he future for the species known as the midsize pickup is getting darker with the news this week that the Volkswagen Group isn't interesting in entering the market and Ford Motor Co. seemingly is unmoved by recent overtures asking the company to reconsider the scheduled closure of its Ranger assembly plant in Minnesota.
Edmunds.com's Inside Line reported yesterday that VW officials closed the door on longstanding speculation the company was eying the U.S. market for introduction of the Amorak, a midsize pickup that essentially could be seen as VW's interpretation of the Ford Explorer Sport Trac. In Brazil, one of the prime markets for the Amorak, media relations manager Gilberto dos Santos told Inside Line, "Volkswagen is not planning currently to market the Amarok in the U.S.
"It is destined for South America, Europe, Russia, Australia, South Africa and New Zealand," The VW public-relations official continued. "Capacity of the General Pacheco manufacturing plant in Argentina is 100,000 units yearly, and the planned demand will be fully met. Other markets such as the U.S. and Asia are not in the company's plans."
Auto-industry executives keep talking about how they've trimmed down in order to bulk up profits, but that's only partially true. Many indeed are profitable at today's sharply reduced global sales rates - but they've still got some work to do in cutting the fat from their manufacturing empires.
The latest data from Oliver Wyman's prestigious Harbour Report that tracks the auto industry's manufacturing trends shows that there remains an enormous amount of excess assembly-plant capacity in the U.S. and Europe, despite the fact major automakers such as General Motors Co. Ford Motor Co. and Chrysler Group LLC have shuttered more than two dozen plants in North America alone since 2000.
Regardless of that seemingly major downsizing, the report indicates that in the northern U.S. and Canada, automakers still are tied to the capacity to manufacture more than 3.5 million more vehicles than they currently need - or another 14 more assembly plants of unnecessary capacity.
August new-vehicle sales will remain steady at a Seasonally Adjusted Annual Rate (SAAR) of 11.8 million, according to data from Edmunds.com, but when totals are finalized next week, the month certainly won't be able to compare to last August's Cash For Clunkers-fueled SAAR of 14.1 million.
August new-vehicle sales (including fleet transactions) are expected to be 1,028,200 units, a 17.7-percent decrease from August 2009, when Cash For Clunkers pushed the industry to 1,261,799 sales. Total August sales will represent a 1.4 percent decrease from July 2010, according to Edmunds.com data., while August's projected 11.8-million SAAR compares with 11.5 million in July.
"Comparing to last August is a waste of time since Cash for Clunkers distorted the market so badly last year," said Jessica Caldwell, director of industry analysis for Edmunds.com "It is likely that the current slow sales pace can be partly attributed to the thousands of 'pull-ahead' sales that last year's CARS program stole from subsequent months."
Gasoline prices are staying low and consumers aren't exactly flocking to hybrids and other fuel-saving small cars.
That might be part of the reason sales for Ford Motor Co.'s much-anticipated Fiesta subcompact haven't exactly gone orbital; for July, the Fiesta's first full month on the market, sales were 3,349.
Ford knew the Fiesta will have to overcome Americans' historic aversion to small cars. It's been tried by many makers many times before. But the job is all the more difficult when Ford's own much-larger and still reasonably economical Fusion midsizer - a car two classes above the Fiesta - in on sale in the same showroom for similar, or even less money.
A recent dealer ad showed a well-equipped Fiesta selling for $200 more than a Fusion after stacking up all the possible incentives on the larger car. Even if a buyer didn't qualify for all the Fusion come-ons, the quandary still is obvious.
Ford Motor Co. promised its EcoBoost suite of high-tech engine technology would start to spread throughout its lineup, and today announced another significant application for the power- and fuel-efficiency-enhancing EcoBoost V6: the 2011 F-150 pickup.
The turbocharged 3.5-liter EcoBoost joins Ford's snarly 5-liter V8 and a normally aspirated 3.7-liter V6 as new additions to the F-150 powertrain portfolio as Ford at once tries to make the half-ton pickup more relevant - and sellable - in a U.S. market that turned its back on pickups after a fuel-price scare followed by a deep and stubborn recession.
Only now are pickup buyers hesitantly returning to the market; those who are, like just about every other new-vehicle buyer, increasingly are looking for better fuel economy. The F-150's heavily revised engine lineup for 2011 is Ford's answer, one that company engineers today claimed will boost the entire F-150 lineup's fuel economy by 20 percent compared with 2010 and will be "class-leading" for all but the F-150's largest engine choice, the 6.2-liter V8 that's already been seen in the special F-150 Raptor.
Former Ford Vice Chairman Allan Gilmour has been named interim president of Wayne State University in Detroit.
Gilmour did two stints in leadership positions at Ford. He retired as vice chairman after 35 years in 1995. In 2002, he was asked to return to the company as vice chairman, retiring again in 2005.
A graduate of Harvard University and the University of Michigan, Gilmour will serve as interim president of the university of 32,000 students until a permanent president is chosen from a national search.
National Public Radio's On Point program used the occasion of President Obama's visit to a Ford assembly plant in Chicago to look under the hood of the U.S. auto industry. Only a year ago, Ford was struggling financially, while General Motors and Chrysler had just emerged from Chapter 11 bankruptcy.
Last week, the President was in Detroit visiting GM and Chrysler plants, hailing the governments $60 billion bailout of GM and Chrysler as a victory. A guest to the On Point program today, Ron Bloom,chief advisor to the U.S. Treasury Department on the auto industry -- the " Car Czar" -- was more cautious in declaring mission accomplished. Michelle Krebs, senior analyst and editor at large for Edmunds.com, was a guest on the program. So too was Edmunds AutoObserver.com contributor and Pulitzer-Prize winning writer Paul Ingrassia as well as Kentucky dealer Jack Kain, of Jack Kain Ford.
Toyota sold more Corollas than Honda did its Civics. In fact, Toyota sold more Corollas this July than last, whereas Honda sold less this year than last. The Hyundai Elantra, due for replacement in the coming months, came on strong in July. The current Ford Focus is winding down to pave the way for the new one. Similarly, the Chevrolet Cobalt is making way for the all-important Chevrolet Cruze. The Nissan Sentra helped the division achieve across-the-board increases this July.
At an important auto-industry conference today, Ford Motor Co. is saying what the nation's leaders seemingly can't bring themselves to utter, much less do something about: the U.S. needs to get back to manufacturing things.
Ford President of the Americas Mark Fields not only said it, he also pledged Ford is going to do something about it, announcing at the Center for Automotive Research Management Briefing Seminars that Ford is going to bring even more jobs in house than it had previously promised in a 2007 bargaining agreement with the United Auto Workers union.
"No economy anywhere in the world - since the industrial revolution - has been strong without a strong manufacturing base," said Fields, who also invoked a familiar quote from Ford founder Henry Ford: "A business that makes nothing but money is a poor business."
"He was right," said Fields. "And we'd better listen."
Editor's Note: Ford CEO Alan Mulally turns 65 today, prompting questions about how long he will stay at the automaker. His recent response has been a vague "a few more years."
By Doron Levin
With each quarter the stature of Ford Motor chief executive Alan Mulally grows more impressive. It's difficult to overstate the healing impact of his tenure on the No. 2 U.S. automaker, which posted a $2.6 billion second-quarter profit.
When he was brought aboard in 2006 Ford was bereft of ideas and leadership, beset with losses, forced to suspend its dividend and sliding toward a recession that would engulf the world industry. Fortunately Ford already was undertaking a plan to borrow $23.6 billion against its future, which gave the company the cash reserves to avoid almost certain insolvency in late 2008 during the credit meltdown.
Edmunds.com CEO Jeremy Anwyl and Edmunds.com analysts Karl Brauer, Jessica Caldwell and Michelle Krebs discuss July car sales, which were not as robust as predicted, considering the attractive deals available. Disappointing July sales foreshadow a continued rocky ride ahead for car sales in the remaining months of 2010.
The auto industry is swimming against poor economic tides and will end up with a healthy July sales rate that is the best since the halcyon days of last summer's Cash-For-Clunkers program. Analysts at Edmunds.com project July's Seasonally Adjusted Annualized Rate (SAAR) to be 11.8 million.
July sales are expected to total about 1,064,000 units - an 8.4-percent jump compared with July of last year and an 8.9-percent improvement over June's troubling 983,000 sales that translated to an 11.1-million SAAR.
Equally important is a projected improvement in retail sales. A large portion of the industry's aggregate volume gains so far this year have been driven by outsized sales to fleet customers, not individual households.
"July sales numbers should be the highest we've seen since last August's 'Cash for Clunkers' frenzy," reported Edmunds.com Senior Analyst Ray Zhou. "Retail demand for new cars this month has been the strongest of the year, even more than in March when Toyota launched an aggressive incentive campaign and other automakers followed suit."
Pickup-truck sales have strengthened a bit so far this year, and there's a nascent confidence in Detroit - which makes nearly all of the pickups sold in North America - that the segment's recovery from a deep trough will acquire still more steam through the end of 2010.
General Motors, for instance, is calling for trucks to grab 0.3 percent more of the overall U.S. market by the end of the year than in the first half.
"Our dealers still remain very optimistic, particularly on pickups, for the next six months of the year; they're a big part of our media spend and our promotional focus," said Brian Sweeney, general manager of GM's GMC truck brand. "In some of our big pickup markets, the economy is bouncing back, so we're very positive about the next six months with Sierra sales."
George Rogers, head of Ford's Team Detroit advertising agency, believes that "there is still a tremendous amount of pent-up demand in the [pickup] market that isn't reflected in current figures."
Mark Fields, Ford's president of the Americas, stopped by the Santa Monica, Calif., offices of Edmunds.com Monday. Fields was among several Ford executives who fanned out across the U.S. and Canada for the public debut of the 2011 Ford Explorer, which occurred for the Los Angeles market on Venice Beach. Karl Brauer, Edmunds.com senior analyst and editor at large, interviewed Fields during his visit.
Ford CEO Alan Mulally wasn't the only one to appear on NBC's Today Show Monday. So too did our own Karl Brauer, Edmunds.com senior analyst and editor at large. Brauer weighed in on Ford's recent stellar financial performance and Monday's public debut of the 2011 Ford Explorer.
While Mulally was interviewed live by Today show host Matt Lauer, Brauer appeared in the lead-in segment to the interview. The segment can be viewed here.
Alan Mulally, who turns 65 on Aug. 4, says he'll stick around as Ford CEO for "a few more years."
Mulally made the comments in an interview with Matt Lauer on the Today show Monday. Mulally is in New York for the public unveiling of the 2011 Ford Explorer.
Mulally joins Ford spokesman Mike Rowe, the host of the Discovery Channel's "Dirty Jobs," at Herald Square, which Ford has converted into an off-road course to display the Explorer.
Other Ford executives are fanning out across the country for local unveilings of the revamped SUV. Ford President of the Americas Mark Fields will host the Venice Beach, Calif., debut and will drop by Edmunds.com's Santa Monica, Calif., offices.
Even before the gas-price shock of summer 2008 and the recession that started a few months later, the world already was passing by Ford Motor Co.'s Explorer, the SUV that in the mid-'90s defined what SUVs were all about.
But the Explorer name has an incredible 96-percent recognition rate with North American consumers, said Ford president of the Americas Mark Fields and Ford aims to leverage that with a "redefined" '11 Explorer that's tuned in to a more-sensible national esthetic.
At a media event last week to unveil the all-new Explorer -- it makes its public debut Monday -- Ford confirmed what has been an open secret about the two fundamental and somewhat risky changes that will redefine the Explorer formula: the vehicle now is based on a unibody structure and will offer - advocate, actually - 4-cylinder power.
Ford reported a second-quarter profit of $2.6 billion -- its best performance since the first quarter of 2004. Ford said the quarter, with results higher than analysts had estimated, sets the stage for an even better 2011 as each business unit, including North American automotive operations, showied a significant improvement.
"We delivered a very strong second quarter and first half of 2010 and are ahead of where we thought we would be despite the still-challenging business conditions," said Ford President and CEO Alan Mulally in a statement issued Friday morning.
"We remain on track to deliver solid profits and positive automotive operating-related cash flow for 2010, and we expect even better financial results in 2011," he added. Ford said by the end of 2011, it expects to have more cash than debt. Ford's huge debtload has been seen as its major challenge for the future.
Unleaded gasoline: $2.67 per gallon. Extra cost to cut fuel consumption with hybrid technology: priceless.
For Ford Motor Co.'s Lincoln upscale division, however, the definition of "priceless" means "no cost." Lincoln announced today that the price of its 2011 MKZ Hybrid is the same as a standard MKZ with a conventional V6: $35,180.
Pricing the hybrid MKZ identically to the standard version is a significant and potentially game-changing ploy that may put Lincoln on the map with hybrid enthusiasts and surely will cause competing automakers' marketers to watch customer response. And Lincoln's gambit also will test - for good and bad - the limits of hybrid-technology upcharge.
After a 20-year run using the same basic formula that shot it to the top of the sales charts, the Ford Explorer is going in a completely new direction for the 2011 model year.
Ford provides details to the media this week, with public release of that information allowed in a couple weeks. But we already know the all-new 2011 Explorer that arrives in dealerships later this year will break most of its long-standing traditions.
And another institution likely to be broken is the Explorer's once-bestselling status. Even if the new one is wildly successful, it likely will never achieve the sales levels its predecessor delivered.
Just weeks ago, General Motors Co. announced it is forming a new regional organization to administer to South America and this week chief rival Ford Motor Co. is indicating it, too, will be placing more emphasis on its Latin-American business.
In a reorganization of its Canada, Mexico and South America business units, Ford is appointing Eduardo Serrano, current president and CEO of Ford of Mexico, as executive director, Latin America. Serrano now will have responsibility for South America and Mexico.
Despite expected weak sales in June and signs of a slowing economic recovery, automakers are remaining vigilant in keeping inventories low so they don't require expensive incentives to move the metal.
Edmunds.com data shows another dip in incentive spending in June. The average incentive was $2,661 per vehicle sold in June 2010, Edmunds.com estimates. That's down $36, or 1.3 percent, from May and down $196, or 6.9 percent, from June 2009.
Automakers report sales Wednesday, which are expected to by up from the dismal levels of last June but down from weak May of this year. A year ago, incentives were high because inventories were high and sales were particularly depressed as consumers awaited details of the governments Cash for Clunkers program.
Ford reported sales in June were up 13 percent from a year ago as its much ballyhooed Ford Fiesta went on sale.
Ford sold 175,895 Ford, Lincoln, Mercury and Volvo brand vehicles in June. Ford recently announced it will discontinue Mercury by year-end. It is in the process of selling Volvo to China's Geely.
Ford sold just over 1,000 Ford Fiestas, which went on sale in June backed by a hefty advertising campaign.
On Thursday, automakers will report how many vehicles they sold in June and how many they sold in the first half of 2010. Edmunds.com's senior analysts Karl Brauer, Jessica Caldwell and Michelle Krebs share their thoughts - and concerns - about the year so far.
Toyota's highly publicized safety recall of 2.2 million cars in February seemed to precipitate a run of recent safety recalls by other automakers including General Motors, Chrysler, Honda and Hyundai. And 2010 overall is on pace for what could be the highest number of total recalled vehicles in this country since 2005.
But new analysis by Edmunds.com also demonstrates that the number of vehicles affected by industry safety recalls these days has declined dramatically compared with the record levels of a decade ago.
In a telling reversal of longstanding trends and perceptions, domestic automakers' brands, as a whole, have pulled ahead in overall quality as measured by J.D. Power and Associates' benchmark Initial Quality Study, now in its 24th year. It's the first time domestic brands have, in the aggregate, surpassed imports in initial quality, Power said today. The domestics brands' watershed performance in the 2010 U.S. Initial Quality Study was driven by quality improvements by new models from the surging Ford Motor Co. and the industry's trend in improving the general quality of newly launched vehicles.
True, the domestic triumph was not overwhelming: domestic brands experienced 108 problems per 100 vehicles compared with the 109 problems per 100 vehicles for imports. But the symbolic impact remains - domestics, overall, have better quality than imports.
"Domestic automakers have made impressive strides in steadily improving vehicle quality, particularly since 2007," said David Sargent, vice president of global vehicle research, in a release. "This year may mark a key turning point for U.S. brands as they continue to fight the battle against lingering negative perceptions of their quality."
Edmunds.com, parent of AutoObserver, today named vehicles in 21 distinct segments the leaders in its proprietary True Cost to Own (TCO) metric that establishes total vehicle ownership costs.
Vehicles by Japanese automakers dominate the 2010 TCO list, placing 14 of the 21 winners. Domestic automakers placed four models and European makers had three winners.
Six of the winners are made by Honda Motor Co. Ltd., the most by any manufacturer.
Edmunds.com's TCO pricing system estimates total vehicle ownership costs over a five-year period. The calculation incorporates projected average depreciation, financing, taxes, fees, insurance premiums, fuel costs, regional variances, maintenance and repairs for each model.
May sales reports from automakers came in stronger Wednesday than even Edmunds.com forecasted, suggesting a modest recovery is, indeed, under way. Edmunds.com CEO Jeremy Anwyl and analysts Karl Brauer and Jessica Caldwell discuss the 19-percent year-over-year sales rise in May, a month that came in at a 11.6 million Seasonally Adjusted Annual Rate of sales.
It's about time that the U.S. auto market followed script for a change, and May was that month: There was a modest increase in sales compared with last May, befitting the annual gain of 10 percent or more that the industry has forecast for the year as a whole. Steady as it goes was the byword.
For the month, automakers sold 1,099,000 vehicles in the U.S., 19 percent higher than the nadir of May, 2009, and an improvement from about 982,000 this April. More important, the pace of sales in May was about 11.6 million units on a seasonally adjusted annualized rate (SAAR) basis, a significant uptick from the 11.2-million rate posted in the previous month and right in line with the industry consensus that full-year sales will end up between 11.5 million and 12 million units compared with 10.4 million for 2009.
"This supports the thesis for the moderate recovery we've been forecasting," said George Pipas, head of U.S. industry analysis for Ford.
Ford Motor Co. confirmed today it will eliminate its Mercury sales division. The decision came after an extensive business and product review Ford conducts every spring and was approved by Ford's board of directors at its regularly scheduled June meeting today.
The decision comes as the Ford brand has strengthened and the automaker instead looks to accelerate the Lincoln brand. Ford will take Mercury personnel and resources and focus them entirely on Lincoln, which will get new products -- seven all new or significantly freshened vehicles in the next four years.
The shutdown of Mercury apparently will happen quickly, as Ford officials say the last Mercury vehicles will be produced in the fourth quarter this year.
Edmunds.com analysts chimed in recently on the possible demise of Mercury; prospects of the Toyota-Tesla partnership; the return of super-luxury vehicle sales; and consumers responding to zero percent financing.
After 71 years of history, Ford Motor Co. may finally be cutting loose its dimming Mercury sales division, reports Bloomberg today.
Citing sources familiar with an executive proposal to be presented to Ford's board of directors in July, Bloomberg said the plan outlines the shutdown of Mercury, whose showrooms soon will be down to two models - yet recently was publicly supported by Ford CEO Alan Mulally while Ford also discussed future-product options for the brand created by founder Henry Ford's son Edsel in 1939.
At the Washington auto show in January, Mulally seemingly supported the ongoing future of Mercury, saying Ford planners and marketers were working to better position Mercury in the Ford-Lincoln-Mercury triumvirate by using the division to emphasize smaller, fuel-efficient models. Some reports speculated a cornerstone of the strategy would be a Mercury-badged variant of the widely anticipated 2012 Focus compact car coming early next year.
It may not be an all-new model just yet, but Detroit's two healthiest automakers are getting underway with a facelift for their decimated manufacturing operations in Michigan.
The two automakers have husked their home-state manufacturing of thousands of jobs during the past several years' reorganizations and downsizing. Many of those jobs may never return, but the two companies are beginning to make good on the promise of new-age manufacturing to replace at least some of the old.
Ford announced Monday it is investing $135 million in new Detroit-area operations to assemble lithium-ion battery packs and hybrid transaxles for its next-generation compact and midsize hybrid-electric vehicles coming in 2012. The company says 220 new jobs will be created.
Emerging trends in the auto industry and government investigations of possible vehicle defects captured the interest of AutoObserver readers this past week.
The National Highway Traffic SafetyAdministration's (NHTSA) investigation into Ford and General Motors vehicles was the most read post on AutoObserver by a wide margin last week. NHTSA is investigating complaints on the Ford Windstar for have rear axles that can potentially break. NHTSA is investigating the Chevrolet Corvette for complaints over leaky gas tanks.
Edmund.com analysts talked with the media in recent weeks about the Toyota-Tesla link, a drop in Toyota's sales, a rise in Ford sales, conventional versus electric cars, the best family cars, leasing and General Motors marketing and rising profitability.
After a year-long run that saw auto-industry stock prices balloon from historic lows, the market retreat of the past several weeks has caused some give-backs on those exponential gains.
Ford Motor Co. stock had been in a dead sprint over the past year and in mid-March was trading at $13.40 per share - a price Ford shareholders hadn't enjoyed since 2004. But the price has retreated twice this month by nearly 20 percent, leaving some market watchers to wonder Ford is being dragged down in general or whether its stock price had become too overheated, particularly when considering the company's still-considerable debt load.
It's not just Toyota Motor Corp. falling under the newly-watchful eye of the National Highway Traffic Safety Administration and its vehicle-recall powers: Ford Motor Co. and General Motors Co. each have a vehicle under the NHTSA microscope this week.
The NHTSA opened a formal investigation into 900,000 1999-2003 Ford Windstar minivans for the potential for the rear axle beam to corrode and potentially break. The administration's Office of Defects Investigation launched a formal inquiry this week after noting on its website that it had received 234 complaints about the condition and had begun a preliminary evaluation "to assess the scope, frequency and safety consequences of the alleged defect in the subject vehicles."
At GM, the vaunted Chevrolet Corvette is also the subject of a NHTSA investigation after 30 consumer complaints about fuel or fuel vapor leaking from the car's gas tank. The investigation covers about 33,000 2004-model vehicles.
