering the pros and cons of an alliance.

Such an alliance likely would be a joint venture or partnership on powertrain technology, such as hybrid or small engines. An equity deal isn't likely. Toyota has generally avoided large-scale acquisitions and alliances with rival automakers, the paper noted. Plus, the 40% ownership by the Ford family is a complication. Ford, meanwhile, has too many financial troubles to buy a significant stake in Toyota.

Ford may see potential in Toyota's hybrid engines and financial help to build powertrains for the future.

Toyota - and the Japanese government—fear political pressure in the U.S. as Detroit swoons. Toyota worries about a possible backlash if it gains sales and market share while Detroit automakers' slide and are forced to close factories and eliminate jobs.

Analysts expect Toyota to outsell Ford in the U.S. on an annual basis as early as this year.

—Michelle Krebs

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Chevy’s No. 1 as a record label, says Mellencamp

John Mellencamp performs at the Chevy-sponsored Farm Aid Benefit Concert in Camden, N.J.

Singer John Mellencamp defends his controversial decision to license his recent album’s first single, “Our Country,” for a Chevy truck ad campaign in a profile on him in the February issue of Vanity Fair magazine.

Mellencamp said he was well aware that commercial radio doesn’t play the music of middle-aged rockers anymore, and he wanted his music heard. Further, he told the magazine, when Chevy handed him the creative freedom that he’s often fought for at his labels, he took it. “Pretty much, Chevrolet has been a better record company than Columbia Records ever was to me,” he is quoted as saying.

Mellencamp has been slammed for the move, partly because in the past he was critical of other singers, including Detroit’s own Bob Seger, for doing the same. Chevy used Seger’s “Like a Rock” for years in its truck advertising.

The New York Times accused Mellencamp of having “elastic” political values. “He and his spouse once wrote a jeremiad against the Bush administration that said, in part: ‘It is time to take back our country. Take it back from political agendas, corporate greed and overall manipulation,” the paper noted. “That was in 2003. Now he’s sitting on the fender of a Chevy truck, strumming a guitar and singing, ‘Well, I can stand beside ideals I think are right, and I can stand beside the idea to stand and fight.’ He can also stand beside a nice shiny truck, if the fee is right.”

—Michelle Krebs

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Tesla Motors opens engineering center in Detroit 'burbs

Tesla Motors, the Silicon Valley company reviving the electric car, is opening an engineering center in Detroit’s suburbs.

Tesla’s chief executive officer Martin Eberhard said at a panel discussion on the environment and cars held in conjunction with the Detroit auto show that the company already has hired a dozen engineers to staff the technical center in Rochester Hills, Mich., not far from Chrysler headquarters. He predicts the staff will grow to about 60 by year-end. They will be mostly chassis, body and suspension engineers more than powertrain engineers. “If you want to hire good automotive engineers, you have to come here,” he said.

He said the Michigan center is focused on Tesla’s “White Star” program, the basic engineering for a vehicle, likely a sedan or crossover, that can carry more than two people and would cost about $50,000, almost half the price of Tesla’s $92,000 roadster.

Tesla further is being wooed by the state of Michigan and its governor, Jennifer Granholm, to build a manufacturing facility in the state. Michigan is trying to position itself as the center of expertise in engineering and manufacturing high-tech, alternative fuel vehicles.

—Michelle Krebs

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Who was that under the Toyota Tundra?

Toyota executives were a bit taken back when Ferdinand Piech, Volkswagen's non-executive chairman and Porsche stakeholder, showed up at Toyota's Detroit auto show exhibit with his entourage of about 20 people, apparently engineers, in tow. The 70ish Piech, an engineer, dropped to the floor and slid deep beneath the Toyota Tundra pick up truck with nothing more than his feet dangling out.
 
Why?
 
Toyota execs witnessing the event said Piech closely examined various attachments, door hinges, tailgate mechanisms and who knows what beneath the truck. The Toyota onlookers theorized maybe Piech was looking for innovative and possibly lower cost bits and pieces for the Porsche Cayenne sport utility, and its cousin, the Volkswagen Touareg. Or, they wondered, could a pickup truck be in Volkswagen's future?
 
Now that Piech has tightened his grip on German car making, having pushed out Bernd Pischetsrieder, who until last spring headed Volkswagen AG, and only this week Wolfgang Bernhard, Pischetsrieder’s comrade formerly of DaimlerChrysler and Chrysler Group, anything is possible.
 
The VW soap opera will be one worth tuning into during 2007. Stay tuned.
 
--Michelle Krebs

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Ford's Alan Mulally: The Man To Watch in 2007

Former Boeing executive Alan Mulally has kept a relatively low profile since taking over as president and CEO of Ford Motor Co. last October. But he will be very much in the news during 2007.

In a letter to employees in a company publication, Mulally says he's been spending his time so far reviewing the automaker's existing plans, meeting with employees and conducting weekly business plan reviews with senior leadership. The sessions prohibit the use of Blackberries, require reams of substantiating data and — most importantly — force senior management to be accountable.