Over the decades OEMs have gone their separate ways on a number of big strategic matters that ended up becoming major determinants of the industry's winners and losers. Front-wheel drive or rear-wheel drive? Unionized or non-union factories? Global mega-merger or not?
Automakers likewise are diverging around the question of how to approach the onboard "infotainment" revolution. Platforms including General Motors' OnStar, Ford's Sync and Mercedes-Benz's mbrace represent early commitments to widely varying answers.
And Hyundai's recent announcement of tie-ins between iPad and the company's upcoming 2011 Equus luxury sedan is further indication that every OEM believes the procurement, packaging and presentation of wireless content and connections going into, coming out of and bouncing around within vehicles can make a huge difference.
"It's the next big battleground in the industry," said John Wolkonowicz, senior auto analyst for IHS Global Insight, a market-research firm in Lexington, Mass. "It is addressing what people under 50 years old today find absolutely mandatory in their vehicles."
Ford President and CEO Alan Mulally is big beneficiary of the stock market's rally -- and the automaker's turnaround -- because a hefty chunk of his compensation is in stock that was issued low and now is trading high.
In March 2009, Ford granted 5 million stock options to Mulally, the Associated Press noted in a story Monday on executive compensation. Using a complex formula, Ford assigned the options an estimated value of $5 million. At the time, Ford's shares were trading at $1.96. Since then, the stock has jumped nearly sixfold, and Mulally's options have a value on paper of about $48 million.
Mulally is also ahead on his 2008 options, which were valued at $9 million when they were granted two years ago. Now, they're worth close to $21 million.
For the first time in the history of the 10-year-old study that looks at the relationship between automakers and their suppliers, a U.S. automaker -- Ford -- ranked in the top three. It was third, with Honda and Toyota in 1st and 2nd place, respectively.
The annual North American OEM-Supplier Working Relations study, done by Birmingham, Mich.-based Planning Perspectives, closely follows supplier perceptions of their working relations with the top three U.S. and top three Japanese automakers across 14 commodity purchasing areas. About 45 percent of automotive suppliers in Planning Perspectives' database participated in the study.
"When the U.S. automakers were in bankruptcy, or in Ford's case near bankruptcy, they knew they could not come back alone," John W. Henke Jr., president of the management consulting firm, told AutoObserver in an interview. "Alan Mulally (Ford president and CEO), a big proponent of good supplier relations since his days at Boeing, has been taking a more active role in getting top management to strive for strong supplier relations."
With savvy muscle car aficionados clearly holding back in anticipation of the showroom appearance of the heavily revised 2011 Ford Mustang, its chief rival Chevrolet Camaro is pulling ahead in the sales competition between Detroit's new-generation muscle cars.
And while sales for the high-powered Detroit muscle cars remain comparatively healthy, sales of almost all other sports cars remain troublingly depressed - including for the Camaro's big brother and Chevrolet-brand halo, the Corvette.
It's not the sexiest segment around, and speculation has long held that various new vehicle configurations, namely crossovers, would cause serious erosion of the midsize sedan market. But as the broad economic and auto-industry recoveries proceed almost in lockstep, it looks as if cautious buyers re-entering the market are gravitating to the safe play: sales of midsize sedans are more than a little robust.
Although most companies had trouble logging April sales that surpassed those of the incentive-fueled March, midsize sedans certainly weren't the problem. April and year-to-date sales show the segment on its way to perhaps some of its best results in a long while.
The segment's growth isn't coming from only the usual suspects, either: There's a hot new player stoking fresh interest in the four-door family car. And higher incentives, two words the industry is reluctantly latching onto as its recovery comes with one step forward and two steps back, also a playing a role in the midsize-sedan renaissance.
In a sign of modest progress for the American car market, sales in April were up 20 percent from a year ago, though they declined by 8 percent from March. Still, auto company executives and outside analysts pronounced the industry's modest recovery remains on track - and, in fact, is expected to strengthen - as the year goes on.
Industrywide sales of 981,659 vehicles compared with 817,096 sold last April. But last spring marked the depths of the Great Recession, and so a better comparison for the current market actually was March 2010. Sales in April eased to a Seasonally Adjusted Annual Rate of about 11.2 million from 11.8 million in March, but higher than last April's 9.2 million.
While some automakers carried over their rather hefty incentive programs from March into April, including popular zero-percent financing and discounted leases, their effectiveness appears to be waning, according to estimates by Edmunds.com.
"The automakers that need extra marketing support will have to pull out a new trick for May," said Jessica Caldwell, Edmunds.com's director of Industry Analysis.
Industrywide, manufacturer incentives dropped in April from last April and March. Sales, being reported by automakers Monday, are forecasted to be well ahead of last April but slightly down from March.
Honda may prove the exception. Its incentives hit a record high in April and its sales may be up.
Ford Motor Company this week reported blockbuster net earnings of $2.1 billion for the first quarter, almost as much as the company earned in all of 2009. The automaker is gaining market share and is about to launch the promising new Ford Fiesta subcompact.
That's all in addition, we are constantly reminded, to being the only Detroit automaker that avoided bankruptcy last year.
So maybe it's time to ask what could go wrong at America's most successful car company. History shows, after all, that when automobile manufacturers are at the peak of prosperity, they also can be surprisingly myopic -- and unexpectedly vulnerable. Think of Toyota Motor Corp., now struggling with a shocking quality and safety crisis. And before that, General Motors Co.'s once-unfathomable bankruptcy.
It would be foolish to predict that things will start unraveling in Dearborn, because Ford is doing a lot of things right. But the car business can be volatile, and Ford faces some significant challenges despite its recent success. Some of them are common to all car companies, especially the task of developing the engineering expertise and making the right decisions to capitalize on emerging engine technologies. Other challenges, though, are specific to Ford.
Here are five issues Ford faces in the months and years ahead:
Ford Motor Co. Chief Economist Ellen Hughes-Cromwick plays a key role in providing the economic forecast and analysis that serves as the context for the automaker's future planning and decision making.
Before joining Ford in 1996, Hughes-Cromwick worked in academia and banking. She was staff economist on the President's Council of Economic Advisers, received her Master's degree in international development and Ph.D. in economics at Clark University in Worcester, Mass. She's a member of the board for the National Association for Business Economics, serving as its president in 2007-2008.
Edmunds.com Senior Analyst and Editor at Large Karl Brauer interviewed Hughes-Cromwick at the Miliken Institute's global Shaping the Future conference in Los Angeles Tuesday -- the day Ford announced a $2.1-billion first-quarter profit. Here's an excerpt from their chat:
It couldn't have been a much better first-quarter result for Ford Motor Co.: earnings of $2.1 billion that doubled the consensus forecast. A healthy profit on automaking operations and a healthy profit in North America. A rather remarkable rebound of more than a quarter-million more sales compared with first-quarter 2009.
The company's reward for all this solid work: a smackdown from Wall Street.
Ford stock was down nearly 10 percent today at its lowest point and hovered around a still-hefty 5-percent decline into the afternoon, finishing down a full 6 percent. This, admittedly, in a broad market that saw the Dow Jones Industrial Average finish almost 2 percent down and all other indices slide markedly.
Joe Phillippi, principal of AutoTrends consulting in Short Hills, New Jersey, attributed the market's reaction to Ford's exceptional first quarter to two factors: investor mentality and worries about Ford's ability to continue the pace of its rebound.
Ford Motor Co. reported a $2.1-billion net profit for the first quarter of 2010, the best quarter for the automaker in six years. Its results were roughly double what analysts had forecasted and represented a $3.5-billion improvement from 2009's first-quarter loss.
As a result, Ford said based on the quarter's performance, it expects to deliver "solid profits" for the full year of 2010, a year ahead of schedule.
"The Ford team around the world achieved another very solid quarter, and we are delivering profitable growth," Ford President and CEO Alan Mulally said in a statement issued Tuesday morning. Mulally holds a conference call with media and analysts later in the day.
"Our plan is working," he added, "and the basic engine that drives our business results -- products, market share, revenue and cost structure -- is performing stronger each quarter, even as the economy and vehicle demand remain relatively soft."
In yet another sign that the U.S. auto industry is righting itself, Ford Motor Co. is expected to announce a profit of $1 billion or better on Tuesday.
Ford's profit will be $1.08 billion in the first quarter, according to an average of analysts surveyed by Bloomberg News. That compares with a $1.43 billion loss in the same quarter a year ago.
Edmunds.com is sticking with its long-held 2010 sales forecast of 11.5 million vehicles as other forecasters up theirs some.
Ford executives this week expressed growing optimism based on improved economic metrics and higher March sales, which were boosted by incentives, including low interest and even zero-interest financing led by Toyota. Ford has been saying sales would be between 11.5 million and 12.5 million (including heavy and medium-duty trucks).
Despite considering a boost, Edmunds.com is staying with 11.5 million (light vehicles only) for now.
Turkey's economy and auto industry can thank the U.S. for its warm reception of the Ford Transit Connect for contributing to a boost in the country's vehicle production.
Turkish vehicle production increased by 69 percent in March to 100,820 units, according to the Turkish Automotive Industry Association.
Ford imports its increasingly popular Transit Connect, which was named 2010 North American Truck of the Year in January, from Turkey for U.S. sale. Ford has an electric version coming.
Don't look now, but the U.S. auto market is changing - sort of just like we'd been told it would.
Call it environmental awareness, call it regulatory pressure, call it old-fashioned economics. But by and large, call it inevitable: that most American of inventions - the V8 - is quickly being supplanted by smaller, more peppery engines as the auto industry marches to the latest beat of "downsizing."
Ford announced today that it will produce three new engines using its Ecoboost concept of combining direct fuel injection with turbocharging and variable camshaft timing to boost the specific output of smaller-displacement engines. Ecoboost engines will be deployed for two vehicles that long represented the heart of the V8 market: the F-150 pickup and the 2011 Explorer.
Ford may be among the companies to drive the first back-to-back quarterly profit gains among U.S. companies since 2007, reports Bloomberg News.
Earnings for Standard & Poor's 500 Index, which includes Ford, probably rose 30 percent in the three months through March after more than doubling in last year's final quarter, according to analysts' estimates compiled by Bloomberg.
Analysts' estimates put Ford's first-quarter profit at 30 cents per share after a year-earlier loss of about 75 cents a share. Ford, which has not given a date for announcing first-quarter results, said in January that market-share gains and better pricing for its cars will help the bottom line and should help produce a full- year profit.
Last week's New York auto show wrapped up for the media just as the industry's rough-and- tumble first quarter also came to a close. It was impossible not to connect the hardware on the New York show floor with the direction some of those vehicles' makers are headed as the industry writhes through what may or may not be labeled a recovery.
Judging from what's on display in New York, if there's a recovery underway, it's definitely going to treat some automakers better than others.
Using new products as the springboard, a scorecard of who's winning and losing so far this year:
American consumers returned to showrooms in force during March, driving overall sales to their best levels since last summer's peak around Cash for Clunkers. But there already were signals that the springtime spurt of sales momentum may not amount to much for the long term.
Automakers sold a total of 1,065,555 vehicles in the United States last month, the highest absolute number of sales since the federal government's massive buyback of late-model used cars sent sales skyrocketing last August. Last month's number also was 25 percent ahead of March, 2009.
Toyota, seeking to come back from recalls, quality issues and negitave publicity, set new heights for its incentives as it offered zero-percent financing and discounted leases throughout March, accourding to Edmunds.com's estimates.
The average automaker incentive in March was $2,742 per vehicle, up $100, or 3.8 percent, from February 2010, but down $423, or 13.4 percent, from March 2009.
Those hefty incentives offered by Toyota and other automakers who followed suit are expected to lift March car sales to their highest levels since last summer's Cash for Clunkers program, Edmunds.com Senior Analyst Jessica Caldwell predicted.
Ford Motor Co. received the first annual Edmunds.com Marketing Breakthrough Award, which was presented at the New York International Auto Show.
"Ford's image has improved by leaps and bounds in the past year because the company has supported good new products with deft marketing," said Edmunds.com CEO Jeremy Anwyl.
As automakers put the finishing touches on their March car sales numbers that will be announced on Thursday, it appears that the month came in like a lion but went out like a lamb, according to Edmunds.com's ongoing tracking of actual sales transaction data.
The month started off strong as Toyota launched aggressive incentives, which included zero-percent financing and attractively discounted lease prices, and other automakers followed suit. But the great deals look as if they fizzled by month's end. That raises the question -- even if automakers continue heavy incentives through April, will they be effective?
Everyone's certain to be sensitive to the industry "mood" at this week's New York auto show. Projections for March's Seasonally Adjusted Annual Rate are calling for hefty leaps over February, as well as compared with the same time last year when the auto industry had reached its depths.
However, with March sales figures pumped by oversized incentive spending incited by Toyota Motor Corp. and more large-scale fleet purchases, some analysts suspect March performances may be painting an artificial picture of a rebound that isn't there - or at least isn't sustainable.
So with all this background - not to mention gasoline prices steadily inching upward - automakers and industry watchers will be looking at the New York show for even the subtlest of signals, much the same way the finance industry hangs on every word of the latest Federal Reserve meeting.
Ford CEO Alan Mulally was among the new names added to Barron'slist of the 30 most respected chief executive officers worldwide for 2009.
The editors of the business publication said of the list featured in the March 29 issue that they selected CEOs who went on the offensive and scored big while competitors hunkered down during the recession.
"We sought to identify executives who kept their companies out of trouble and took advantage of the downturn to expand, make shrewd acquisitions, feast on the problems of competitors or otherwise distance themselves from rivals," the editors of the business publication said about the list featured in the March 29 issue.
Late Sunday, China's Zhejiang Geely Holding Group Company Limited completed an agreement with Ford Motor Co. to buy Ford's Volvo Car Corp. unit and its related assets.
The deal, under negotiation for more than a year, was said to be on the verge of collapse in recent weeks. But Ford confirmed the agreement on Sunday, saying the deal for Geely to buy Volvo will close sometime in the third quarter.
Geely paid $1.8 billion for the storied Swedish automaker that made safety innovations a brand watchword. Ford said $200 million will be paid in the form of a note and the remainder in cash.
Hefty incentives, spurred by Toyota with others following, are forecasted to send the Seasonally Adjusted Annual Rate of vehicle sales to 12.4 million this month from February's 10.3 million, according to Edmunds.com.
Toyota will get a big bang for its incentives bucks with sales up 80 percent from February, Edmunds.com forecasts. And Ford is expected to outsell GM again in March as it did in February.
"Although this SAAR sounds promising, it's too early to wave the flag and say that the economy has turned the corner," Edmunds.com CEO Jeremy Anwyl said. "Incentives drove sales this month, but those incentives were defensive moves by Toyota and its competitors, and are unlikely to last because inventories are simply not high enough to justify them."
Former auto executive Jerome York is dead at the age of 71 after suffering a brain aneurysm on Tuesday.
In the 1970s, York held high executive posts at Ford Motor Co. and Chrysler Corp. and was a central player in Chrysler's early 1980s turnaround, yet always was a vocal and strident critic of Detroit automakers for what he characterized as a myopic management culture.
York's seemingly perpetual prediction that Detroit would fall if it did not change essentially came to fruition with last summer's bankruptcies at General Motors Corp. and Chrysler.
York had a colorful career for someone who often was characterized as relentlessly methodical and calculating - a perception that may have cost him the CEO chair at Chrysler when legendarily emotional Lee Iacocca retired in 1992.
New car sales in Europe rose 3 percent in February to 1 million vehicles due largely to the return of Cash for Clunker-like programs in some countries.
Sales were up double digits in France, Italy, the United Kingdom and Spain where the programs were in effect. In contrast, sales in Germany fell 30 percent where the scrappage program had expired in late 2009.
A downturn in vehicle sales this year is predicted for Western Europe.
Financial blogs have been all abuzz this past week as the price of Ford Motor Co. stock climbed to new highs.
Ford's stock has been trading at more than $13.40 a share in recent days, approaching its highest point since late 2004 when it was selling for nearly $15 a share. And its current price is a far cry from the couple of bucks it was selling for only a year ago. In fact, in November 2009, it sold at less than $8 a share.
The question now facing shareholders is hold as the prices goes higher or sell and take the money and run? For would-be Ford shareholders, did they miss the boat or is Ford still a buy?
A few articles caught my eye this week. Both pertained to women, appropriately so since March 8 was International Women's Day. They are pertinent to all auto companies as their business is employing women and marketing to women.
One article was written by former Chrysler marketer Julie Roehm on how Toyota must regain the trust of women in order to recoup its sales and image. Another was by economist Sylvia Ann Hewlett discussed women as a major emerging market in emerging markets. A a third was by University of Michigan professor Susan Douglas who contends women's equality is only a perception that doesn't mirror reality.
Hefty incentives offered by Toyota to rejuvenate sales and market share -- and copied by some competitors - sent U.S. industry sales soaring in the early going of March, according to Edmunds.com's forecast.
In the first eight days of March, the Seasonally Adjusted Annual Rate (SAAR) of U.S. sales climbed to 12.5 million units, the highest level since September 2008, excluding August 2009 when Cash for Clunkers was at fever pitch.
"Generous incentives from Toyota and General Motors have stimulated this boom," Edmunds.com Senior Analyst Ray Zhou, PhD. "But we anticipate that it will cool off, and that the month will end closer to 11 million or so."
Chinese automaker Geely reportedly has obtained financing for its long-planned purchase of Sweden's Volvo Cars from Ford Motor Co.,
The financing was concluded in recent days and the money is now in Geely's bank account, according to a report from the Swedish financial daily Dagens Industri, which was picked up by worldwide wire services. Geely reportedly will pay about $2 billion for Volvo.
Possibly lengthy approvals from various Chinese, Swedish and U.S. authorities is still required and could mean a few more months before the deal is finished.
AT&T has agreed to buy two of the first electric-powered Ford Transit Connects, despite the fact that the company's former CEO, Ed Whitacre, is now CEO of Ford-competitor General Motors and, it was revealed this week, still flies AT&T corporate planes as his retirement perk.
GM, where insiders have criticized the Transit Connect for its raw simplicity, almost crudeness, has nothing to directly compete with Ford's clever compact cargo van. The Transit Connect is carving out a new segment for urban delivery vans and, largely for that reason, was voted by journalists as the 2010 North American Truck of the Year in January.
The composting-saves-the-world neighbors won't be able to sneer (as much) at the gas-sucking muscle car in the driveway after Ford Motor Co. crowed today that a Mustang sporting the nameplate's new 3.7-liter dual-cam V6 churns out 305 horsepower - yet was just certified by the Environmental Protection Agency as earning a highway fuel-economy rating of 31 miles per gallon.
Ford says the car is history's first example of a production model that exceeds 300 hp yet also tops 30 mpg.
The number actually beat Ford's earlier expectations for 30 mpg from the V6 Mustang, the number the company was proudly promoting in January at the Detroit auto show.
The story that Ford Motor Co. outsold General Motors Co. (by 471 units) for the first month since August, 1998, has made the rounds.
But February's sales charts served up some other noteworthy numbers. Here is a selection:
Ford and GM's totals were No.1 and No. 2 in the market, and figures for the "Big 7" automakers were rounded out, in descending order, by Toyota Motor Sales USA at 100,027; Chrysler Group LLC at 84,449; Honda Motor America at 80,671; Nissan Motor Co. Ltd. at 70,189 and the Hyundai Group (Hyundai and Kia brands combined) at 58,056.
February marked the first month since August, 1998, that Ford Motor Co.'s monthly sales topped those of chief rival General Motors Co., providing an unexpected jolt in a month when the broad industry was handicapped by severe winter weather in the northeast regions of the country - and by the spillover from Toyota's safety-recall debacle.
Total U.S. auto sales for the month were 779,743 units, an increase of about 13.5 percent from year-earlier sales of 687,182, when the American automotive market was at the very bottom of one of its biggest slumps ever. And the February pace represented a seasonally adjusted annual sales rate of 10.4 million units, a number at the upper middle of most SAAR projections.
"The good underlying news is that the industry hasn't gone into reverse in terms of its recovery," said Jessica Caldwell, senior industry analyst for Edmunds.com.
There aren't that many true concept vehicles slated for the Geneva motor show this week. The few that are unveiled are bookended by a heavy presence in two sectors: small cars and luxury models.
Most of the attention in Geneva is concentrated on the small-car sector, thanks to continuing environmental pressure on both sides of the Atlantic. Europe continues to press with carbon-dioxide reduction measures, while financially battered U.S. customers evidence a downsizing mindset and the nation glides inexorably closer to a 2016 deadline for all automaker fleets to average 35 miles per gallon.
So while the Geneva show is mostly about what makes sense for an auto sector evolving toward less dependence on fossil fuels, the makers of luxury performance cars continue to respond with their own individual visions of how that future will be addressed. In many senses, it's becoming evident the makers of premium vehicles may in fact have more of an opportunity to capitalize -- as customers able to spend but unwilling to compromise may represent the best market to accept pricey new fuel-saving innovations.
The possibilities for synergy between the environmental movement and the luxury auto market may be almost limitless: even Ferrari, after all, is showing a hybrid-electric concept at this week's Geneva show.
Despite all the questions asked during Congressional hearings on Toyota's recalls this week, the nagging question that won't -- and maybe can't -- be answered is: are today's cars safe, at least from accelerating of their own volition?
Toyota happened to be the company at the witness table for vehicles that -- for one reason or another, identified or not -- have the possibility of unintended acceleration, potentially endangering not only Toyota drivers but drivers, passengers and pedestrians around them.
Yet, while Toyota is under the microscope and, in fact, has more reported complaints than its competitors, unintended acceleration is an industry-wide problem that requires industry and government attention.
"The current emphasis in the hearings seems to be about who learned about what/when and they are skirting the core issue of what's really causing unintended acceleration in the first place. With this being an industry issue, what's called for is an unprecedented, cross-company and government safety agency collaboration to pool data and resources, getting to the bottom of the problem once and for all," said Edmunds.com CEO Jeremy Anwyl.
Despite Toyota's recall woes and snowy weather covering most of the country, February vehicle sales will be higher this February than last year's dismal lows and also higher than January's numbers, Edmunds.com forecasts. Still, February sales weren't as strong as many had hoped or expected.
February sales reports from manufacturers, to be posted Tuesday, also will show who made sales and share gains at Toyota's expense. Toyota's sales will be about even with January and down about 10 percent from a year ago. Its market share likely will fall to 12.6 percent, its lowest level since 2005.
In contrast, Hyundai and Nissan will post their highest U.S. market shares ever, Edmunds.com predicts. Ford's share increased, while market share for General Motors and Chrysler dropped.
Of the Big Six automakers selling vehicles in the United States, Toyota - as a manufacturer and as an individual brand - has the most consumer complaints filed with the National Highway Traffic Safety Administration (NHTSA) for unintended acceleration, according to an Edmunds.com analysis of the government safety agency's data bases.
Unintended acceleration will be the hot topic of Congressional hearings Tuesday and Wednesday on Toyota's recalls for sticking accelerator pedals and floormats that can trap the gas pedal. Both situations have the potential to cause unintended acceleration.
This week, Toyota President Akio Toyoda and other Toyota executives are scheduled to testify before two Congressional committees regarding the automaker's recall of millions of vehicles. The committees, which will hear from other industry experts as well, will attempt to answer the question of whether the public is at risk.
Toyota's recalls have generated massive amounts of global media and dozens of lawsuits. Toyota has hired a crisis management team to help with the hearings and the public relations effort that got off to a bungled start.
For a glimpse of what might be going on behind the scenes leading up to the hearings and how the hearings might play out, AutoObserver turned to Ford public relations veteran Jon Harmon, now an author and crisis management consultant. His book, Feeding Frenzy, published last October, tells the riveting behind-the-scenes story of the deadly rollover accidents involving Ford Explorers equipped with Firestone and subsequent recalls. Like Toyota is now, Ford faced intense media scrutiny, aggressive trial lawyers and an angry U.S. Congress.
Here's an excerpt covering Ford's preparation for and experience in Congressional hearings:
The automaker announced Tuesday that it will drop a shift at its joint venture plant with Mazda outside of Detroit, eliminating 900 jobs.
The automaker said the shift and jobs at the AutoAlliance Mustang plant in Flat Rock, Michigan, south of Detroit, are eliminated in the name of plant efficiency. The plant, jointly owned by Mazda and Ford, assembles the Mazda 6 and the Ford Mustang, neither of which have been having banner sales.
The reports of Mercury's death just became even more exaggerated.
Dealers for Ford Motor Co.'s Lincoln-Mercury division were told at this week's National Automobile Dealers Association convention in Orlando, that the weakly-endowed Mercury lineup will get a big boost come next year: Mercury is slated to get a version of the hot-looking and much-hyped (perhaps deservedly so) 2012 Ford Focus.
The choice of potential names might not be so hot: dealers told reporters at the convention Ford could revive the unflattering Tracer name for the planned Mercury-badged variant of the Focus. The Focus goes on sale in the U.S. about a year from now.
The book, "Crash Course," by veteran automotive journalist and Pulitzer Prize-winner Paul Ingrassia is the first book about last year's bailouts and bankruptcies of General Motors and Chrysler. While the book, which was published this month by Random House, focuses on the dramatic events of 2009, it covers the history of the American auto industry from the Model T onward. This excerpt from the opening chapter, published courtesy of Random House, begins in the bleak final months of 2008; it summarizes the mounting crisis and how Ford avoided the fate of its Detroit competitors.
It really wasn't intended to be a prophecy. It was just a smart-alecky tee-shirt worn for years by local teen-agers to annoy their parents, and show their perverse pride in the Motor City's tough-town image. It said: DETROIT: WHERE THE WEAK ARE KILLED AND EATEN. But the menacing message seemed all too appropriate in the bleak winter of 2008-2009, when signs of weakness -- indeed, desperation -- erupted everywhere in Detroit.
Toyota's mounting product quality and public image woes have prompted Edmunds.com to revamp its sales forecast for 2010, lowering Toyota's share and raising the share of other automakers.
Edmunds.com's most current forecast of 11.5 million vehicle sales for 2010 has Toyota losing market share that will be picked up by Ford, General Motors and Honda.
Ford's sales gain, in fact, likely will push the American automaker to the No. 2 sales spot in the United States, ahead of Toyota, Edmunds.com predicts. Toyota took the No. 2 position from Ford in 2007 and has held it ever since.
"It now seems clear that Ford will overtake Toyota to reclaim its position as the second biggest automaker in the U.S. market," Edmunds.com Senior Analyst Jessica Caldwell said at the Chicago auto show.
After a January of piddly auto sales propped up mainly by fleet buyers didn't deliver any momentum from December's strong selling, slightly nervous automakers hoping 2010 will be a solid rebound year are looking to the Chicago auto show -- said to still be the nation's leading show in terms of bringing patrons through the turnstiles -- to stoke up winter interest.
Nobody's expecting any blowout introductions, but the Chicago show's slate of new-vehicle intros runs a wide gamut. Unveilings begin Wednesday, the first press day.
Most titillating for industry watchers is Nissan Motor Co. Ltd.'s late-in-the-game decision to return to the Chicago show. Nissan skipped the Detroit and Chicago auto shows in 2009 and came up missing again at the Detroit show last month.
State Farm insurance warned U.S. regulators repeatedly of a rise in vehicle-accident claims involving Toyota vehicles and uninntended acceleration as far back as 2007, according to various media reports coming out of Washington Tuesday, a day before Toyota's top U.S. executive is scheduled to testify before the House oversight committee.
The nation's largest auto insurer saw an increase in reports of unwanted acceleration in Toyotas from its database of 40 million customers and told the National Highway Traffic Safety Administration (NTHSA) in 2007, the company confirmed.
Interestingly, State Farm also was first to sound the alarm on the deadly rollovers of Ford Explorers with Firestone tires in 2000.
Careful -- at least at the moment -- what you call it when it comes to fixing hybrids. You might want to say "recall," but Ford's got a better idea, to coin a phrase.
Almost in lockstep with embattled Toyota Motor Corp. reportedly on the verge of announcing a recall or brake software recalibration on its Prius, Ford Motor Co. also announced a decision last week to reprogram the braking strategy for its Fusion Hybrid and Mercury Milan Hybrid.
In response to customer complaints about unusual brake feel, Ford has announced it will update software on the brakes of some 2010 Ford Fusion Hybrids and 2010 Mercury Milan Hybrids.
"We have received reports that some drivers have experienced a different brake feel when the hybrid's unique regenerative brakes switch to conventional hydraulic braking," Ford's statement issued Thursday afternoon said. "While the vehicles maintain full braking capability, customers may initially perceive the condition as loss of brakes."
Ford's announcement comes as Toyota tries to figure out what to do about complaints regarding the Toyota Prius' brakes.
The U.S. auto market in January continued its recent strengthening trend, with overall sales just shy of 700,000 vehicles (698,456 vehicles) for the month rising by nearly 7 percent compared with 654,757 vehicles in a very weak January 2009. The seasonally adjusted light-vehicle sales rate ticked up to about 10.76 million units versus last year's 9.59 million - and roughly in line with the firming picture of recent months.
Toyota was clearly the biggest loser in January due to its recalls and stop-sales order on eight of its bestsellers. Yet, January's results varied widely for its top competitors that may have tried to take advantage of Toyota's problems with special incentives meant to lure disaffected Toyota customers in particular.
Incentives paid by manufacturers in January dipped below year-ago and December levels despite last-minute promotions by Toyota's competitors to capitalize on the automaker's recall woes.
The average incentive was $2,382 per vehicle sold in January 2010, down $160, or 6.3 percent, from December 2009, and down $326, or 12.0 percent, from January 2009, Edmunds.com estimates.
"January incentives were not particularly generous or compelling - until some automakers began trying to conquest unsettled Toyota owners and shoppers late in the month," stated Jessica Caldwell, director of Industry Analysis for Edmunds.com. "January sales numbers are up from a year ago largely because of fleet sales."
Toyota-brand sales will drop 75 percent during the sales suspension of its eight best-selling models and some potential Lexus and Scion sales will be collateral damage.
"As long as sales of recalled Toyota models are suspended, Toyota will suffer about a 75 percent hit in sales," said Edmunds.com Senior Analyst Ray Zhou, PhD.
Even though no Lexus of Scion models are covered under the sticky gas pedal recall and sales suspension, their sales may be down as well.
"During this period, Scion may be down about 20 percent and Lexus may be down about 10 percent because of damage to the Toyota corporate brand," added Zhou.
Toyota's market share in January is expected to plummet to lows not seen since 2006, because the automaker issued a stop-selling order on eight models representing more than half of the automaker's U.S. sales this week.
Toyota's share is likely to drop to 14.7 percent of U.S. sales in January, Edmunds.com forecasts; the last time it was that low was March 2006 when its share was 14.2 percent.
In contrast, Ford is expected to have its best month for market share since May 2006. Edmunds.com forecasts Ford's share at 18.0 percent in January. The last time it was that high was in May 2006 at 18.4 percent.
In total, U.S. sales in January, buoyed by hefty hikes in fleet sales and offset by lower retail sales, will total of 701,000 vehicles, according to Edmunds.com's forecast. That would put the Seasonally Adjusted Annualized Rate (SAAR) of car sales at 10.7 million vehicles, down from 11.2 million December but up from 9.6 million in January 2009.
Ford Motor Co. reported Thursday it earned a $2.7-billion profit for 2009, its first profit in four years that came during one of the worst years in decades for global vehicle sales and auto company profits. The past year's performance led Ford to boldly declare it plans to be profitable for all of 2010. Ford's previous plan called for not being profitable until 2011.
"While we still face significant business environment challenges ahead, 2009 was a pivotal year for Ford and the strongest proof yet that our One Ford plan is working and that we are forging a path toward profitable growth by working together as one team, leveraging our global scale," Ford President and CEO Alan Mulally said in a statement released Thursday morning.
"In every part of the world, we are providing customers with great products, building a stronger business and contributing to a better world," he added. "Our progress has helped us gain market share in most of our major markets."
Indeed, Ford's fortunes have vastly improved, largely because the company has tackled the basics: building and selling vehicles buyers want, enabling Ford to boost sales and gain market share, commanding higher prices and collecting higher profit margins against the backdrop of a reduced cost structure.
The Ford Fusion Hybrid earned 26 percent of the votes, closely followed by the Toyota Prius with 23 percent.
"Ford's midsize hybrid sedan, which helped boost Ford's overall sales performance in an otherwise dismal 2009, has been praised for its smooth operation, fuel economy, looks and interactive information system that helps drivers modify their behind-the-wheel behavior to increase fuel economy," according to Edmunds' GreenCarAdvisor.com Senior Editor John O'Dell.
The North American International Auto Show in Detroit just opened its doors to the public on Saturday, but already some vehicles introduced during the previous week's press preview have been generating substantial buzz on Edmunds.com.
Vehicles driving the biggest increases in Edmunds.com's site traffic are: Audi A8; Buick Regal GS concept; Ford Focus; Ford Transit Connect; and Honda CR-Z.
The 2010 North American International Auto Show is one of the most restrained editions of the Detroit confab many can remember.
But the show's comparative scarcity of high-impact concept and production vehicles didn't stem the avalanche of opinion on the most notable vehicles.
After scores of media outlets have weighed in, AutoObserver cuts through the clutter to give the real score on the 10 most significant - for better or worse - vehicles of the 2010 Detroit auto show.
Most of the energy at this week's Detroit auto show epicentered at Ford Motor Co.'s display, with eddies splashing out to General Motors Corp.'s guardedly optimistic stand and Audi AG's gleaming base of operations.
But the majority of automakers were laying low, and media crowds were visibly reduced at the show with a reputation for over-the-top product introductions and boastful talk about the coming year.
There was no avoiding the 2010 Detroit auto show's subdued and geared-down mood, fashioned from the collective attitude of automakers licking their wounds and hoping the worst is past.
It also was yet another evolution of the show itself: there was plenty of room thanks to fewer automakers opting to display and fewer journalists opting (or fewer existing) to attend. A surprisingly expansive area of main-floor real estate was occupied by seemingly inappropriate electric vehicles of all manner, few of them of the road-going passenger variety.
The Ford Fusion Hybrid and the Ford Transit Connect won the 2010 North American Car and Truck of the Year awards, it was announced Monday morning at the Detroit auto show.
The Fusion Hybrid won over two other finalists for the prestigious award -- the Buick LaCrosse and Volkswagen Golf. The Transit Connect beat out the Chevrolet Equinox and Subaru Outback.
"Winning both of these prestigious awards is confirmation that the One Ford plan is working, delivering industry-leading product for our customers," said Mark Fields, Ford president of The Americas.
Thanks to the beat-down 2009 threw on almost every automaker, the 2010 installment of the North American International Auto Show in Detroit this week isn't expected to be one of the more ebullient in the storied show's history.
Most makers are laying low. And that's the ones who are even coming. Like last year, many automakers are taking a pass: Nissan and Porsche, for instance.
Many makers let the hometown companies make the biggest splashes, but Chrysler, for one, is displaying vehicles but having no press conference (our hopes remain Chrysler will import some Italian food to feed the media masses).
You can get a rundown of what will be displayed at the Detroit show at Edmunds.com's Inside Line. But we're adding a new twist: in addition to a scorecard of what some automakers are showing at the Detroit auto show, AutoObserver is adding what each automaker ought to be showing.
U.S. auto sales in December accelerated to their best pace of the year outside last summer's Cash for Clunkers bonanza, providing a hopeful punctuation mark to the industry's worst year in decades.
Sales in December totaled 1,010,003, up 1.9 percent from December 2008, when automakers and American consumers were newly stunned by the economic debacle unfolding on several levels around them.
The Ford Mustang, thanks to a December sprint to the finish, won the pony car sales race over the Chevrolet Camaro.
And it wasn't as close as anticipated.
Ford Mustang sales came in at 66,623 vehicles; General Motors sold 61,648 Chevrolet Camaros. The Camaro went on sale in March so did not have a full year of sales.
Some day, automakers hope to look back on 2009 as the year that both sales and corporate fortunes finally bottomed out. It's far too early to tell if history will treat last year that way, but for now, at least, the industry is taking heart from a definite surge of sales momentum as the decade closed.
Automakers sold about 10.4 million units last year, a disastrous tally that comprised the lowest total of light-vehicle sales in this country since 1970.
The winner of the sales race between the Chevrolet Camaro and Ford Mustang will be revealed when the auto industry reports sales Tuesday. And the finish will be a close one.
General Motors already is hailing a victory, announcing the Camaro will win. And, based on Edmunds.com estimates, it's possible even though at the end of November Mustang was ahead.
"It looks feasible that the Camaro could outsell Mustang," said Edmunds.com Analyst Ivan Drury. "The two will be only a thousand or two thousand units apart when final sales are reported."
Still, through the end of the November, the Mustang was ahead.
Car shopping on Edmunds.com surged in the waning days of December, prompting the Web site to suggest sales for the month may come in higher than previously expected -- and could be the highest non Cash for Clunker month of the year.
"The industry potentially could reach a seasonal sales rate of 11.7 million vehicles in December, given the current site traffic trend," noted Edmunds.com Senior Analyst Jessica Caldwell.
"Our Web site activity is through the roof," added Caldwell. "That makes sense as there are so many bargain-hunters scrambling to get year-end deals and cash in on the sales tax deduction opportunity that expires on December 31st."
An improving economy likely has helped as well. Edmunds.com Web activity in late December is 60 percent higher than the historical pattern for the period. Brands enjoying particularly strong activity are BMW, Ford, Honda and General Motors' Chevrolet, Pontiac and Saturn brands.
Ten years ago, most people had never heard of many of the technologies that are mainstream today.
"In the '90s, satellite radio and iPods weren't around. Only hard-core computer geeks were tweaking cars to add MP3 capability, and navigation systems were still only available as expensive in-dash systems," remembered Edmunds.com Senior Technology Editor Doug Newcomb. "Bluetooth hands-free phones were still years away and Bose was the best known of only a handful of premium car audio offerings."
As the decade comes to a close, Edmunds.com has identified the following top 10 in-car technologies of the last 10 years.
Desperate times require desperate measures, as the saying goes, and 2009 was about as desperate as it gets in the auto industry.
Companies sometimes do the most interesting things when they're desperate -- and that maxim seems particularly relevant to auto companies. Because their products are so visible, with such potential emotional impact. Because their executives and designers and engineers are in charge of the process that creates those products.
Desperation in 2009 -- as defined by coming up some 6 million sales short of the industry's glory days of just three years ago -- generated products and strategies that ran the gamut from ridiculous to sublime. Some ideas were inspired; some were just tired.
Here are a few of the best and worst ideas from the auto industry in 2009:
Not only is 2009, one of the single most tumultuous years for the auto industry, drawing to a close, but so is the first decade of a new century.
As the year winds down, data analysts at Edmunds.com are cranking away at numbers that are certain not only to entertain but also demonstrate how cataclysmic 2009 turned out to be, particularly viewed through the prism of a closing decade's worth of sales-performance trends: market share destroyed, market share gained. Years of growth turned upside down. Surprising sales-volume gains, foreboding losses.
The ever-present import-versus-domestic battle in almost startling perspective.
Ford Motor Co. confirmed Wednesday details of its sale of Volvo to China's Zheijang Geely Holding Group Company Ltd. have been settled, and the deal likely will close in the second quarter of next year.
Saying more information would be revealed when the final documents are signed in the first quarter of 2010, Ford provided no details about the terms of the sale, including the price. Experts estimate the price $1.8 billion, making it the largest overseas acquisition by a Chinese automaker.
The best thing that might be said about the year the auto industry - and an economically battered nation - is preparing to close: it probably can't get any worse.
The year 2009 brought two high-profile bankruptcies, billions of dollars in government bailouts and funding for Cash for Clunkers and thousands of lost jobs. Similar upheaval - though not as catastrophic as predicted - came to the tightly integrated supplier industry. Several historic brands were relegated to the archives.
Five new models displayed at the recently wrapped-up Los Angeles auto show are generating tremendous buzz on Edmunds.com. The five most talked-about vehicles are the Buick Regal, Ford Fiesta, Hyundai Sonata, Toyota Sienna and Cadillac CTS coupe.
The former AT&T CEO held his first media roundtable since adding the CEO title two weeks after the ouster of Fritz Henderson.
At the press briefing, Whitacre said GM's priorities are paying back $6.7 billion in government loans by June and selling more cars and generating more revenue. He also called GM's sale of Saab to Dutch sports car maker Spyker is "possible" by year-end, but, if not, Saab would be eliminated.
The Ford Fusion Hybrid, Buick LaCrosse and Volkswagen Golf are finalists for the 2010 North American Car of the Year awards. Finalists for the 2010 North American Truck of the year are the Subaru Outback, Chevrolet Equinox and Ford Transit Connect.
The half-dozen finalists for the prestigious awards were announced Wednesday at an Automotive Press Association luncheon sponsored by organizers of the Detroit auto show, where the winners will be announced in January.
U.S. auto sales clocked in about flat in November compared with a year ago -- and in line with widespread expectations that the market will only gradually creep upward for at least the next year. But industry executives and analysts mostly chose to interpret the American auto market as a glass half-full.
November sales were 746,544 vehicles compared with 743,605 in November, 2008. On an absolute basis, that number of units represented a 0.4-percent year-to-year monthly sales increase -- or call it flat. But taking into account the fact that the industry enjoyed two fewer "selling days" this year compared with last November, sales actually increased by 9.1 percent last month on an apples-to-apples basis.
Ford's sale of Volvo to Chinese automaker Geely appears to be edging toward completion, as major hurdles are cleared.
Geely, the preferred bidder for Ford's Volvo unit, reportedly is seeking at least $1 billion in loans from Chinese banks to finance its bid for the Swedish auto company.
The U.S. Supreme Court denied a last-ditch effort from Ford Motor Co. Monday to reverse an $82.6 million decision in a product-liability case involving the Ford Explorer, according to the Wall Street Journal.
California resident Benetta Buell-Wilson and her husband sued Ford in 2002, the year the Ford Explorer Buell-Wilson was driving overturned on a highway. Buell-Wilson swerved to avoid a piece of metal, causing the Explorer to roll over and its roof to collapsed, crushing Buell-Wilson and rendering her a paraplegic.
Thanksgiving week saw the blow-up of yet another deal for a cast-off General Motors Co. brand, but unsurprisingly, nobody's yet declaring Saab Automobile a dead turkey.
A Bloomberg News report from China early Monday had Beijing Automotive Industry Holding Co. (BAIC) president Wang Dazong insinuating his company is considering its own play for Saab after Sweden's Koenigsegg Group unceremoniously dropped its bid for GM's perennially money-losing Swedish auto division. BAIC was part of the consortium led by Koenigsegg that originally planned to take over Saab.
And yes, venture capital - the reddest of flags for flailing auto companies - appears to be involved, too.
General Motors last week began sending out 1.8 million pieces of direct mail to what the automaker calls its "free-agent customers" -- customers orphaned by the wind-down of Pontiac and Saturn and the proposed sell-off of Hummer and Saab.
In this first of promised multiple mailings, GM is offering discounts of up to $2,000 on certain models to the nearly 1 million customers of closed GM dealerships, if they go to the next closest dealer by January 4. The automaker also is giving customers of closed dealerships a vehicle inspection and tire rotation at remaining dealerships through May.
"The challenge for us is to grab those customers by the hand and make sure they know where to go," Susan Docherty, GM's vice president of U.S. sales, said in a media conference call last week.
But GM's competitors also are eyeing those up-for-grabs customers.
After the sales plunge in the auto market began in earnest in the fall of 2008, automakers scrambled to reduce production schedules, sell off swollen inventories and otherwise deal with a drastically contracting U.S. market.
Now, after months of production cutbacks orchestrated by many automakers and the summer's outsized demand from the $3 billion Cash for Clunkers rebate program, bloated inventories are a thing of the past. Now, data researchers at Edmunds.com say the coming months may be a tug of war between still-cautious buyers and right-sized-but-cash-strapped automakers anxious to hold the line on pricing.
It could be a battle that sees winners and losers on both sides as uncommon market and industry forces collide in what will be an unpredictable sales environment.