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Detroit Auto Show: An Infiniti crossover

Nissan's Infiniti will add a crossover vehicle to its line by year-end.

Codenamed LSCO for luxury sport crossover, the rear-drive vehicle uses the G35's front midship chassis. It will debut at the New York auto show in April and go on sale in December.

—Michelle Krebs

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Detroit Auto Show: Carlos Ghosn predicts a grim year ahead

Nissan-Renault chief executive officer Carlos Ghosn predicts a grim year for automakers this year.

Ghosn told a group of reporters at the Detroit auto show that he predicts sales will drop to 16 million vehicles in 2007, from this year's 16.56 million, a number that was lower than Nissan had forecasted.

Worse, Ghosn said all automakers will be in their third year of rising commodity prices, which must be absorbed by automakers and can't be recovered by increasing the price of vehicles. Further, it isn't merely a U.S. phenomenon; Ghosn expects sales to be lower and pressures to heighten in all of the developed markets of the world, which account for about two-thirds of all vehicle sales.

"That's going to have serious consequences for all automakers," Ghosn said. Such pressure will cause company failures and force more consolidation in the auto industry.

Of course, Ghosn projects Nissan will fare better than others.

—Michelle Krebs

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Detroit Auto Show: Pie-in the sky?

With flashing lights simulating lightening encircling the stage, General Motors unveiled the Chevrolet Volt, a concept that runs on electricity.

GM Chairman Rick Wagoner opened the press conference, reiterating highlights of a speech he delivered six weeks ago at the Los Angeles show. He insisted again it is a business necessity to develop alternative sources of energy and alternative propulsion systems. He renewed GM’s commitment to develop a Saturn Vue plug in hybrid.

GM Vice Chairman Robert Lutz then rolled out as a passenger in the Chevy Volt. The concept runs on electricity from lithium ion batteries beneath its floor. It also has a fuel tank from which gasoline is to fuel a generator to produce electricity onboard the car. The Volt is the first concept to use a new family of electric propulsion systems being developed by GM. The system is designed to accommodate a variety of fuels as well as hydrogen-powered fuel cells.

Lutz made some lame attempts at jokes like “I’m shocked! Truly shocked” in reference to the Volt’s electric power and made reference to “an inconvenience truth,” the movie title for former Vice President Al Gore’s environmental film. (The director of the documentary, “Who Killed the Electric Car?,” which blamed GM for the death of its electric-powered EV1, was a guest in the audience.)

Skeptics in the crowd called the Chevy Volt another pie in the sky idea and even a PR stunt by GM, which has been harshly criticized for lagging in developing hybrids and alternative fuel vehicles.

GM executives insist, however, the lithium ion batteries for the E-flex system, which are not yet ready for prime time, are in the works in as early as two years. GM is pushing for them to be developed by an American manufacturer; at the moment, Japan and Korea area ahead in battery development.

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Detroit Auto Show: GM Unveils 2007 Chevrolet Camaro Concept Convertible

The new 2007 Chevrolet Camaro concept convertible is unveiled at the GM Style event in Detroit, Michigan Saturday, January 6, 2007. The GM Style event brings together celebrities, fashion and General Motors vehicles from around the world on the eve of the North American International Auto Show.

Images: General Motors Photo/Tom Pidgeon

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Detroit Auto Show: GM Unveils 2007 Chevrolet Camaro v.2

The new 2007 Chevrolet Camaro concept convertible is unveiled at the GM Style event in Detroit, Michigan Saturday, January 6, 2007. The GM Style event brings together celebrities, fashion and General Motors vehicles from around the world on the eve of the North American International Auto Show.

Image: General Motors Photo/John F. Martin

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Detroit Auto Show: John Legend Warms Up For GM Style Event

Musician John Legend performs on stage with the new 2007 Chevrolet Camaro convertible concept during a sound check prior to GM Style event in Detroit, Michigan Saturday, January 6, 2007. The Camaro convertible concept will be unveiled during the GM Style event that brings together celebrities,fashion and classic General Motors vehicles on the eve of the North American International Auto Show. 

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And then there was one ...

And then there was one domestic auto brand selling a traditional minivan --- Chrysler.

Ford announced the end of the line for the Ford Freestar has arrived. The automaker will not restart minivan production at its Oakville, Ontario, plant from the holiday shutdown. Ford had planned to build the Freestar through the end of the 2007 model year. Putting the positive spin on its move, Ford said demand is strong for its new Ford Edge and Lincoln MKX crossovers, also built at the Canadian plant, while minivan sales are in a slump. The Freestar's twin, the Mercury Monterey, went out of production last August. Next year's Ford Fairlane will also cover territory left by the minivan.

Earlier, General Motors said it was abandoning traditional minivans for crossovers.

Neither Ford nor GM ever got the minivan right. Their entries were always sub par compared to Chrysler and then the Japanese and Korean competition.

That opens the door of opportunity to Chrysler, which will unveil its new minivans in a few days at the North American International Auto Show in Detroit. Chrysler, which invented the minivan and continues to dominate the market, ups the ante with the 2008 models.

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