A rigorous new roof-strength standard means a lot fewer new models earned the Insurance Institute for Highway Safety's "Top Safety Pick" award for 2010.
This year, just 27 individual models were named Top Safety Pick by the IIHS, compared with last year's record 94 models that earned the award. Most of the reason so many new vehicles couldn't grab the brass ring comes down to a newly instituted roof-safety test presumed to indicate superior protection in rollovers, which are involved in about one-third of all fatal accidents.
"With the addition of our new roof strength evaluation, our crash test results now cover all 4 of the most common kinds of crashes," said IIHS president Adrian Lund in a release. "Consumers can use this list to zero in on the vehicles that are on the top rung for safety."
The Mazda2 is coming to North America, making its debut at the 2009 Los Angeles Auto Show in early December.
Named last year's World Car of the Year and sold in Japan as the Demio, the Mazda2 goes on sale in late 2010 in the U.S. and Canada as a 2011 model.
The Ford Fiesta, which shares the Mazda2's architecture, beats the Mazda2 to showrooms with a spring arrival. The Euro-designed Fiesta will be built in Mexico.
The Fiesta also will have its North American debut at the Los Angeles show.
Ford Motor Co. stock closed Monday at its highest price in more than two years after billionaire investor George Soros upped his stake in the automaker.
Ford shares rose 30 cents, or 3.6 percent, to close at $8.71 a share on Monday. That's the highest price since the shares closed at $8.95 per share on Nov. 2, 2007, according to Bloomberg. Ford shares have risen 25 percent since Oct. and more than tripled this year.
China's Geely Holding Group Co., selected by Ford as the lead bidder for Volvo, has developed a turnaround plan for the money-losing Swedish brand that centers on China but also sets ambitious goals for sales in Volvo's traditional markets of Europe and North America, the Wall Street Journal reports.
Geely would add two or three larger, more luxurious models to Volvo's line in the next three to four years to boost global sales, sources told the Journal. New models would compete with the popular Audi A6, a symbol of success in China.
Hoping to mitigate crash-related injuries to a vehicle's rear-seat passengers, Ford Motor Co. unveiled what it is calling the auto industry's first seatbelts with integral air bags that inflate in an accident to provide additional protection.
The new rear-seat inflatable seatbelts will be offered for the new-generation Ford Explorer crossover, which begins production next year, said Sue Cischke, Ford group vice president of sustainability, environmental and safety engineering.
Although several automakers and safety-systems suppliers have in recent years shown concepts for inflatable belts, Ford claims it will be the first to use them in a production vehicle.
Incentives paid by automakers dipped in October from September and a year ago as they launch new 2010 models, which don't need them yet, and wind down 2009 models, Edmunds.com reports.
The average automotive manufacturer incentive in the U.S. was $2,468 per vehicle sold in October 2009, according to Edmunds.com analysis of Total Cost of Incentives (TCI). That's down $329, or 11.8 percent, from September, and down $209, or 7.8 percent, from October 2008.
"Incentives declined because fewer old model-year vehicles were sold in October, and the newer vehicles are not discounted nearly as heavily," explained Jessica Caldwell, director of industry analysis for Edmunds.com. "Over 55 percent of vehicles sold in October were 2010 model year, compared with about 36 percent in September."
Automakers report October sales on Tuesday and those reports are likely to show some signs of life.
Edmunds.com forecasts the Seasonally Adjusted Annualized Rate (SAAR) of car sales will come in at 10.3 milllion to 10.4 million, the year's highest level aside from the summer's Cash for Clunkers months of July and August.
Toyota's Bob Carter told reporters in Detroit Monday that he expects the SAAR to come at between 10.3 to 10.5 million units. "Toyota will be up single digits on a daily selling rate basis versus September and down slightly - single digits - versus a year ago," Carter said. Edmunds.com forecasts Toyota sales will be off 9.6 percent from a year ago.
Ford Motor Co. reported it earned a profit of $997 million in the third quarter, with its North American operations posting its first profit since the first quarter of 2005. The automaker said the results put it on track to be "solidly profitable" in 2011.
The results far surpassed forecasts by analysts, most of whom expected a loss. That sent Ford's shares up 6 percent in pre-market trading Monday morning.
Ford said its third-quarter earnings represented a $1.2 billion improvement from the same period a year ago.
"Our third-quarter results clearly show that Ford is making tremendous progress despite the prolonged slump in the global market," Ford President and CEO Alan Mulally said in a statement issued Monday morning. He acknowledged "we still face a challenging road ahead."
Alan Mulally might have reckoned he left union discord behind when he left aerospace giant Boeing Co. to become Ford Motor Co.'s president and CEO in 2006. But this weekend's resounding dismissal of Ford's desired concessions from the United Auto Workers union may set the tone for ongoing tension between Ford and its union similar to that Mulally became accustomed to at Boeing.
Although nationwide voting will not be official until sometime today, the UAW already was conceding its rank-and-file workers had widely rejected a Ford proposal of contract concessions that would equate to those the UAW earlier this year granted General Motors Co. and Chrysler Group LLC, both of which tripped through hasty Chapter 11 bankruptcies this summer.
This despite the fact UAW counterparts at the Canadian Autoworkers Union approved the concessions.
October car sales are expected to come in at the highest level of the year except for during the summer's frenzied Cash for Clunker months, Edmunds.com forecasts.
Industry sales, being reported on Tuesday, are expected to total 830,000 vehicles, almost even with a year ago and up 11.4 percent from September. That would push October's Seasonally Adjusted Annualized Rate (SAAR) to 10.35 million, up from 9.19 in September.
""There are clear signs that the automotive industry is finally starting to recover from the painful lows experienced earlier this year,"said Jessica Caldwell, Edmunds.com's director of Industry Analysis.
Too much good news is turning out to be a bad thing for Ford Motor Co.
The good news apparently has convinced members of the United Auto Workers union that things are hunky- dory at Ford, and there's no reason for them to give the automaker the same concessions competitors General Motors and Chrysler got from bankruptcy proceedings.
As of day-end Tuesday, union members at half-dozen Ford plants had rejected -- in some cases resoundingly so -- the new contract that puts Ford at parity with union brothers and sisters at GM and Chrysler. Voting continues through Saturday, but the outlook is not good as only two plants with votes tallied so far have voted in favor of a new contract.
Ford Motor Co. set a new record in Popular Mechanics Automotive Excellence Awards by winning more categories in a single year than any other automaker in the history of the awards.
Ford vehicles winning 2010 awards, which recognize the best in design, execution and technology, were the: 2010 Ford Mustang Shelby GT500, Best Performance; 2010 Ford Transit Connect; Best Workhorse; and the 2010 Ford F-150 SVT Raptor, Best Off-Road Ability.
"Ford's sweep of three categories in this year's awards speaks to the onslaught of great products coming from Dearborn," said Ben Stewart, automotive editor, Popular Mechanics.
Ford Motor Co.'s confirmation that it has chosen a group led by Chinese automaker Zhejiang Geely Group Holding as its preferred bidder for Volvo came as no surprise. Geely has long been mentioned as a potential buyer for the Swedish marque, which Ford put up for sale a year ago.
"Ford's objective in our discussions with Geely is to secure an agreement that is in the best interests of all the parties," Ford's CFO Lewis Booth, said in a statement.
Ford Motor Co. secured its position as the only Detroit automaker with world-class reliability, according to Consumer Reports magazine's 2009 Annual Car Reliability Survey.
Of 51 Ford, Mercury, and Lincoln models, 46 had average or better reliability, the magazine said in an announcement made Tuesday at the Automotive Press Association in Detroit.
"Ford's sustained production of vehicles that are as dependable -- or better than -- some of the industry's best dispels the notion that only Japanese manufacturers make reliable cars," the magazine said.
Ford could run short of Ford Edge and Ford Flex models due to a labor dispute at a supplier plant in India that has forced the automaker to close its Oakville, Ontario, assembly plant.
Ford closed the Canadian plant, which makes the Edge and Flex as well as the Lincoln MKX and newly-launched Flex-based MKT, due to a shortage of transmissions, the result of a labor dispute a supplier plant, Rico Auto Industries, in India. The strike turned violent Sunday night after a plant employee died during a protest.
The industry's best deals right now are in luxury cars, sports cars and convertibles as well as leftover 2009 models, according to Edmunds.com.
As for brands, Lincoln, Saab and Volvo are offering great deals, as are Pontiac and Saturn, which are being discountinued completely by General Motors.
"Dealers should be open to any decent offer since they know that these vehicles, which often sell to a fashion-conscious crowd, will drop in value once the 2010 model year vehicles roll in. There will be nothing harder to sell than a 2009 convertible in winter with 2010 fast approaching," said Edmunds.com Senior Analyst Jessica Caldwell. And there is ample inventory of 2009 models, she added
Ford Motor Co. is moving production of its small Kuga crossover from Europe to the U.S. to take advantage of lower labor costs and the weaker dollar, Bloomberg News reports.
Ford will shift Kuga production from Germany to Louisville, where Ford makes trucks, in October 2011, says Bloomberg, quoting three unnamed sources apparently familiar with the plans. As many as 80,000 a year will be exported to Europe.
After dismal September car sales due to the hangover from the government's Cash for Clunkers program, auto manufacturers have ramped up incentives in October as they have ramped up production to refill the inventory pipeline, according to Edmunds.com.
The incentives show manufacturers are extremely eager to sell off 2009 models left in inventory. But automakers are also offering incentives on newly launched 2010 models.
"This year has been a wild ride for automakers, and it's not over yet," said Edmunds.com Senior Analyst Jessica Caldwell. "No segment is unaffected by the current round of incentives, though luxury models and trucks are being discounted particularly heavily."
Low-interest financing, including zero-interest financing, and cash rebates dominate the landscape, but subsidized lease programs, almost non-existent in the past years, are proliferating as well.
Former Ford executive Wolfgang Reitzle has been named chairman of the supervisory board of auto supplier and tiremaker Continental.
A lieutenant of former Ford CEO Jacques Nasser and head of Ford's now-defunct Premier Automotive Group, Rietzle is chief executive of Linde AG, an industrial gases and engineering company.
Reitzle remains one of Germany's most high-profile executives and must lead Continental through the economic downturn and deal with an ugly take-over situation.
Ford may report an unexpected third-quarter profit next week, for the first time in a long time, analysts for JP Morgan predicts. However, The Wall Street consensus is that Ford will post a loss.
Put up or shut up, albeit in more polite European terms, is basically financial columnist Antony Currie's advice to Detroit's auto bosses.
The Big Three bosses have returned to one of their favorite past times, writes Currie on the financial blog site, Breakingviews.com: "... each of the Big Three's bosses has been indulging in painting rosy scenarios for their firms. But like pronouncements of the past, they're a tad premature."
Caught recently at Ford Motor Co. headquarters in Dearborn, Mich.: a Fiat Bravo 5-door in the employee parking area.
But not just any employee - the small sign at the right reads "Vice President."
If Ford's crosstown rival Chrysler Group LLC - now managed by partial owner Fiat S.p.A. - gets its way, there are going to be Chrysler -- and probably Fiat-badged subcompacts sold in the U.S. within two years that could rely on some variant of the Bravo underpinnings.
A faulty switch to disengage cruise control will cost Ford Motor Co. yet again in what has been a wide-ranging safety problem.
In the latest recall that encompasses some 4.5 million vehicles - mostly trucks - Ford will repair the switch that can overheat and cause underhood fires. This round brings the number of vehicles recalled to fix the switch to 16 million. It is the largest recall ever in the U.S.
The vehicle lines affected by the latest recall - the Detroit Free Press said it now is the eighth recall for the switch - are:
1992-2003 Ford Ranger 1992-2003 Econoline vans 1995-2003 Ford Windstar 2000-2003 Ford Excursion 1993, 1997 and 1999-2003 F-Series Super Duty with diesel engines 1994 F53 motorhomes
The National Highway Transportation Safety Admin. opened an investigation for the latest recall in June 2008 after reports of engine fires in Windstar minivans.
Ford achieved a 10.1-percent market share in September in its primary 19 European markets - the best share for any month since September 2001 - and a 0.8 percentage point increase on September 2008.
Ford sold 51,400 new Ford Fiesta cars in September - the best September for Fiesta since 1994. The Fiesta goes on sale in the U.S. in 2010.
China is on track to surpass the U.S. in vehicle sales this year. Automakers reported selling more than 1 million vehicles in September - a first - according to the China Association of Automobile Manufacturers.
China's total vehicle sales are expected to close the year at 12 million, as much as 2 million above what analysts project for the U.S.
Ford reportedly has reached a tentative agreement with the United Auto Workers union similar to one negotiated with General Motors earlier this year.
The proposed agreement would freeze entry-level wages, implement a no-strike clause and pay a bonus to workers for agreeing to new concessions, sources have told the Wall Street Journal.
The agreement now goes to the union's national council delegates, who will decide if it should go to members for a vote.
When Ford product planners began to contemplate a possible new generation Taurus, they decided they should either move the next Taurus upmarket so it wouldn't be positioned right on top of the popular Ford Fusion as the previous one was - or forget about being in the segment altogether.
The automaker moved forward with a more upscale Taurus, introduced this summer as a 2010 model, and it appears to be doing what product planners intended, according to Edmunds.com's analysis of Taurus shoppers and what else they are considering.
The analysis shows: - the new Taurus is being cross-shopped less with other Ford models than the old one, and the Ford models it is being cross-shopped against are more upscale ones; - the new Taurus' most cross-shopped list shows more upscale competitors in the mix, including some luxury brands and hot imports that weren't on the old Taurus' cross-shop list; - off the top 10 list are more downmarket competitors.
Doug Speck, president and CEO of Volvo Cars North America, is in the guest chair on this week's AutoLine Detroit with Edmunds'AutoObserver Michelle Krebs, Business Week's David Welch and show host John McElroy firing the questions at him.
The show is available now on AutoLine Detroit's Web site and airs on Detroit Public Television on Sunday, October 11 at 10:30 a.m.
Volvo was put on the auction block by Ford Motor Co. a couple of years ago. Ford eportedly has bids for the 82-year-old Swedish marque from Chinese automaker Geely, which just got a boost financially and in image with an investment by Goldman, and Crown Consortium, a group of former Ford executives with some private equity funds.
But no matter what goes on at the ownership level, the beat goes on for Speck and Volvo.
Consumers are paying 2 percent more this year for new cars and trucks than they were a year ago, according to Edmunds.com.
That's good news for automakers eager to turn profits on fewer sales, but bad news for consumers.
The average price of a car or truck sold in the United States was $28,492 for the first nine months of the year, compared with $27,945 last year, according to Edmunds.com. The average transaction estimate doesn't include manufacturer rebates.
A few years back, it was the first appearance of a Chinese automaker at the Detroit auto show that seemed to start the serious speculation about when the Chinese would crack into the U.S. market. Assessing the functional but rudimentary models on display, some predicted 2015 or 2020.
Instead, how about next year?
OK, it won't be with their own China-built models. But there are three pending brand-takeover deals -- General Motors Co.'s Saab and Hummer and Ford's Volvo Cars -- in which a Chinese automaker has a leading or secondary role. If any of the three purchases make it to completion -- and it's probable at least two will -- Chinese automakers will in effect be selling vehicles in the U.S.
The 2010 Ford Taurus is rolling onto dealer lots across the country, and, judging by a flurry of recent posts in Edmunds' CarSpace Forums, its all-new design appears to have captured the attention of the car-buying public.
But with no lack of tough competitors out there, will it also capture their business? And is it priced right?
Although Ford Motor Co. has been trying to offload its money-losing Volvo Cars unit for some time, it appeared there had been only one entity serious about buying Volvo: China's Geely Automotive Holdings.
But the Financial Times reports today that a consortium headed by former Ford executive Michael Dingman and that also includes Shamel Rushwin, another executive for both Ford and Chrysler, has emerged as a bidder for Volvo.
There are few reported details about a proposal from Dingman's Crown consortium to acquire Volvo, but the deal likely may vary significantly from that proposed by Geely, which, among other facets, is said to include a provision that Ford retain responsibility for certain pension liabilities and that Ford retain a share of Volvo.
U.S. auto sales in September dipped to predicted lows because the Cash for Clunkers program ended in August and there weren't many buyers left, car company executives reported Thursday. They're just hoping that the market's massive "payback" via September's sales drought isn't extended into the fourth quarter.
Americans bought just 745,516 vehicles in September, a 23-percent drop from a year ago. That represents an abysmal Seasonally Adjusted Annual Rate (SAAR) of sales of just 9.2 million units - the lowest since February and roughly the laconic pace at which economically shell-shocked consumers purchased cars during the first half of the year.
And it was far below -- 41 percent, to be exact -- the relatively breathtaking sales rate of 14.1 million units that prevailed for August, when most buyers took advantage of a total of $3.5 billion in rebates under the federal government's clunkers program and purchased more fuel-efficient vehicles. September's sales volume plunged by more than a half-million units compared with August.
After five straight months of decline, incentives are on the rise again, according to Edmunds.com.
The average manufacturer incentive totaled $2,557 per vehicle sold in September, up $83 or 3.4 percent from August, Edmunds.com estimates. That was down $344, or 11.9 percent from September 2008.
This summer's Cash for Clunkers program substituted as a manufacturer incentive but with the program over and vehicle inventories being replenished, consumers aren't buying, as will be seen when automakers report September sales Thursday. Edmunds.com forecasts sales for the month will come in at only about a 9.3 million Seasonally Adjusted Annual Rate (SAAR).
Microsoft Corp. said Ford is among a handful of companies that will upgrade to the new Windows 7 operating system and help the company promote the new system that goes on sale next month.
Sounds like "you scratch my back and I'll scratch yours" deal.
Ford uses Microsoft's Sync communications and music system in many of its vehicles, and Microsoft, including its famous founder Bill Gates personally, has helped Ford promote it.
Automakers will have their resolve to scaleback incentive spending tested in the coming months as their assembly plants ramp up production to beef up inventory and sales continue to be soft.
Incentives on General Motors, Ford and Chrysler vehicles plummeted by 26 percent to $3,278 per vehicle in August from a March peak, according to Edmunds.com, parent of AutoObserver.com. Industrywide incentives fell 22 percent to $2,474 per vehicle.
"Automakers have to pull the lever and increase production in an unknown market," Edmunds.com Senior Analyst Jessica Caldwell told Bloomberg News. "They could find there are no buyers out there and have to raise incentives again. It's a vicious circle."
September's hangover from August's Cash for Clunkers program appears to be easing.
New vehicle sales for the month are expected to total 742,000 units, off 22.9 percent from September 2008 and down 41.1 percent from August when Cash for Clunkers was in full swing, according to Edmunds.com's forecast. That would put the Seasonally Adjusted Annual Rate (SAAR) of sales at 9.34 million vehicles. Automakers report U.S. sales on Oct. 1.
"The aftereffects of Cash for Clunkers are still being felt: a significant number of September sales were pulled ahead into August, and many September shoppers left showrooms empty-handed after finding low inventories and high prices," said Edmunds.com CEO Jeremy Anwyl. "However, the industry's sales rebound is gaining momentum, so there is room for a small upside surprise on sales announcement day."
Ford is forecasting an increase in sales through the end of this year and a further rise in the next two years.
Ford CEO Alan Mulally told reporters in New Delhi, India, where Ford was launching a new small car, that U.S. car sales will hit 11 million this year then rise to 12.5 million in 2010 and 14.5 million in 2011, the year Ford vows it will break-even.
"That's pretty optimistic for 2009," said Jessica Caldwell, Edmunds.com senior analyst. "The industry would have to average 1 million sales for the next four months to achieve Ford's predicted 11 million."
Edmunds.com has completed its final tally of the most popular vehicle purchases and most frequent trade-ins under the Cash for Clunkers. The Ford Focus held its No. 1 spot as the favorite buy; the Ford Explorer remained the No. 1 trade-in.
Indeed, the top 10 lists in both categories wound up little changed from the early scoring on Edmunds.com's lists.
And, in fact, many of the top clunker buys are the industry's bestsellers in non-clunker times. Eight of the 10 vehicles on the top 10 clunker buy list are also in the top 10 for the year so far in total; only the order is changed.
Hangovers are hell, and in Europe as in the U.S., automakers fear with Cash for Clunkers programs ended or winding down, they are in for a big one.
In Europe, automakers are pushing their governments to continue Cash for Clunkers-like plans - known as scrappage programs -- for fear the bottom will fall out of car sales.
In the U.S., automakers aren't pressing for Cash for Clunkers 2.0, but they are worried about sales this month and through year-end.
At the Frankfurt Motor Show Tuesday, Ford Motor Co. said it will bring the new generation of its popular European compact people-mover, the Focus C-Max, to the U.S. sometime near the end of 2011.
The C-Max, the all-new generation of which was unveiled in Frankfurt, has been a widely acclaimed hit for Ford of Europe since the original went on sale in 2003.
Derrick Kuzak, Ford's group vice president in charge of global product development, told a group of reporters at its Dearborn, Mich., headquarters Monday the initial U.S.-market C-Max will be the 7-passenger variant (to be called the Grand C-Max) that is longer and taller than the standard 5-passenger C-Max and has a sliding rear door on each side. Both are based on Ford's new global C-segment architecture, also used for the Ford Focus.
Ford marketing sources say it has not yet been decided how the vehicle will be badged in the U.S. - the Focus name, for example, may not be included in the car's branding.
Medium-duty truck buyers are due for a potential treat when Ford Motor Co. launches 2011 models of its Super Duty F-Series next spring powered by the company's all-new Power Stroke 6.7-liter V8 turbodiesel.
The new, in-house-developed engine ends Ford's decades-long supply arrangement with Navistar International Corp., a relationship that ends this year after a long and publicly nasty dispute.
The engine, which Chief Engineer Adam Gryglak said is a total clean-sheet design, is something of a technical tour de force: It has an innovative twin-turbocharger setup packaged as a single unit, a reversed exhaust-port design in which exhaust exits on the inner portion of the engine's vee and Ford's first medium-truck use of weight-saving compacted graphite iron for the engine block.
Maybe America's love affair with pickup trucks isn't over. It's just getting smaller.
In both size and volume.
The recently ended federal Cash for Clunkers incentive was a giant boost for fuel-efficient cars. They dominated the top 10 list of new vehicles purchased by those trading clunkers. But if August sales reports are any indicator, more than a few of those Cash for Clunkers vouchers were used to buy midsize (formerly "compact") pickups.
The U.S. government's Cash for Clunkers program finished its job in August, boosting industry-wide U.S. sales to 1,261,799 vehicles, a 1.3-percent increase from a year earlier and a 26.7-percent boost from July, as American consumers rushed dealerships to turn in their well-used vehicles for more fuel-efficient new ones.
Automakers revisited long-abandoned, almost heady levels of sales, with the August results translating into a Seasonally Adjusted Annual Rate of 14.1 million units - equivalent to a yearly pace about five million units faster than the sales rate for the first half of this year, and much higher than the 10.5-million to 11-million-vehicle pace that industry executives still expect to prevail for the rest of 2009.
With American taxpayers footing the bill for Cash for Clunkers, automakers were able to lower their spending on incentives in August. And, in fact, automakers may still have paid more than they needed to in incentives.
The average automotive manufacturer incentive was $2,475 per vehicle for every vehicle sold in August, Edmunds.com estimates. That's down $231, or 8.5 percent, from July and down $327, or 11.7 percent, from August 2008, continuing a downward trend of several months.
"The industry spent a record $3,165 per vehicle in March, but ever since then, incentives have continuously fallen," said Jessica Caldwell, Edmunds.com's director of Industry Analysis.
However, the story may change in the coming months, she added, with the Cash for Clunkers program over, vehicle inventories low due to production cutbacks and brisk clunker sales. But now, factories are ramping up production to fill up the pipeline again -- production that may come into a market that isn't in the mood for buying.
Thanks to the government's Cash-For-Clunkers program, new-vehicle sales bounced around throughout the month of August, one of the most volatile periods in automotive history. Edmunds.com predicts the annualized sales rate could land at just more than 13 million for the month.
"Cash for Clunkers sent the sales rate on a wild roller coaster ride," said Edmunds.com Senior Analyst Jessica Caldwell. She said the Seasonally Adjusted Annualized Rate (SAAR) of sales exceeded 19 million in late July - the peak of Cash-For-Clunkers selling - and fluctuated around the 15-million mark in early August. But the SAAR has plunged to an 8-million rate in the post-Clunkers final days of the month.
"Ending August on such a low note does not bode well for September," Caldwell warned.
Prior to the Cash-For-Clunkers sales explosion, the last thing automakers would have considered was increasing production in their North American factories.
In answer to the worst industry sales slide in more than a generation, most had for more than a year being doing just the opposite - slashing production schedules - in an attempt to reduce bloated inventories suddenly and catastrophically out of line with consumer demand.
But Cash-For-Clunkers changed all that: in just four weeks, the federal incentive program squeezed more than a half-million buyers into showrooms. So much for that troublesome inventory.
Now the auto industry has to deal with the wholly unpredicted consequence of Cash-For-Clunkers' success: almost overnight, nobody has enough new vehicles to sell. And the equally ironic solution: raise production.
Reports from Japan earlier this month indicated Honda Motor Co. Ltd. -- like other automakers with models that proved popular in the just-ended Cash for Clunkers new-vehicle rebate program -- is planning to increase production to replenish starved U.S. inventories.
But a Honda spokesman told AutoObserver today the company won't detail the amount of its production increase.
"We're not attaching figures yet to our production," said the Honda spokesman, adding that the company doesn't expect to forecast production for the remainder of the year.
The much-examined Cash for Clunkers new-vehicle rebate program ends August 24 and the armchair quarterbacking has already started. Most evaluations of the program will focus on the government's inability to quickly process applications and reimburse dealers for the $3,500 or $4,500 rebates given to buyers.
The backlog of payments certainly affected dealer cashflow, particularly for smaller operations.
But according to new data from Edmunds.com, dealers (and automakers, ultimately) did enjoy more than a few offsetting perks: Besides hiking sales volumes, the Cash for Clunkers program, along with the resulting accelerated reduction of new-vehicle inventories, was responsible for immediately jacking up average transaction prices, margins -- and dealer profit.
General Motors Co. and Honda Motor Co. Ltd. are the latest automakers to spool up U.S. vehicle production to answer inventories depleted by the ongoing "Cash for Clunkers" new-vehicle rebate program.
GM will add one day shift at the Orion Township, Michigan, plant that assembles the Chevrolet Malibu midsize sedan; the plant currently is on a four-day work week. Also ramping up with the addition of a two-shift day will be the automaker's plant in Lordstown, Ohio, that produces the Chevrolet Cobalt compact cars, Dow Jones reported.
GM is expected to announce more production increases as it adjusts a third-quarter output that had been drastically reduced from year-ago levels. In extending the Car Allowance Rebate System, the official name of Cash for Clunkers, from the original $1 billion in funding to a total of $3 billion, the program has put unanticipated pressure on the stock of many of the most popular vehicles purchased by those trading clunkers.
Trying to insure it doesn't run dry of two of the best-selling new vehicles in the still-humming Cash for Clunkers rebate program, Ford Motor Co. confirmed today a modest production increase for the third quarter, from 485,000 units to 495,000 units.
Ford's 2 percent production hike over its previous plan will come from extra shifts and more overtime at the Kansas City, MO, plant that produces the Escape compact crossover and the Wayne, MI, factory that assembles the Focus compact.
Data from Edmunds.com indicates the Focus and the Escape ranked as the No.1 and No.2 new vehicles bought to replace "clunkers" in the government-funded Car Allowance Rebate System (CARS) incentive program that runs through the end of this month.
Ford vehicles topped the most recent list of clunkers traded in and models bought to replace those clunkers as the Cash for Clunker frenzy slowed some from its end-of-July peak, Edmunds.com finds.
The Seasonally Adjusted Annualized Rate (SAAR) of vehicle sales dipped to a still high of 16 million for the first week of August. By comparison, the SAAR for the peak week of the government's Car Allowance Rebate System (CARS) -- the last week of July -- was 19.6 million.
From the CARS July 24 launch to August 7, the Ford Explorer SUV and Ford F-150 pickup truck were the No. 1 and No. 2 vehicles, respectively, traded in as official clunkers, according to Edmunds.com's calculations.
The Ford Escape and Ford Focus ranked No. 1 and No. 2, respectively, for vehicles purchased to replace those clunkers, according to Edmunds.com.
Should the federal government fund a Cash for Clunkers extension, and is it worth the added
$2 billion cost as an economic and environmental stimulus?
Those are the questions the Senate considered this week as it debated the extension the House already passed. Data based on real Cash for Clunker transactions by Edmunds.com shows clearly vehicles turned in as clunkers -- mostly gas-guzzling trucks and SUVs -- would have been traded in at some point even without the program.
However, those vehicles were traded for vehicles that were more likely to be cars than trucks or SUVS and vehicles that deliver better fuel economy with the $3,500 to $4,500 government vouchers provided under the Car Allowance Rebate System (CARS).
Further, the clunker plan appears to have had a rub-off effect. The program created a feeding frenzy, with the last week of July generating a seasonally adjusted selling rate of a stunning 19.6 million vehicles. And those consumers buying vehicles regardless of trade-ins opted for smaller, more fuel-efficient cars during the Cash for Clunker program at a higher than usual rate.
Pressing U.S. Senators to pass a $2-billion extension to the Car Allowance Rebate System
(CARS) -- the riotously accepted "Cash For Clunkers" program projected to run through its original $1 billion backing in little more than a week - the Obama administration is citing the program's impact on reducing fuel consumption.
A note from the administration reportedly being distributed to lawmakers says the average fuel-economy gain between traded-in clunkers and the new vehicles purchased to replace them is 9.6 miles per gallon -- a 61 percent improvement. Purchased vehicles that improve fuel economy by at least 4 mpg net the clunker owner $3,500. New vehicles that achieve 10 mpg or better than the clunker they replace win the owner a $4,500 CARS rebate.
The crescendo of activity in American auto showrooms around the Cash for Clunkers program late last week produced a correspondingly huge surge in U.S. auto sales, and consumers kept scrounging through the weekend for fuel-efficient vehicles to buy under the generous government rebates.
Consequently, sales for all of July for the industry came up only 12 percent short of their level a year ago - when $4-a-gallon gasoline also was goosing shopper interest in fuel-efficient vehicles.
Both Ford and Subaru signaled over the weekend that they would post year-over-year sales increases. And indeed they did.
Ford said July sales were 2 percent higher than July 2008, thanks to the Cash for Clunkers program, officially known as Car Allowance Rebate System (CARS).
Subaru sales soared 34 percent, with Cash for Clunker deals accounting for 40 to 50 percent of July sales. Most clunkers were traded for the popular Subaru Forester.
The race is on for which will run out first: government funding for Cash for Clunkers or the cars
popular for purchase by clunker traders.
The U.S. House handily passed a Cash for Clunkers extension that provides an added $2 billion to the program, bringing the total to $3 billion. The Senate takes up the matter this week where it faces more challenge by Democrats, who want higher fuel-economy requirements for the new vehicle bought with the clunker trade, and Republicans, who oppose more spending.
At the same time, consumers who are ditching their clunkers for the $3,500 or $4,500 credit toward the purchase of a new, more fuel-efficient vehicle face a dwindling selection and supply of the more popular vehicles.
Dozens of vehicles that are popular as clunker trades had under the ideal 60-day supply at the beginning of the month, Edmunds.com's analysis of inventory numbers showed. And those inventory levels are based on June sales -- before the Car Allowance Retail System (CARS) program kicked in July 24. More up-to-date inventory numbers won't be available until July sales are reported by manufacturers Monday.
Ford Motor Co. will announce Monday a year-over-year sales increase for July, thanks to the
government's cash for clunkers program. It will be Ford's first year-to-year sales increase since November 2007.
The Car Allowance Rebate System (CARS) is expected cash for clunkers pushed the Seasonally Adjusted Sales Rate (SAAR) to well above 11 million vehicles sold to as high as 13 million, the highest level this year by a long shot.
July's SAAR will be 11 million to 12 million "for sure," Ford's sales chief George Pipas told AutoObserver.com in a phone interview Sunday. "The increase is a nice proof point of the progress Ford has made but being the first of the Big Six automakers to post an increase may be a sign that the consumer is a little more optimistic."
Ford Motor Co. reported a net profit of $2.3 billion in the second quarter, thanks to a one-time
special gain. However, the automaker continues to lose money in its operations.
Ford said Thursday its net profit was the result of a $2.8-billion net gain due to debt-reduction actions the automaker took. Its pre-tax operating loss came to $424 million in the second quarter, excluding those special items. Its after-tax loss totaled $638 million.
Still, Ford's second-quarter results show the automaker is improving its financial position and narrowing losses. Further, Ford's results beat analysts' forecasts, although the company's automotive operations still "burned" slightly more than $1 billion for the quarter.
DEARBORN, Michigan -- Here we go again. In a repeat of not-too-successful experiments of the past, automakers are once again going to see if luxury-car buyers will go for four-cylinder engines.
General Motors Corp.'s Buick will offer a base version of its new 2010 LaCrosse upper-midsize sedan later this year with a four-cylinder under the hood. GM execs have also said the Cadillac division won't rule it out.
The Lexus HS 250h goes on sale next month, and although attention will focus on the fact that it's a hybrid, the HS 250h still is working with a four-cylinder engine -- a first for Toyota Motor Corp.'s premium division.
Former Ford CEO Jacques "Jac" Nasser has reemerged, this time as a top contender to head the
world's largest mining company, BHP Billiton. The job is described by Australia's Business Day
as "one of corporate Australia's most prized positions."
Born in Lebanon and raised and educated in Australia, Nasser currently is a non-executive director of BHP. The Australian business press reports he and one other candidate are being interviewed this week to replace BHP CEO Don Argus, who retires in November.
General Motors and Chrysler will be challenged by weak future product plans while Ford
stands to gain market share with a relatively strongfuture product plan, a new report says.
Called Car Wars, the annual competitive analysis is produced by Banc of America Securities-Merrill Lynch and reported on by the Detroit Free Press Thursday, predicts:
- GM's market share losses will be greater than the automaker expects because of its skimpy future product plan;
- Chrysler's weak product pipeline is "an ominous sign"
- Ford's relatively strong future product plan could help it gain market share.
Like Sally Fieldwhen accepting her Best Actress Oscar, consumers seemed to be saying of
their new and redesigned vehicles "You like me ... you really like me."
Indeed, J. D. Power and Associates 2009 APEAL study, released Thursday, consumer satisfaction with their new and redesigned models at a three-year high. Report highlights include:
- Porsche ranked highest among nameplates for a fifth consecutive year; - Volkswagen captured four segment-level awards--more than any other vehicle nameplate in 2009; - new and redesigned models scored higher than last year's new and redesigned models and higher than this year's carryover models. - seven new and redesigned models ranked highest in their respective segments: Dodge Challenger; Ford F-150; Ford Flex; Hyundai Genesis; Nissan Maxima; Volkswagen CC and Volkswagen Tiguan.
Shares at Ford Motor Co., which had buoyed in recent weeks but began sliding with news of a still-sputtering U.S. economic recovery, slid further on Friday after rival General Motors Co. slipped the shackles of Chapter 11 bankruptcy off after just six weeks.
Ford's share-price slide -- by midday on Friday after GM's emergence from bankruptcy, shares had dropped just a few cents but were off meaningfully from morning gains -- could be coincidental with a continuing downward move in the broad market, but some analysts and investors remain concerned that Ford may be at a competitive disadvantage because of the enormous support the federal government is throwing at GM to assure its recovery.
By the end of the year, the U.S. Department of Treasury will have invested upward of $50 billion in GM, plus at least $5 billion more to lending unit GMAC Financial Services, which also now handles vehicle financing for Chrysler Group LLC.
Robert S. McNamara, the Ford Motor Co. Whiz Kid who became U.S. Defense Secretary
vilified during the Vietnam War, died Monday at the age of 93 after an illness.
McNamara, who joined Ford in 1946, was one of 10 former World War II officers who became known as the Whiz Kids who saved the failing company by implementing modern management systems. McNamara started as manager of planning and financial analysis and rose quickly through the ranks to the top post. He was the first non-Ford family member to serve as president to that point.
Current Ford Chairman Bill Ford said in a statement issued Monday that McNamara's dedicated service to Ford will long be remembered. "Bob's contributions as a member of the history-making Whiz Kids and his visionary efforts on behalf of automotive safety and environmentalism are as relevant today as they were then," he said.
Automakers expressed more optimism about the U.S. car market despite the fact that overall sales in June fell by 28 percent compared with a year ago, to 859,420 vehicles. That represents only a slight improvement in year-ago comparisons over results for the first five months of this year.
Jesse Toprak, executive director of Industry Analysis for Edmunds.com, characterized the month cautiously. "It means, if nothing else, that things are not getting any worse, although things are not getting that much better, either. There was a lot of volatility, but there were signs of life."
Toprak added that June was "probably the best retail-demand month of the year."
SANTA MONICA, Calif. -- Automakers spent more in June on incentives than any June on record, Edmunds.com reports.
The average automaker incentive was $2,930 per vehicle sold in June up $489 -- or 20 percent, from a year ago, Edmunds.com estimates. Incentives were down a scant $22, or 0.8 percent, from May.
"June incentives have never been higher, but we anticipate that the tide is about to turn," said Jesse Toprak, Edmunds.com's executive director of Industry Analysis. "The effects of recent production cuts are starting to be felt, and as supply dwindles, incentives will fall."
The industry remains cautiously optimistic June vehicle sales in the U.S. will hit a seasonally adjusted annualized rate (SAAR) of 10 million units for the first time in 2009, a milestone analysts think may indicate the deep freeze in auto sales is at least beginning to thaw.
Automakers will report June sales on Wednesday, and Ford Motor Co. chief sales analyst George Pipas told reporters the company believes total industry sales will see less than a 30 percent decline (compared with the same period last year) for the first time since early last fall.
Ford is confident enough in an improving outlook that it will slightly increase its production for the third quarter -- the first time it's hiked scheduled production since 2007.
SANTA MONICA, Calif. - June vehicle sales will hit their highest level of 2009 with a
Seasonally Adjusted Annualized Rate of 10.1 million when manufacturers report them Wednesday, Edmunds.com
forecasts.
"The SAAR is finally back in double-digits," observed Jesse Toprak, Edmunds.com's executive director of Industry Analysis. "We're still a long way from 16 million unit sales, but things are moving in the right direction.
General Motors and Chrysler, which both were in Chapter 11 bankruptcy during the month, are expected to post market share gains in June compared with May, proving yet-again -- contrary to conventional wisdom -- that consumers will, indeed, buy cars from a bankrupt manufacturer, at least in these current tumultuous times.
Honda and Hyundai also are forecasted to show May-to-June market share gains. The gains come at the expense of share declines for Ford, Nissan and Toyota. Despite Ford's dip, the share for Detroit automakers is estimated to come in at 47.0 percent in June, up from 46.6 percent in June 2008 and from 46.5 percent in May.
Vehicles sold by General Motors and Chrysler, both of which filed for Chapter 11 bankruptcy
in recent months, dominated a list of the 15 slowest sellers in May, according to an analysis by Edmunds.com
, parent of AutoObserver.com
.
Of the 15 slowest-selling vehicles, 12 were made by American automakers. GM and Chrysler dominated the list. Ford had one vehicle on the list - the Mustang.
"It's really a reflection of a misstep of the American automakers," Edmunds.com analyst Jessica Caldwell.
Models from Korean brands, Kia and Hyundai, rounded out the list of 15 slow sellers.
DETROIT -- The financial turbulence of the global auto industry has not hurt vehicle quality. Quite the opposite, according to new data released Monday by J.D. Power and Associates.
"Vehicle quality is better than it has ever been," Dave Sargent, J.D. Power's vice president of automotive research, told the Automotive Press Association here as he announced the results of the 2009 Initial Quality Study. The study measures defects reported by buyers in the first 90 days of ownership.
"There's a positive disconnect. There's no correlation between the financial side of the business and the production side," said Sargent. "Despite the turbulence on the business side and concern for the future of their own jobs, the people who design and build vehicles are getting on with their jobs and keeping their eye on the ball. That's remarkable."
Yet another news report says, through a Chinese news agency citing anonymous government sources, that Chinese automaker Geely has signed a deal to purchase Volvo Cars from current owner Ford Motor Co.
Volvo and Geely are silent on the latest report, but neither company issued a denial. Volvo's official response, which could be interpreted either as dismissive or a Nordically stoic quasi-confirmation, was to call the report "speculative."
The report says the two companies continue to hammer out details, with the most intriguing aspect being that Volvo reputedly will add more Chinese production in a yet-to-be-built plant in the city of Dongguan in China's Guandong Province. Volvo Cars China already produces the S40 domestically and in March added a version of the S80 flagship at a factory in Chongging.
DETROIT - Ford Motor Co. Chairman Bill Ford Jr., kicking off a National Summit in Detroit this week, called for the U.S. government to establish a national industrial policy aimed at bolstering the nation's competitiveness and to institute a policy that would stabilize "gyrating" gasoline prices.
"The industrial base is eroding and prosperous nations don't let their industries erode," Ford said. "Government, industry and academia all have to be on the same page. Too many times they throw bombs at each other rather than working together."
In a throwback to a simpler era, the new Ford F-150's drop-down tailgate step has become an entertaining flashpoint in the marketing war between heavyweights in the pickup-truck segment.
In a current TV ad for the Silverado, Chevrolet's celebrity pitchster, Howie Long, tweaks the addition of the "man step" to the F-150 as an embarrassment -- because it only helps make up for the unreasonably long reach required to get over the tailgate to the bed of the F-150.
But Ford executives assert that Chevy's gambit actually highlights an appealing innovation for potential truck buyers -- and makes them more likely to choose an F-150.
"Our steps have done very well, because they're selling at about 30 percent of the mix of our F-150s," said Doug Scott, Ford's truck marketing manager. "So I hope GM keeps running the ad [in which] they're panning it."
DETROIT - It's far too premature to break out the champagne and even too early to finally call the absolute bottom of one of the worst auto sales slumps in decades. But May sales reports from auto manufacturers in the U.S. hinted the worst just may be over.
"We saw glimmers of hope in May sales reports," said Jesse Toprak, executive director of Industry Analysis for Edmunds.com, parent of AutoObserver.com.
SANTA MONICA, Calif. -- May car sales, due to be reported by auto manufacturer Tuesday, remain off by double-digits from last year, but the sales increase from April to May is in line with typical April-May seasonal bumps and the drop from a year ago is largely due to lower fleet sales, according to Edmunds.com's forecast.
For May, manufacturers are expected to report new vehicle sales -- retail and fleet -- of 890,000 units, a 36.1 percent decrease from the 1.4 million sold in May 2008 but an 8.9 percent increase from the 817,000 sold in April. A typical seasonal increase between April and May is a 9 percent rise. When adjusted for this difference in the number of selling days in May versus a year ago, sales decreased 33.6 percent.
That would put the Seasonally Adjusted Annualized Rate at about 9.5 million vehicles, up from 9.3 million in April.
DETROIT -- Auto parts supplier Visteon Corp., as longanticipated it would,filed for Chapter 11 bankruptcy protection Thursday.
Visteon, one of the world's largest auto-parts suppliers, was created from Ford Motor Co. parts operations and employs 31,000 people in 27 countries.
Visteon follows in the footsteps of Delphi Corp., formed from General Motors' parts operations. Delphi has been in Chapter 11 bankruptcy for three and a half years.
Like all automotive suppliers, Visteon has struggled with the dramatic fall-off in vehicle sales, which have prompted its automaker customers to slash production.
Ford is on pace to overtake General Motors this year as the top North American producer of
vehicles, according to a forecast by IHS Global Insight.
Ford, which has been No. 2 for decades, gets a boost from GM idling its plants in the next couple of months to produce an estimated 1.7 million vehicles in North America this year.
Volkswagen has signed a letter of intent with China's BYD on hybrid or electric cars. Ford
and another European automaker are rumored to be working on similar arrangements with BYD.
BYD, which stands for Build Your Dream, has been a Chinese company to watch. Formed in 1995, BYD is now the world's second-largest producer of lithium-ion batteries, mostly for cell phones, and has been making cars only since 2003.
The company has been displaying a plug-in hybrid, the BYD F3, at global auto shows, including one in Detroit.
Once again, Ford has lucked out in terms of timing.
As President Obama was announcing stricter fuel economy and emissions standards in Washington, D.C., Ford was celebrating the production of its new EcoBoost engine in Cleveland.
The opportunity to promote Ford, which has tried to set itself apart from General Motors and Chrysler by not taking government assistance -- and staying away from bankruptcy -- was not lost on company CEO Alan Mulally, who flanked President Obama at his White House press conference.
With investors nervously interpreting the General Motors Corp. tea leaves, GM's stock price plunged to $1 on Wednesday - leaving for Americans the choice between a value-menu order of French fries or a share of GM stock.
After the dip, GM's share price bounced back some 25 percent or better by midday, but the price range nonetheless reflected levels GM common shares hadn't visited since the 1930s.
GM's stock price has been steadily declining in the past months - and since the bankruptcy of Chrysler LLC on May 1 - as media reports and industry-analyst talk underscore an increasing certainty that GM, too, will have to make a trip to bankruptcy court when the company's June 1 restructuring deadline given by the Obama Administration arrives.
In a move signaling Ford Motor Co. is seeking new liquidity -- and further positioning itself apart from its Detroit competitors -- the company announced late Monday a new public offering of 300 million shares of common stock.
Ford made a point to say it will use some of the proceeds to pay cash into the United Auto Workers union retiree health-benefits fund, rather than the stock General Motors Corp. and Chrysler hope to use as the lion's share of their payments to the fund.
"Net proceeds to Ford from the offering are expected to be used for general corporate purposes, including to fund with cash, instead of stock, a portion of the payments the company is required to make to the Voluntary Employee Beneficiary Association (VEBA) retiree health care trust with the United Auto Workers," Ford said in a statement.
DETROIT -- By now, everyone knows the raw sales numbers are bloody red: the full-size pickup market was one of the first to be savaged by last summer's high gasoline prices and by the end of 2008, pffft -- five points of market share and some three-quarters of a million units were gone.
Maybe never to return. At least to the segment's former glories.
But there may be a sliver of a silver lining in the pickup sales plunge. At least one automaker -- Ford Motor Co. -- says those still buying pickups are splurging. Since its launch late last year, the "mix" of Ford's new '09 F-Series has been unexpectedly rich, slanted toward more expensive and heavily optioned models and trim levels.
The best example: the F-Series' ultra-plush Platinum -- the new top-of-the-line trim level -- has run at 8 percent of the total F-Series mix. Ford predicted a 3 percent take rate.
April's auto sales numbers looked pretty much like those from March, and February, and January - abysmal. Industrywide sales plunged by 34 percent last month compared with a year earlier, continuing the first-quarter trend of dreadful comparisons tied to a moribund economy.
But in those April results, carmaker executives and analysts on Friday also thought they saw more than just the latest in a long string of awful comparisons with 2008. Almost to a person, they interpreted April's performance and other economic data as painting at least a near bottom of the dreadful U.S. car market - and as the harbinger of an eventual recovery.
"We won't truly be able to call the bottom until summer when we can look back at three consecutive months of increase in the annualized rate of sales," said Jesse Toprak, executive director of industry analysis for Edmunds.com. "We had expected April would be the start of that. And April's annualized sales rate, while lower than March, still didn't dip to February level."
SANTA MONICA, Calif. -- April vehicle sales are looking like they will come in at a Seasonally Adjusted Annualized Rate of 10 million. That's certainly nothing to brag about in normal times and compared with the last decade. Still, April looks to be the best month in several and up from 9.1 million in February.
"The industry is slowly picking up much-needed momentum; a 'cash for clunkers program' could help while an automaker bankruptcy could hurt, depending on how consumer confidence is affected," said Jesse Toprak, executive director of Industry Analysis for Edmunds.com.
DEARBORN, Mich. -- Ford Motor Co. reported Friday it had a net loss of $1.4 billion in the first quarter, a smaller loss than analysts had forecasted.
Ford's results lower the probability that Ford will need government loans as General Motors and Chrysler have required. Indeed, Ford reiterated in its press statement that it does not expect to seek a government loan.
"Our results in the first quarter reflected the extremely difficult business environment and weak demand for autos around the world," said Ford CEO Alan Mulally in a statement.
Ford Motor Co. reports its first-quarter financial results on Friday and is expected to lose
$3.2 billion for its largest first-quarter loss in 17 years, according to the average of analysts by four analysts surveyed by Bloomberg News
.
Still, Bloomberg reported, Ford is likely to be able to steer clear of loans from the U.S. government, like those as General Motors and Chrysler have required. Loan-free Ford is expected to benefit from loan-laden GM and Chrysler, who still may be forced into bankruptcy. Analysts believe Ford has made enough cost reductions to maintain sufficient liquidity to 2010.
Goldman Sachs has increased its forecast for 2009 new vehicle sales from 10 million to 11 million.
Goldman analyst Patrick Archambault said his optimism comes from the likelihood that Congress will pass a cash-for-clunkers bill, one that could add 750,000 to 1 million vehicle sales this year as consumers turn in their old cars for new new ones for a government rebate. Archambault also sees improvement in consumer confidence.
Headlines declared the auto industry achieved a showroom mini-victory in March by markedly improving sales over a dismal February. But the improved numbers were something like lipstick on a pig as March's boost nonetheless concealed some ugly realities.
One of the most foreboding trends to continue despite the March uptick: the still-accelerating plunge of the full-size pickup truck market. If segment sales do not stabilize this year, revenue-ravaged automakers may have to take drastic measures.
SANTA MONICA, Calif. -- Inside Line, Edmunds.com's online car magazine and sister site
of AutoObserver.com
, announced Wednesday that the 2010 Chevrolet Camaro SS took first place in its latest comparison test of iconic muscle cars.
"Car enthusiasts can rejoice that all three of these legendary pony cars have made a comeback," says Jay Kavanagh, Edmunds' Inside Line Engineering Editor. "But the 2010 Chevrolet Camaro SS leads the pack with its combination of power, speed and attitude."
In global news, the auto industry criticized Prime Minister Gordon Brown's subsidy for electric cars, Nissan and Renault announced plans to supply China with electric cars by 2011; U.S.-based Tesla is expanding to Europe; and vehicle sales in Australia tumbled in the first quarter.
LONDON -- It's not all doom and gloom if General Motors and Chrysler go bankrupt, a new report says. In fact, some automakers will benefit from their bankruptcy.
GM and Chrysler competitors could gain pre-tax profit of more than $24 billion if the companies are forced to dramatically downsize after some kind of bankruptcy, says a report from Bernstein Research in London and reported on by the Detroit News.
In the U.S., Ford would benefit most with GM and Chrysler customers deflecting to its brand. Ford would be followed by the Japanese automakers and Germany's Volkswagen.
WASHINGTON -- As President Obama promised a week ago, his administration is advancing plans for the purchase of new government fleet cars to spur U.S. vehicle sales and improve the fuel-efficiency of government-owned cars.
The government's order is for 17,600 fuel-efficient vehicles from General Motors, Ford and Chrysler by June 1. The total tab comes to $285 million, which will be drawn from the $787 billion economic stimulus package.
In the first quarter this year, 271 auto dealers in the U.S. went out of business, according to
the National Automobile Dealers Association.
NADA reports at the end of the first quarter, the U.S. had 19,738 auto dealers, down from 20,009 year-end 2008.
The trade group predicts about 1,200 dealers, mostly representing General Motors, Chrysler and Ford brands, to go out of business this year, about 20 percent more than last year.
The U.S. Treasury Department will start releasing $5 billion in government funds to auto suppliers next week. The Supplier Support Program will funnel the money through General Motors and Chrysler, which have loans from the government, to their shakiest and most vital suppliers.
Chrysler plans to use $1.5 billion; GM expects to use $2 billion. The remaining $1.5 billion would be available at the request of GM or Chrysler.
Ford has declined to participate as it has with government loans for itself. Instead, Ford is lending money to its suppliers.
SANTA MONICA, Calif. -- Ford's choice and ability to avoid taking loans from U.S.
governmentis paying dividends inincreased shopping by consumers.
An analysis of shopping on its Web site by Edmunds.com, parent of AutoObserver.com, shows the number of visitors who shopped for Ford vehicles in the first three months of this year rose 12 percent compared with the same period a year ago.
At the same time, the number of shoppers considering vehicles from General Motors and Chrysler, both of which have taken loans from the U.S. government, declined 19 percent and 15 percent respectively during the same period.
What do college basketball and troubled U.S. automakers have in common?
Plenty this year. The NCAA championship is taking place in Detroitand the "blue-collar" hometown team, Michigan State University, is in the final Monday night, to the surprise of many and the upset ofthose playing the brackets.
Indeed, as Wall Street Journalcolumnist Austin Kelley noted in Monday's edition, sports fans who wanted to forget General Motors' troubles and divert attention to college basketball were out of luck this weekend. "The specter of the ailing automaker was everywhere," he wrote.
A late-month uptick caused March car and truck sales to surpass forecasters' expectations, providing a glimmer of hope to the U.S. auto industry that the long and ugly drought is nearing an end.
"We started to see some signs of life in the March numbers," said Jesse Toprak, executive director of Industry Analysis for Edmunds.com, parent of AutoObserver.com. His remark echoed similar comments made by auto company executives and analysts as they delivered their March sales results Wednesday.
Particularly encouraging to everyone was the rise in the annualized rate and the above-average hike in sales from February to March.
SANTA MONICA, Calif. -- Automaker incentives set a new all-time high in March, even though it appears they didn't helpsales much, according to Edmunds.com
.
The average automotive manufacturer incentive was $3,169 per vehicle sold in March, the highest industry average on record.
"Automakers are pulling every lever in their effort to attract buyers, as evidenced by the new programs from Ford and General Motors," stated Jesse Toprak, Edmunds' executive director of Industry Analysis. "The typical incentive programs simply do not resonate in today's economy."
DEARBORN, Mich. -- Ford Motor announced Tuesday a comprehensive package of
incentives it is calling the Ford Advantage Planthat includes a payment protection plan like Hyundai's as well as zero-percent financing andacharitable donation element.
"Consumers remain anxious about the economy and their own outlook for the future," said Ken Czubay, Ford's vice president of sales and marketing in a statement Tuesday morning. "We at Ford want to do our part to rebuild faith in the marketplace by offering payment protection on every new Ford, Lincoln or Mercury vehicle for up to a year if our customers lose their jobs."
SANTA MONICA, Calif. -- March car sales to be reported April 1 by manufacturers look a lot like February car sales, and that's not a good thing since March traditionally marks the kick off of the busy spring selling season.
"If sales continue at this pace all year, we're looking at a Seasonally Adjusted Annual Rate of only 8.9 million vehicles sold, which is slightly more than half of 2007 sales," said Edmunds.com CEO Jeremy Anwyl.
HONG KONG -- China's Geely Automobile Holdings Ltd., known to be in talks with Ford to
buy Volvo, announced Friday its purchase of Australian partsmaker Drivetrain Systems International, claimed to be the world's largest supplier of automatic gearboxes. Ford is among Drivetrain's customers.
Geely, China's largest private carmaker, is believed to be furthest along in talks to buy Volvo from Ford. Ford confirmed earlier this week that it was in talks with multiple interested parties about purchasing Volvo.
In Global News Wednesday, Ford Motor Co. is negotiating with three bidders for Volvo, General Motors and Saab agree to share technology for five years, and Porsche obtained $13.5 billion in financing.
In Global News Tuesday, Japan's automakers are lobbying for government aid, Ford is raising prices in the United Kingdom to contend with the weakening pound, and Europe and South Korea struck a tentative deal to encourage free-flowing trade.
Turns out Doug Poling, the son of former Ford Motor Co. Chairman Harold "Red" Poling topped the list for biggest bonuses paid to executives of American International Group Inc., an honor that earned him a personal visit by protesters over the weekend.
News reports say 48-year-old Poling, an executive vice president in charge of energy and infrastructure investments, received -- and says he will return -- the $6.4-million payment he received in bonus.
In news from around the world Thursday, Ford of Europe offered support for General Motors Europe's request for government aid, the 2010 British International Motor Show was canceled, Brazil car sales this month are rising and union workers for Volkswagen's Seat subsidiary approved a two-year pay freeze to prevent layoffs.
WESTLAKE VILLAGE, Calif. - Buick and Jaguar ranked highest in vehicle dependability, in a tie for first place in the J.D. Power and Associates 2009 Vehicle Dependability Study released Thursday morning.
Buick climbed to the top this year from sixth place in the 2008 rankings; Jaguar moved up from 10th place. Both surpassed Toyota and its luxury division Lexus, though Toyota and Lexus immediately followed in the No. 3 and 4 spots while also nabbing the most individual categories for vehicle dependability.
"Buick has ranked among the top 10 nameplates each year since the study was last redesigned in 2003, while Jaguar has moved rapidly up the rankings," David Sargent, vice president of automotive research at J.D. Power and Associates, said in a statement.
"Lexus remains a very strong competitor in long-term quality. In particular, the Lexus LS 430 sets the industry standard for dependability, with fewer problems reported than any other model in the study," Sargent added.
In global news Tuesday, Mazda said it was seeking financial help from the Japanese government, China is giving incentives to rural dwellers to buy cars, and Kia slashed its forecast for Russia.
In news from around the globe Monday, Toyota announced 50 percent bonus cuts for Japanese management, Ford is reducing output at several European plants, consumer gas prices in Shanghai rose to the government-limited maximum, and Chinese automaker Geely has halted production in Russia.
Plans to use clean-running diesel engines for U.S. passenger are being shredded almost daily as troubles in the auto industry deepen, with the latest backtracking said to be coming from Nissan Motor Co. Ltd.
Nissan confirmed in early 2008 it would launch a sophisticated 3.0-liter V6 turbodiesel -- developed by partner Renault S.A. -- for the U.S.-market Maxima flagship later this year. That plan now is likely to change, as industry sources speculate Nissan will join several other makers to recently retreat on diesel-launch strategies.
The cuts just keep coming for Swedish automakers Saab Cars and Volvo Cars; in response to weak demand, Saab announced significant job cuts this week; Volvo reportedly will idle plants in Sweden and Belgium for months and cut pay.
Saab recently sought bankruptcy protection in Sweden and is scheduled to sever business ties with current owner General Motors Corp. on January 1 next year; Volvo
owner Ford Motor Co., meanwhile, is laboring to rid itself of the unit for which it paid nearly $6.5 billion in 1999.
KANSAS CITY, Missouri -- Ford produced its 100,000th hybrid vehicle Tuesday. The silver Escape
Hybrid rolled off the assembly line at the carmaker's Kansas City Assembly Plant.
At the same time, Honda announced that its 2010 Honda Insight will cost more than $2,000 less than the least expensive 2009 Toyota Prius.
Ford has built the most hybrids of any of the Big Three, but still trails Toyota and Honda. In 2008, Ford sold 19,524 Ford Escape and Mercury Mariner hybrids. Toyota sold almost 159,000 Prius hybrids. Still, as Edmunds' Green Car Advisor reports, Escape hybrid sales bucked the industry's downward sales trend in February with a 55-percent sales increase.
DETROIT -- Automotive supplier Visteon Corp. made a $16 million interest payment on
Tuesday, avoiding what may be the inevitable for now, that of filing for Chapter 11 bankruptcy.
Visteon, a major supplier to Ford, is widely expected to eventually file for Chapter 11 but postponed the filing for now by making the interest payment on the $450 million it has in bonds maturing in 2014.
On Friday, Visteon was delisted from the New York Stock Exchange; its stock price on its final day of NYSE trading closed at 2 cents per share. Fitch Ratings and Moody's say Visteon is among the companies very likely to default on debt payments.
This week, the United Auto Workers union agreed to more cutbacks to help the Detroit Three automakers get back on their feet. The UAW rank and file at Ford ratified concessions. UAW and General Motors negotiators reportedly hammered out similar concessions Tuesday night that will be voted on by GM workers. Next up for give-backs will beChrysler workers.
But once again, the predicament the Big Three are in isn't about labor costs; it's about the product.
You just know Jerome York is dying to say it: "I told you so."
The former Chrysler executive who served on General Motors' board of directors representing the interests of billionaire Kirk Kerkorian, had insisted the Detroit automakerditch money-losing Saab and Hummer. ButGM executives refused to entertain the notion. They insisted the automaker's many brands were an asset: not, as York contended, a drain on resources.
Now look where GM is -- staying afloat on government loans as it sets Saab loose and has Hummer on the auction block with a plan to eliminate it if no buyer is found.
Rank-and-file members of the United Auto Workers union yesterday gave the union the authority to make amendments to the union's 1997 contract with Ford in order to help the automaker further ease its labor costs and debt burden.
The positive vote was not overwhelming: The Detroit News reports only about 58 percent of the UAW's production and skilled-trade members who work for Ford agreed to the contract changes. But the majority of UAW workers went for the deal, meaning Ford has won another important battle in the war to improve its balance sheet.
DETROIT -- Representatives of President Barack Obama's automotive task force are visiting
Detroit Monday. Their trip includes a tour of a Chrysler assembly plant and General Motor's Technical Center and a test-drive of the Chevrolet Volt.
All the while, auto company executives will try to convince them further federal assistance is a worthwhile investment for taxpayers.
Their visit comes as Republicans cranked up the volume on their opposition to support Detroit automakers and yet another survey showed the American public generally is opposed as well.
DETROIT -- General Motors made history again Friday as its stock price plummeted to a 75-year low, dropping for the first time below Ford's share price.
GM's stock closed at $1.45 a share on Friday, but during the day dropped to $1.27 a share, a price not seen since May 4, 1933. That put GM's market capitalization at about $885 million.
Nissan just announced that it plans to stay away from the North American International Auto Show in Detroit next year, as the company did this year. It also plans to skip other major U.S. shows and dozens of smaller ones scattered across the country, as well as the Frankfurt exhibition this September.
But as auto company executives, suppliers and the global news media gathered in Geneva last week for one of the most prestigious regular shows, Nissan appears to be alone in its strategy of making draconian cuts in its annual exhibition budget to help get costs under control in this severe sales environment.
In fact, most other automakers -- even badly damaged Chrysler -- so far are making it a point to stick with their expensive investments in auto-show participation.
With industry trade journal Automotive News this week quoting a spokesman from General Motors Corp.'s Saturn division as saying there are prospective buyers for the perpetually underachieving division, it occurred to AutoObserver that the auto-industry conventional wisdom on this subject is dead wrong: the global economic disintegration hasn't dissuaded anyone from considering investment in a money-bleeding car brand.
The New York Stock Exchange plans to delist the stock of ailing auto supplier Visteon Corp. on Friday and has warned another supplier, American Axle, that it could be delisted if certain criteria aren't met.
Visteon's stock has been at "abnormally low trading levels," the stock exchange said in a statement. It was trading at 7 cents a share Thursday morning, putting its market capitalization at about $7.8 million. A year ago, Visteon traded at about $3.70 a share.
When February sales were tallied this week, Ford Motor Co. reported aggregate sales for its Ford, Lincoln and Mercury brands of 96,044. It was the first time in Edmunds.com
sales data reaching back to 1991 that Ford monthly sales dipped below the 100,000-unit mark.
Even adding the 3,356 units sold last month by Ford-owned Volvo Cars couldn't buoy Ford above the 100,000-unit threshold.
DETROIT - Americans, unemployed or fearing they will be, hunkered down last month, cutting their household budgets, squirreling away money and avoiding dealer showrooms as February car sales sunk to their lowest level of any February in more than four decades.
Automakers sold 691,073 vehicles in February, down 40.9 percent from the 1,168,729 they sold in February a year ago. That marked the lowest level of car sales for any February since 1967, according to General Motors' record books. That fact is even more eye-popping when population is considered: in 1967, the U.S. had 103 million registered drivers; today the nation has nearly twice that many.
And it put the closely-monitored Seasonally Adjusted Annualized Rate (SAAR) at 9.1 million vehicles, the lowest SAAR since 1982.
Not coincidentally, consumer confidence, a key indicator for how vehicle sales will fare, sunk to record lows in February, according to at least two measurements. And much of that has to do with dimming employment picture as well as dwindling household worth.
DEARBORN -- Think Ford and most consumers don't think cars first. Or fuel economy.
Ford marketing executives hope to reverse both notions with its massive ad campaign for the 2010 Ford Fusion and the 2010 Ford Fusion Hybrid that kicks off this week. Quite simply, Ford bills the Fusion in all of its forms -- from the four-cylinder to the V6 to the hybrid -- as the most fuel-efficient midsize sedan in America.
In a campaign that's as large as that for the Ford F-150 pickup, Ford focuses mostly on fuel economy as well as technology, including Ford Sync, in its print ads, that began running in newspapers this weeks, and on television commercials, the first of which air Tuesday evening on American Idol.
Americans' confidence in the U.S. economy fell in February, and it showed with a lack of activity in dealer showrooms last month. Automakers report February sales Tuesday, and the annualized rate is likely to be the lowest since the early 1980s.
A key indicator that drives car sales is consumer confidence, which had been edging up since last fall but fell back in February.
White House Chief of Staff Rahm Emanuel had some harsh words for General Motors on a Sunday news program, prompting questions about what the Obama administration has in mind for restructuring GM and Chrysler.
Emanuel told CBS' Face the Nation GM's situation is "a wakeup call to America" to increase energy independence and overhaul the nation's health care system. GM's plight is an example of "a day of reckoning," Emanuel said.
With another month of dismal sales predicted for February, three forecasts released this week revise U.S. car sales for 2009 downward.
- Edmunds.com has cut its forecast by more than a million units to 10.1 million vehicle sales for 2009.
- J.D. Power and Associates has shaved its forecast by a million vehicles as well. The company puts 2009 sales at 10.4 million vehicles, down from the previous forecast of 11.4 million.
- Even Ford Motor Co., which had one of the rosier forecasts, reported in government documents that it had reduced its downside outlook for the year to 10.5 million vehicles, the same amount GM said it had conservatively estimated.
A survey conducted by theUSA Today newspaper and Gallup poll this week found only 25 percent of Americans believe the government should continue lending money to Detroit automakers.
"That's a huge, and fast, change of heart," said USA Today's Jim Healey, who added that in December, before the government approved emergency auto loans, 61 percent favored federal help for the automakers.
With February auto sales expected to once again be precipitously low and the nation's
economy still roiling, automotive supplier giant Visteon Corp. appears to be sliding toward bankruptcy.
The fall could cause more turmoil for the fragile Detroit automakers, all of which depend on Visteon and a number of similar mega-suppliers for a heavy proportion of their auto parts and major sub-assemblies.
With the United Auto Workers (UAW) submitting to its rank and file a proposed Ford Motor Co. amendment to the 2007 labor contract that asks the UAW to accept half of Ford's obligation to the union's Voluntary Employee Benefit Association trust, UAW leadership appears to be choosing the lesser of potential evils.
If any of the Detroit Three automakers that owe payments to the VEBA -- an amount totaling nearly $60 billion -- declare or are otherwise forced into bankruptcy, the trust that was established to fund health-care costs for UAW retirees could be shattered, says one bankruptcy expert.
SANTA MONICA, Calif. -- The still-deteriorating economy and the continued uncertainty about employment kept consumers away from buying new cars again in February despite the record-breaking deals available to them.
February car sales, to be posted by automakers Tuesday, are expected to be down about 40 percent from a year ago to 685,000 vehicles sold for the month, according to Edmunds.com, parent of AutoObserver.com.
That puts the closely watched Seasonally Adjusted Annual Rate (SAAR) for the month at 9.3 million vehicles, down from 9.6 million the previous month.
"The fluctuation in car sales and the instability of the stock market are just two examples of the volatility in the marketplace, which is wreaking havoc on consumer confidence and hampering any economic recovery," said Jesse Toprak, Edmunds.com's executive director of Industry Analysis.
DEARBORN, Mich. -- A fleet of Ford Fiesta cars were built in Cologne, Germany, this week and are headed for the United States, where 100 specially selected "socially vibrant" people will be put behind the wheel for several months of test-driving.
The 100 "agents," as Ford is calling them, will be selected from those who vie for the extended test-drives by applying on Ford's Fiesta Movement Web site and including a YouTube video on why they should be selected. Deadline for applications is March 13 with the "winners" being announced in April.
"We intend to put the Fiesta into the hands of really awesome, socially vibrant people," Fiesta Brand Manager Sam De La Garza told AutoObserver in an interview Thursday.
DETROIT -- Today is V-Day -- Viability Day -- for General Motors and Chrysler.
As part of their acceptance of $17.4 billion in government loans to stay afloat, the two must submit reports on their progress regarding how they are becoming economically viable.
Increasingly experts believe one or both ultimately will file for Chapter 11 reorganization under U.S. bankruptcy laws, particularly because auto sales have continued their plummet.
"If I were betting, I'd say it (Chapter 11 filing) will happen," said Douglas Bernstein, a lawyer specializing in bankruptcy and a managing partner with the Detroit law firm of Plunkett Cooney.
WASHINGTON -- In placing the duty of overseeing the restructuring of the businesses of General Motors Corp. and Chrysler LLC in the hands of a federal-agency coalition rather than a single "car czar," the administration of President Barack Obama could be signaling that the automakers will have more time to reorganize beyond the originally intended March 31 deadline.
Given the fluid nature of the industry's upheaval and the nation's economy, having definitive reorganization plans in place by March 31 may be asking the impossible: Filing their interim restructuring reports Tuesday, GM and Chrysler still face a rapidly devolving industry landscape -- and several sources are saying a government-managed bankruptcy is not out of the question.
This week's Chicago auto show isn't expected to be chock-full of prominent concept- or production-car introductions, as automakers hunker down to evaluate how best to absorb still-disintegrating auto sales.
More important, Chicago comes after a definitely somber Detroit auto show - and just before General Motors Corp. and Chrysler LLC are scheduled to present the next phase of their restructuring "blueprints" to federal officials on Feb. 17. From there, the two automakers must present the full case by March 31 that they are "viable" and worthy of more government investment - a cash infusion both say they need to avoid bankruptcy.
So the Chicago show will make the most of introductions that are, for the most part, likely to reflect these less-ebullient industry times.
Joining the list of auto companies denying they are interested in purchases of or alliances with other auto companies is China's Geely Automobile Holdings Ltd. -- one of the more prominent of the nation's numerous automakers -- which is denying talks with Ford Motor Co. about acquiring its Volvo Cars operation.
The Wall Street Journal
reported this week that Geely president Li Shufu said, "there are no such talks," and Ford, which has said it is shopping Volvo, would not comment.
Two huge drags on the U.S. auto market - an utter lack of consumer confidence, and a paucity of credit -- persisted in January and were joined by a new one: at least a temporary evaporation of the fleet market.
Industry-wide sales in January cratered from a year earlier, falling by 36.9 percent, to about 677,000 units from 1.06 million vehicles sold in January 2008. The seasonally adjusted annual sales rate fell to fewer than 10 million units for the first time in more than 26 years. And the American auto business sold fewer cars than for any month since the depths of a recession in December 1981.
SANTA MONICA, Calif. - The business goal of a car dealer and the health of a financial institution may have more to do with the price a consumer pays for a car or the credit terms a consumer receives on a car loan than anything about the consumer personally.
An analysis by Edmunds.com, parent of AutoObserver.com, of vehicle prices paid by consumers and finance rates on their car loans shows an unusually wide range depending on where the consumer does business.
"The car business has been pummeled by the economic downturn, and individual dealerships are dealing with tough times in different ways," explained Edmunds.com CEO Jeremy Anwyl. "Some are offering substantial price cuts in order to close as many deals as possible, while others are striving to earn the highest possible profit on each sale."
SANTA MONICA, Calif. - Automakers, in an effort to clear out old inventory and pare rising stockpiles of unsold cars, boosted incentive spending dramatically from a year ago, according to estimates calculated by Edmunds.com
, parent of AutoObserver.com
.
"Automakers need to clear out leftover inventory from the 2008 model year, and that effort is boosting the average incentive cost for the industry," said Jesse Toprak, Edmunds.com's executive director of Industry Analysis. "Last month, 27 percent of all new vehicles sold were from the 2008 model year while during January 2008, only 12 percent of new vehicle sales were from the previous model year's inventory."
Super Bowl audiences will see a dearth of car ads during Sunday's big game, and they will see none from Detroit's ailing automakers. Only Audi and Hyundai, back for the second year as they seek to increase market share in the game, and Toyota will advertise during the game.
The cost of the ads, which hit the $3-million mark for a 30-second spot (of which there will be nearly 50) this year, is significant barriers to entry for automakers with auto sales slumping to their lowest levels since the early 1980s and most companies struggling to turn a profit. And the payoff is mixed for advertisers, even though the Super Bowl attracts millions of eyeballs.
The auto industry seemed to have reached agreement earlier this month to hunker down and allow the geared-down Detroit auto show to flicker on without anything as distracting as news to interfere.
That all changed this week, as it seems everyone's talking, dealing, reporting, conjecturing and speculating. Plenty of this news is explicitly bizarre.
A rundown of some of this week's happenings, along with the between-the-lines summary courtesy of AutoObserver's branded decoder ring:
DEARBORN, Mich. -- Ford's Swedish brand, Volvo, posted a $1.5 billion loss in 2008, with
$736 millionof that loss coming in the fourth quarter.
That compares with a loss of $164 million in 2007 and breaking even in the fourth quarter of 2007.
Ford CEO Alan Mulally, in a conference call, blamed Volvo's significant loss largely on lower sales and exchange rates. He said Volvo remains under strategic review, which includes its possible sale, but said no further details would be provided at this time.
DEARBORN, Mich. -- Ford said Thursday the United Auto Workers (UAW) union agreed to end its Jobs Bank for laid-off employees as the union had done with General Motors and Chrysler.
Elimination of the controversial Jobs Bank, which gives laid-off workers nearly full pay though they aren't working, was a requirement for GM and Chrysler to keep their loans from the U.S. government. Though Ford has not taken federal money, the automaker insisted it would not be disadvantaged and expected the same concessions the union granted to GM and Chrysler.
DEARBORN, Mich. -- Reporting its biggest loses in its 105-year history, Ford Motor Co. said Thursday morning it lost $14.6 billion for the full year of 2008. In the fourth quarter alone, Ford lost $5.9 billion.
"Ford and the entire auto industry faced an extraordinary slowdown in all major global markets in the fourth quarter that clearly had an impact on our results," Ford CEO Alan Mulally said in a statement.
DEARBORN, Mich. -- Ford announced Elena Ford, the great-great-granddaughter of company founder Henry Ford and cousin to CEO Bill Ford, has been promoted to director of global marketing, sales and service operations.
Elena Ford most recently was executive vice president of marketing for Ford Motor Credit Co. In the newly created post she assumes on February 1, she will report to Jim Farley, Ford's group vice president of marketing and communications.
Welcome to the club - the corporate jetless club, Citicorp executives. You are in good company.
Despite taking $50 billion in federal funds to stay afloat, Citicorp only canceled delivery of a fancy $50-million corporate jet when the American public found out -- and a U.S. Senator gave bank officials a public tongue lashing.
U.S. Sen. Carl Levin, D-Mich., who advocated federal help to Detroit automakers, has been cheesed about Congress' double standard for the banks and the automakers.
DETROIT -- In Washington, the talk is of what cars automakers will produce in 2011, 2016 and 2020, but the auto industry faces an immediate demand: sell cars today.
Dealers, particularly, face a challenging dilemma as to just how to do that. The auto manufacturers, notably General Motors and Chrysler, are pressuring them to order more 2009 models so that factories can remain open and the automakers can book revenue.
Yet, dealers are buried with bulging stockpiles of old models, becoming increasingly expensive to keep and eating into their bottom-line. Yet, even hefty incentives aren't attracting buyers.
So starts the auto industry's cautious waltz with the administration of new President Barack Obama.
Anxious to reverse negative environmental perceptions (most of them realities, to be sure) about the Bush administration, President Obama has instructed the U.S. Environmental Protection Agency (EPA) to make haste in deciding the case of application for waiver by California -- and 13 other states that have adopted California's auto-emissions regulations -- to regulate vehicular carbon-dioxide emissions.
The United Auto Workers (UAW) union has agreed to end its controversial Jobs Bank at Chrysler that pays workers on layoff, effective Monday.
The Jobs Bank became a lightening rod during last fall's Congressional hearings on government aid to U.S. automakers and its elimination was part of the agreement to obtain the federal loans.
Detroit automakers General Motors and Ford have both put up for strategic review their
Swedish brands, but the companies appear to be taking different paths for disposing of the marques.
Saab is in negotiations with owner GM and the Swedish government to reestablish itself as an independent company, according to a report in Europe's Autocar magazine.
Ford will begin taking bids for Volvo next month and expects some of
those bidders to be Chinese automakers, Bloomberg News
reports.
Timothy Geithner, President Barack Obama's nominee for U.S. Treasury Secretary, testified to Congress Wednesday that the new administration intended to assembly a team of experts to oversee the loans to automakers.
Geithner told the Senate Finance Committee during his confirmation hearings that the team would have "expertise in manufacturing, in restructuring, who understand how these labor contracts work."
Automakers should be thrilled at the news since it was frighteningly evident during last fall's Congressional hearings on aide to U.S. automakers that most government officials and Congressmen are generally ignorant about the extremely complex auto industry. Finding a single individual who understood all of the aspects of the auto industry would be impossible. And if President Obama's picks for other government posts are any indication, the car czars will a bright, talented and pragmatic lot.
The Japan Automobile Manufacturers' Association reportedly plans to meet later this month
about whether or not to hold the 2009 Tokyo Motor Show. A decision likely will be announced shortly thereafter.
An official of the organization was quoted as saying the show, held every other year, may be canceled due to the global economic crisis.
The Tokyo show has struggled in recent years to maintain its status as an international show because of Japan's largely closed market. Automakers have opted instead to shift their auto show dollars to China.
Remember those diesel-engine light-duty pickups we're supposed to be seeing this year? Get ready to hear the words "back burner" in relation to those product plans.
General Motors Corp., Ford Motor Co. and Chrysler LLC all said as long ago as 2007 they would have diesel engines, respectively, for the GMT 900 pickup line (Chevy Silverado/GMC Sierra); the Ford F-150 and the Dodge Ram. GM is developing an in-house 4.5-liter V8; Ford, an in-house 4.4-liter V8 derived from a European diesel and Chrysler said it would collaborate with longstanding diesel-engine partner Cummins Inc. to produce a V6 diesel.
The Genesis was the first Korean car in the 16-year history of the award to win. It was selected from three finalists that also included the Ford Flex and Volkswagen Jetta TDI.
The F-150 was selected from three finalists that also included the Dodge Ram and Mercedes-Benz ML320 BlueTEC.
Nearly 3 million U.S. auto sales evaporated in 2008, and plenty of that blood was lost by the Detroit Three: General Motors Corp. sales were down 23 percent, Ford Motor Co. sales slid by 20 percent and Chrysler LLC sales dropped by 30 percent.
Total U.S. sales plunged from 16.1 million units in 2007 to 13.2 million for 2008. Equally interesting -- and troubling, for Detroit -- was that not only did the pie get painfully smaller, the domestic automakers' portion, market share, once again lost ground.
According to data from Edmunds.com, the Detroit Three lost a collective total of 3.7 points of market share in 2008. Chrysler led the group, ceding 1.9 points of share (from 12.9 percent of the market in 2007 to 11 percent in 2008). GM lost 1.4 percent (from 23.8 percent in 2007 to 22.4 percent). Ford gave back 0.4 points of share (from 15.5 percent to 15.1 percent for 2008).
Striking every attitude from empathy to ambivalence to something resembling snarkiness, automakers have been using new TV-advertising campaigns to try to jolt consumers off their couches and into dealer showrooms.
The headwinds are daunting, but automakers have been launching a greater variety of messages than at any time in recent memory - attempting to find something, anything that punches effectively through the pervasive gloom in American households and reignites their desire and confidence to make a major purchase.
U.S. auto sales continued their precipitous tumble in December, closing the books on the industry's worst year since 1992.
Five of the Big Six automakers -- General Motors, Ford, Toyota, Nissan and Honda -- saw sales slide another 30 percent each in December; Chrysler's plummeted 53 percent. No automaker showed higher sales December to December. The lucky ones saw mere single-digit dips.
For the full year of 2008, all of the Big Six automakers reported sales declines. In total, the industry sold 13.2 million vehicles for an 18 percent drop from 2007's 16.1 million.
"It was an unbelievable year -- not one I want to repeat," said Mark LaNeve, GM's head of sales and marketing in a conference call with reporters. "Hopefully, 2009 will improve from December's low point rather than deteriorate as 2008 did."
SANTA MONICA, Calif. -- Automaker incentives set a new record in December, Edmunds.com estimates, and, surprisingly, leasing showed a remarkable jump despite reports of its demise.
"Never before has the December average incentive been this high," said Jesse Toprak, Edmunds.com's executive director of Industry Analysis. "Automakers have been pulling out all the stops to keep motivating shoppers during these tough times."
Slowing sales have struck virtually every automaker and every market segment. U.S. auto industry sales for December and the full-year of 2008 are being reported Monday. December sales are expected to look a lot like the dismal levels of October and November -- and down from in the neighborhood of 30 percent or more from December 2007. Full-year sales are likely to be the worst since 1992.
Perhaps now, at age 91, Las Vegas billionaire Kirk Kerkorian has finally given up on the auto industry that has not been particularly good to him.
On Tuesday -- just in time to take year-end losses -- Kerkorian sold the last of his investment in Ford. The move came just six months after Kerkorian's Tracinda Corp. bought a 6.49 stake in Ford and carries with it deep losses. Kerkorian's purchase was seen as a vote of confidence in Ford's turnaround strategy and its management led by former Boeing exec Alan Mulally.
SANTA MONICA, Calif. -- The deteriorating economy, the precarious employment situation and the lack of available credit will push the annual sales rate in December for U.S. car sales to their lowest level of the year below 10 million units, Edmunds.com forecasts.
December sales (retail and fleet) are expected to total 852,000 units, a 38.4 percent decrease from December 2007 but a 14.6 percent increase from November, Edmunds.com predicts. Typically, December sales are about 18 percent higher than November's.
With the year closing on a low note, U.S. vehicle sales for all of 2008 will total just over 13 million, a decrease of almost 3 million vehicles, or 18 percent, from 2007. Automakers report December and 2008 sales figures January 5, 2009.
A day after Chrysler LLC announced it is suspending operations for at least a month at all of its North American assembly plants, General Motors Corp. is denying a Wall Street Journal report saying the two companies resumed merger talks.
Chrysler and GM are awaiting word from the Bush Administration regarding promised emergency funding to carry the automakers into early 2009. Without a loan of billions, both companies have said they may not have sufficient liquidity to continue funding daily operations.
Separate from Chrysler's drastic move to curtail all manufacturing, GM already had announced a major production cutback for the first quarter of 2009 and is delaying other manufacturing spending, including the construction of a plant to build the engine for the high-profile Volt extended-range electric vehicle.
DETROIT - Finalists for the 2009 North American Car and Truck of the Year awards were announced Thursday at the Detroit Economic Club's annual auto show luncheon.
The finalists for the 2009 North American Car of the Year honors are the Ford Flex, Hyundai Genesis and Volkswagen Jetta TDI. Finalists for the 2009 North American Truck of the Year award are the Dodge Ram, Ford F-150 and the Mercedes-Benz ML320 BlueTEC.
The president's expected short-term bailout of the Detroit Three automakers will leave the industry with lots of short- and long-term issues. One of the biggest is who will lead them.
As they pulled the plug on their own rescue deliberations last week, some in Congress seemed to believe they could run the Detroit Three automakers better than the CEOs do. President-Elect Barack Obama also has suggested that some top auto executives have a "head-in-the-sand approach" and should lose their jobs. And the American public, at least as measured by polls, don't seem to want to give a break to the automakers' current leadership either.
Could others actually perform better as CEOs of General Motors, Ford or Chrysler than Rick Wagoner, Alan Mulally or Robert Nardelli have -- and will? If so, where would these executive savants come from? And will we ever see any of this new blood in Detroit?
DEARBORN, MI -- Already talking big about the efficiency gains projected from its new downsized engines and six-speed automatic transmissions, Ford Motor Co. will engage a full-scale war against weight in its next product-development-led gambit to become the green-focused car company executives believe Ford must become to reemerge as a success in the U.S. and global auto markets.
The big cut in ever-bloating vehicle weight will come as Ford phases in the next-generation platforms for its product range, says Derrick Kuzak, group vice president of global product development.
President George W. Bush said Monday an announcement on an auto industry rescue was not imminent, leaving the Detroit Three's fate clouded in uncertainty for a little longer, Reutersnews service reports.
"We're not quite ready to announce that yet," Bush told reporters on Air Force One during a flight from Baghdad on an unannounced visit to Afghanistan.
The U.S. Treasury said it is willing to provide financing to Detroit automakers after the Senate Thursday night failed to approve $14 billion in loans to General Motors and Chrysler.
"Because Congress failed to act, we will stand ready to prevent an imminent failure until Congress reconvenes and acts to address the long-term viability of the industry," Treasury spokeswoman Brookly McLaughlin said in an e-mailed statement.
Detroit Free Press columnist Tom Walsh reminds senators from the Gulf States, many of
whom oppose the loans to Detroit automakers,to recall Hurricane Katrina as they cast their votes on the bailout bill tonight.
"When Hurricane Katrina slammed into Louisiana and Alabama on Aug. 29, 2005, the automobile companies of Detroit did not harrumph that the Gulf Coast should have been better prepared. They didn't sit back and wait for New Orleans to submit a detailed plan for future repair of the ruptured levees," Walsh wrote in Thursday's edition.
The U.S. Senate rejected legislation that would have provided $14 billion in federal loans to keep afloat General Motors and Chrysler, which say they will be out of money by the end of the year.
At the same time, GM reportedly has hired lawyers and bankers to consider whether to file for Chapter 11 bankruptcy. Those advisers are among the best known in the bankruptcy and restructuring business who would handle what would be one of the largest bankruptcy filings in U.S. history.
In their bailout blueprints presented to Congress last week, automakers presented forward-revenue assumptions based on forecasts for 2009 auto sales. In General Motors Corp.'s case, for example, it projected "downside," "baseline" and "upside" sales forecasts for the U.S. market, correlating how much funding the company believes it will need based on each sales scenario.
If a new survey of the nation's economists has any relevance, the beleaguered automakers had better strap in for a bumpy ride that may make a reality of those "downside" assumptions.
Bloomberg News' December survey of economists released this week paints a bleak outlook for 2009. The prominent economists comprising the survey sample predict consumer spending will plunge by a rate not seen since the 1940s, with household spending retreating by 1 percent, which also hasn't happened since World War II.
Both General Motors and the Credit Union National Association would like to expand a just-announced pilot partnership that provides a 4 to 5 percent purchase-price discount to members of nearly 1,300 credit unions who buy GM vehicles in four Midwestern states.
After the June 30 wrap-up of the program launch, GM would like to roll it out to other regions or nationwide, Mark LaNeve, the company's North American vice president of sales, said today. And a credit-union executive invited Ford and Chrysler to consider their own versions of a test program that aims to bring some of America's most creditworthy middle-income consumers into GM dealer showrooms.
With the deal that began this week, GM is seeking broader access for its customers to one of the few reliable pools of auto-financing funds, especially because the company's finance arm, GMAC, is making practically no new loans these days.
The House of Representatives could vote as early as today on the $15-billion loan package for U.S. automakers after the Congressional Democrats and the White House reached an agreement in principle on Tuesday night.
If the legislation now being crafted is passed, the low-interest loans could make their way to General Motors and Chrysler by next week. The automakers have said they could run out of money before the year ends. The $15 billion in loans is intended to keep them afloat through March. Ford has said it doesn't need loans now but would like access to a line of credit if the economy worsens more than the automaker expects.
With a pending vote Congressional vote on a bailout package to extend so-called "bridge loans" to Chrysler LLC, Ford Motor Co. and General Motors Corp. by perhaps as soon as this week, New York Times
columnist Thomas L. Friedman -- often prominent for his provocative views on the auto industry -- is calling for one unique "string" to be attached to federal bailout funds: forcing the domestic automakers to present plans to hybridize their entire model ranges in three years.
Friedman has been a vocal advocate for hybrid-electric technology and has been criticized for a view of the industry that typically is unkind to the Detroit auto-industry establishment. Friedman often argues in favor of the management style and operational practices of Detroit's chief competitors, the Japan-based automakers -- and caused fireworks when he once suggested GM should go out of business and let Toyota assume GM's longstanding role.
As the numbers on the U.S. economy worsen, resistance to federal assistance for the struggling Detroit Three automakers dissipates, with reports from Washington, D.C., saying Congress could vote on a hastily crafted bailout package as early as Tuesday.
White House spokesperson Dana Perito told reporters today it appears the Bush administration and congressional leaders, squabbling mostly about from where "bridge loan" funds would be appropriated, have to come to agreement, although Congressional Democrats need to construct a bill.
Results released from a survey conducted by CNBC and Portfolio.com confirmed what the heads of Detroit's auto companies testified to in Congressional hearings the last months: Consumers are reluctant to buy a car from an automaker in bankruptcy.
A bankruptcy filing by General Motors and Chrysler would cost U.S. taxpayers four times more than the amount of federal bridge loans being considered this week by Congress, a new study finds.
A bankruptcy, or even a prepackaged restructuring outside of bankruptcy court, cannot control a wild card unique to automakers -- the car-buying consumer -- noted a joint study by international consulting firm BBK and Michigan-based Anderson Economic Group.
The debate over aid to the Detroit-based automakers is awash with half-truths and misrepresentations that are endlessly repeated by everyone from members of Congress to journalists. Here are seven myths about the companies and their vehicles, and the reality in each case.
This column by Detroit Free Press auto critic Mark Phelan originally was published on November 17 and was updated last Friday to debunk the myths as Congress was about to fashion an automotive rescue package.
The most dramatic and convincing moment of five-and-a-half hours of Congressional testimony on Detroit automakers' request for financial help came when Texas Democrat Al Green asked the panel of esteemed financial and industry experts simple, straightforward questions. Requesting them to raise their hands like third-graders if their answer was yes, he asked:
Was bailing out AIG in the national interest?
All six hands went up.
Is it in the national interest to bailout the Detroit automakers? All hands shot up.
Would it be damaging to the national interest not to take action to help Detroit's automakers? All hands went up.
"Then we must act. It is in our national interest," Green concluded.
The Canadian government will begin reviewing financial-aid requests this weekend for General Motors, Ford Motor Co. and Chrysler LLC. The automakers had a Friday deadline to submit detailed proposals for their Canadian businesses.
"We want to see long-term plans, and management has to be overseen if taxpayer money is involved," Industry Minister Tony Clement told Bloomberg News Thursday. The government will look at "various options" for help from this year's budget, Clement said.
Every Senator and Representative in Congress are receiving on their doorstep this morning a special edition of the Detroit Free Press with a headline that screams "A Message to Washington: Invest in America."
The sole article on the front page is an editorial asking Congress to pass a rescue package for Detroit automakers.
In his explanation of why the paper was taking such unprecedented action, Editor Paul Anger noted that indeed it is the newspaper's job to inform, but "there are times when a newspaper needs to speak up for what's right."
It's still anybody's guess, but Congress seems to be warming somewhat to the idea of helping Detroit's automakers, if for no other reason than to keep the entire U.S. economy from collapsing on their watch.
On Friday, Detroit's auto chiefs were headed to Capitol Hill to testify again before the House Financial Services Committee. On Thursday, they were before the Senate Banking, Housing and Urban Affairs Committee for nearly six hours.
At the opening of Thursday's session, the potential for the Detroit Three automakers' proposed bridge-loan package of as much as $34 billion appeared to be steering towards the much-discussed - and much-dissed by the automakers - "pre-packaged bankruptcy" option.
But as the testimony wore on, the case against bankruptcy gathered a palpable momentum, and it now seems likely Congress will broker some kind of immediate funding General Motors Corp. and Chrysler LLC say they must have to survive to see 2009.
The real question now seems to be from where, how, and how quickly the help will come. GM CEO Rick Wagoner and Chrysler CEO Robert Nardelli were unabashed in reiterating their companies' need at least $4 billion each - by the end of the month.
DETROIT -- The leadership of the United Auto Workers (UAW) union, meeting in an emergency session here Wednesday, said it willnegotiatewith General Motors, Ford and Chrysler tomodify its current contractas part of the Big Three's plea to Congress for bridge loans.
UAW President Ron Gettelfinger said the union leadership also agreed to delay the Detroit three's payments to the Voluntary Employee Benefit Association (VEBA), which shifts retiree health care benefits for union members from the auto companies' books to a union-administrated fund.
Dongfeng Motor Group Co., China's third-largest automaker, said it had received proposals from investment banks to buy assets from General Motors as the carmaker tries to generate desperately needed cash, Bloomberg News reported Wednesday.
A spokesman for Dongfeng, which partners in China with Nissan, Honda and PSA Peugeot Citroen, said it had received e-mails and investment materials asking if the company would be interested in buying some of GM's assets. The spokesman, who wouldn't reveal the investment banks it was talking with or the assets offered for purchase, told Bloomberg it hasn't reviewed the materials and has not responded to GM.
A GM spokesman based in Shanghai denied the report, saying there were no grounds to the rumors.
In case members of Congress needed any more reminding why the domestic automakers are hat-in-hand before them this week, the 37 percent drop in November sales has provided them with the latest bleak snapshot of a moribund U.S. vehicle market.
As the Detroit Three were presenting their restructuring plans in Washington, D.C., on Tuesday, the sales data rolling in from them and all other OEMs gave further dimension to the vast pall that has come over the nation's automotive market and quantified the paralyzing dread that is felt by American consumers.
As Congressman and industry experts suspected, the $25 billion in bridge loans Detroit's three automakers requested of the federal government is not enough.
In their viability reports submitted to Congress Tuesday, the three auto companies have requested a combined $34 billion.
General Motors wants up to $12 billion in loans in various installments to help it through 2009. GM also requested a $6 billion line of credit in case the economy gets worse. Ford is asking for a line of credit of $9 billion that it may not tap into but wants as a security blanket in case the recession extends well into 2009. And Chrysler wants $7 billion -- by Dec. 31.
With reports still rolling in, U.S. vehicle sales for November look as if they will be down about 35 percent from a year ago. The annual sales rate appears to be a weak 10.6 million vehicles.
General Motors' sales fell a hefty 41 percent. Ford said its U.S. sales fell 31 percent. Toyota reported sales down 34 percent; Honda a 32 percent decline. Chrysler saw sales plummet 47 percent. Nissan sales took nosedive at 44 percent.
SANTA MONICA, Calif. -- Domestic automakers eased off the incentive gas in November while import automakers revved up incentives, according to Edmunds.com.
"All three domestic automakers lowered their incentive spending this month, seeking to preserve cash during these incredibly tough times," said Jesse Toprak, Edmunds.com's executive director of Industry Analysis. "Meanwhile, the imports have poured more money into incentives, attempting to seize the opportunity to gain market share. Toyota's monthly incentives spend hit a new record high in November, and the company's market share might follow suit."
Scrambling to enlist the aid of the federal government in surviving the nation's drastic economic downturn, Ford Motor Co., General Motors Corp. and Chrysler LLC are submitting today their restructuring "blueprints" that will have at least one element in common: symbolic pay cuts for their chief executive officers and pledges to accelerate the introduction of higher-efficiency models and technologies.
Ford CEO Alan Mulally will work for $1 per year, Ford announced, and it is believed GM CEO Rick Wagoner will do the same when his company releases details of the company's plan later today. Chrysler CEO Robert Nardelli already had offered to work for $1.
With Chrysler LLC, Ford Motor Co. and General Motors Corp. set to return to Washington,
DC tomorrow to present Congress with a detailed plan for restructuring their operations under terms of a desired federal bridge-loan package, reports from Europe indicate the Swedish government may be considering an active role in assuring the continued future of Saab Cars and Volvo Car Corp., owned by GM and Ford,
respectively.
And Ford confirmed Monday it is exploring the possibility of selling Volvo - despite assertions
earlier this year the company did not want to part with its Swedish division - saying in a press release the company "will re-evaluate strategic options for Volvo Car Corporation, including the possible sale of the Sweden-based premium automaker."
The Detroit Three are putting the finishing touches and obtaining the blessings of their boards and upper management for the biggest sales pitch of their lives this week. They are preparing the viability plans due to Congress on Tuesday in order to obtain the $25 billion in bridge loans they are seeking.
Executives from General Motors, Ford and Chrysler worked through the Thanksgiving holiday putting together plans after Congressmen criticized them for lacking such plans in the last round of hearings. While each company's plan is individual to their unique circumstances, all are expected to detail even deeper cuts, including executive compensation and perks, than have already been made and an acceleration of environmental and fuel-saving initiatives. Their plans also are expected to include even more concessions from the United Auto Workers (UAW) union.
Meantime, the Detroit Three's plea for help is likely to get a boost from the continued deterioration of auto sales in the U.S., where automakers report November results Tuesday. Sales are expected to hit 25-year lows. That sales slide is spreading globally with a number of markets reporting dismal sales on Monday.
The plans the Detroit Three automakers are developing to submit on December 2 to Congress in justification for their entreated $25-billion federal loan probably are being more closely guarded than the manuscript for Sarah Palin's first book, but we can guess one aspect that seems certain to feature in the bailout blueprint of both Ford Motor Co. and General Motors Corp.: ditching some brands that have long dogged their ever-more-fragile bottom lines.
For at least a decade, critics have shouted down both GM and Ford for refusing to do what it now appears must be done -- stop supporting underperforming divisions.
Rumors howling in Detroit's November winds point to brand-burning as one of the primary ways the companies plan to demonstrate to Congress they will be able to sustain their operations in a U.S. auto market that is expected to be decidedly unkind for all of 2009 and possibly well into 2010.
Detroit's Big Three automakers are jousting with the U.S. Congress for their continued existence, and nobody denies that's serious business.
But as usual, what got the auto companies to this place has opened Detroit Inc. to plenty of ridicule -- and not all of it is mean-spirited.
Laughter may or may not be the best medicine for this predicament. Either way, here are a few examples of our favorite "bailout humor" that hit the national stage:
General Motors and golfing great Tiger Woods announced Monday they were parting ways.
GM's longtime deal with Woods, who served as spokesman for Buick for the past nine years, ends December 31.
For GM, it is a cost-cutting move as it struggles to survive. GM reportedly paid Woods $8 million a year for the endorsement. Woods claims he wants more personal time since he and his wife are expecting a second child in late winter.
SANTA MONICA, Calif. -- November car sales improved over October's historic lows thanks to lower gas prices and high incentives.
November new vehicle sales, including fleet and retail sales, are expected to be 850,000 units, a 27.6 percent decrease from November 2007 but showing a 1.9- percent increase from last month, according to Edmunds.com's forecast.
Still, the Seasonally Adjusted Annual Rate (SAAR) for the month is expected to be only about 11.5 million units.
Detroit Three automakers plan to return to Washington to make their second pitch for federal bridge loans next week and will also ask Washington to help them sell more cars by making car loans more available.
Carmakers around the globe are raising the alarm about the declining health of auto suppliers, whose problems they fear could ricochet back to hurt them.
Many suppliers that make parts for General Motors, Ford and Chrysler also supply their foreign-owned plants operating in North America and elsewhere. Rating agencies are warning about tightening credit conditions, falling orders, and the possible failure of a Detroit carmaker, which could bankrupt some auto suppliers and in turn hurt even relatively healthy carmakers' businesses, the Financial Timesreported.
LONDON -- Struggling Jaguar Land Rover, which was purchased by India's Tata Motors from Ford Motor Co. earlier this year, reportedly is seeking $1.5 billion in government aid, although the automaker won't confirm it is seeking aid for itself.
Rather, the automaker acknowledged it has joined the U.K.'s Society of Motor Manufacturers and Traders and the European Automobile Manufacturers' Association (ACEA) in lobbying for government aid to help the country's ailing auto industry, the Financial Times reported Monday.
The CEOs of Ford Motor Co., General Motors Corp. and Chrysler LLC loaded up on their much-maligned corporate jets and winged out of Washington, DC, this week with no bailout money -- but the assurance of a shaky holiday season.
After Democratic deal-makers conceded this week there would not be sufficient bipartisan support to approve a bill to "repurpose" the existing and already approved $25-billion Department of Energy loan (originally intended to promote the development of fuel-efficient technology and retool factories), the initiative was shelved until a possible vote on December 8.
That promises to be a rocky 17 days for GM and Chrysler, whose bosses insinuate the companies may not have the funds to enable them to see the New Year.
WASHINGTON -- A bipartisan plan to provide Detroit automakers and suppliers with bridge loans using the already appropriated $25 billion to retool to more fuel-efficient vehicles came and went in a matter of hours Thursday.
Democratic Congressional leaders, realizing they did not have the votes to pass the plan that was presented around noon Thursday, announced less than three hours later that they would not put it to a vote this week.
Instead, they are requiring automakers applying for the loans to submit a plan of financial viability with an explanation of how the loans will help them transform their business by December 2. Congress may then reconvene for a possible vote on December 8.
LOS ANGELES -- With its exhibit set in its own small wing of the Los Angeles Convention Center away from other automakers, its mix of new blindingly fast models with its classic roadsters, its trays of hors d'oeuvres for visitors and a visit from comedian and noted enthusiast Jerry Seinfeld, Porsche would appear to be the last carmaker to show the effects of a slumping auto industry at the Los Angeles auto show.
Don't be fooled, says the company's head of U.S. operations. The slowdown is not lost on him.
"I would be very happy if I could say this doesn't affect us or affects us differently from every other car manufacturers, but we all have the same problem," said Detlev von Platen, chief executive officer of Porsche Cars North America, Wednesday. "At the moment, we cannot count on the confidence of the consumers."
On a day when U.S. senators couldn't agree on whether or how to extend $25 billion worth of loans to help General Motors, Ford and Chrysler survive, the overriding mood during the first day of the Los Angeles auto show's exhibits for members of the press was one of restraint.
LOS ANGELES - While the leaders of the three largest U.S. auto companies took a united stand in Washington when pleading for $25 billion in loans from the U.S. government, Ford Motor Co. President of the Americas Mark Fields appeared to take a more independent approach Wednesday at the Los Angeles Auto Show 2,700 miles away.
With General Motors and Chrysler noticeably absent from the show, Ford's didn't appear to scrimp on its display, which took up an entire wall at the L.A. Convention Center's West Hall and included about a dozen Mustangs in addition to its new gas- and hybrid-powered Ford Fusions.
Ford President and CEO Alan Mulally detailed to Congress how the automaker has changed
its business model since he joined the company a couple of years ago from Boeing.Hesaid Ford believes it has enough money to get through 2009 if the economy doesn't worsen. However,he added, the automaker would like the availability of government loans in case the economy sours more soFord can complete its transformation to building more small cars than large vehicles.
Here is Mulally's opening statement to a U.S. Senate committee on Tuesday and a House Committee on Wednesday holding hearings on the bridge loans:
Chief executives from each of the Detroit Three automakers couldn't
have come to Tuesday's session of the U.S. Senate Banking, Housing and Urban Affairs Committee at a less-receptive time. Seeking $25 billion in emergency loans to keep their ailing operations afloat, they might as well have been kids who've gorged on all their Halloween candy and now are whining for more.
Although the committee is chaired by a receptive persona in Senator Chris Todd (D-CT), Republicans are largely presenting an icy posture regarding Detroit's plight - and senators on both sides of the aisle grilled Ford's Alan Mulally, GM's Rick Wagoner and Chrysler's Bob Nardelli with varying degrees of understanding and acidity. The three are scheduled for a House committee hearing Wednesday morning.
Ford announced a new round of incentives Tuesday that it is calling Employee Pricing Plus
Tuesday because it starts with employee pricing and adds cash rebates or, in the case of Ford's most fuel-efficient models,zero-interest financing.
Beginning Wednesday and running through January 5, Ford is offering employee pricing to buyers of most 2008 and 2009 Ford, Lincoln and Mercury vehicles plus cash rebates up to $6,000.
Customers who select one of the nine most fuel-efficient models Ford, Lincoln or Mercury can opt for zero-percent financing for 36 months on top of employee pricing.
Further, Ford Credit will provide a $500 bonus on the purchase of most Ford, Lincoln and Mercury models.
If Ford were to cease operations, 25 states could lose 3,000 or more Ford-related jobs,
according to an internal document obtained by the Wall Street Journal
.
The document detailed state-by-state the number of workers directly employed by Ford, the number of auto parts suppliers who work with the company and the amount they spend to support their business.
DETROIT - Any day now, the country and its decision-makers will decide whether to extend a massive financial lifeline to sustain Detroit's suddenly cash-anemic automakers. Judging from the rhetoric coming from the auto industry and sympathetic voices in Washington, DC, it needs to be any day now, or Detroit won't be around to hear the verdict.
And every day now, there are colliding opinions regarding whether an automaker bailout is wise - or politically and socially proper.
As has been said many times as the domestic auto industry continues its frenetic unraveling, there's plenty of blame to go around, and a portion of it lies with the unions. The United Auto Workers has rarely been out of the conversation of what's ruined Detroit Inc., but arguments centered on the notion that fat, uncompetitive unionized labor is the root cause of Detroit's ills are specious - and little more than an excuse for some good-old-fashioned union-bashing.
Richard Shelby, the top Republican on the Senate Banking Committee, took to the airwaves over the weekend as the chief opponent of loans to Detroit automakers. His premise: This is a Detroit problem not a national problem and taxpayers shouldn't subsidize these poorly managed dinosaurs.
"I don't believe they've got good management. They don't innovate. They're a dinosaur, in a sense, and I hate to see [them get government loans]," Shelby said on NBC's Meet the Press.
With all due respect Senator Shelby, this is not only a Detroit problem. It's an Alabama problem. It's a national problem. And it's a global problem. Recession is spreading around the globe like a California wildfire. Once-hot auto markets have caught cold. And automakers everywhere -- not just in the U.S. -- are asking their governments for a helping hand.
The future of the American auto industry rests in the hands of the U.S. Congress, which this week debates whether the government should make loans to Detroit automakers to get them through the current economic crisis.
Theoretically, we believe the free market is preferable to government intervention. But this isn't theory. This is reality, and an ugly one at that. The pragmatic answer to these unprecedented circumstances demand action.
DETROIT - Automaker and supplier-industry executives and engineers speaking at the Automotive News Green Car Conference here said the recent retreat of fuel prices to around $2 per gallon has provided consumers' finances a little breathing room - but isn't going to do much for the embattled auto industry.
With gasoline prices beating a hasty retreat from the panic-inducing $4 levels attained earlier this summer (the Energy Information Agency said this week's national average for regular unleaded was $2.22), Sue Cischke, Ford Motor Co.'s group vice president-sustainability, environment and safety engineering, said, "We do think there's going to be a little bit of a rebound," for sales of pickup trucks. But small-cars sales have flattened along with fuel prices.
The Associated Press reports today that President-elect Barack Obama, meeting yesterday with President George W. Bush, "suggested" Detroit's reeling automakers need financial assistance -- and need it now. Obama appears to believe keeping the domestic automakers afloat is vital to keeping the nation's flagging economic engine firing -- but he does not become president until January.
It appears Detroit's automakers can scarcely afford to wait.
Even those predicting a retreat from this summer's $4-per-gallon fuel prices didn't call for prices to plunge so far, so fast.
Regular unleaded gasoline in some parts of the country once again begin with a "1." The Energy Information Administration (EIA) said last week's national average for regular unleaded was $2.40, but even that number reflected a drop of some 61 cents from a year ago and a crash of 25 cents in just a week.
DETROIT -- Ford Motor Co.'s Lincoln premium division can't seem to catch a break.
The historic brand has struggled for years to justify its continuing existence within its own family while Ford went shopping overseas for more "relevant" premium brands such as Jaguar, Land Rover and Volvo. Jaguar and Land Rover are sold, but Volvo and home brand Lincoln continue to struggle against economic and industry currents that appear to be particularly battering to luxury brands.
DEARBORN, Mich. - Ford Motor Co. reported Friday a net loss in the third quarter of $129 million, compared with a net loss of $380 million in the third quarter of 2007.
However, Ford took special charges during the quarter mostly related to retiree health-care costs. Excluding those, its third-quarter pre-tax loss was $2.7 billion, down from a profit of $194 million a year ago. On an after-tax basis, Ford's loss was $3 billion, compared with a loss of $24 million.
As expected, the loss prompted Ford to announce more cost cutting measures. They include: an additional 10-percent reduction in North American salaried ranks, a freeze on salaried pay increases and bonuses and an elimination of company matching funds to savings plans. It also includes cutting another 2,600 hourly jobs. Ford will also reduce overall capital spending, reduce spending in in manufacturing, information technology and advertising and lower inventories globally.
The U.S. Department of Energy Thursday issued the draft rules for automakers seeking the long-ballyhooed $25 billion in loans Congress recently approved for automakers (and suppliers) to retool factories to produce a new generation of more fuel-efficient vehicles.
Sure, strings had to be attached, or the automakers would burn through the dough like sailors on shore leave. But saying there are hoops to be jumped through in this "interim final rule" is an understatement.
The chiefs of Detroit's three automakers and the president of the UAW are scheduled to meet at 4 p.m. Thursdaywith a Congressional delegation in Washington, D.C., in an effort to obtain loans to keep them afloat through the next year.
General Motors' Rick Wagoner, Ford's Alan Mulally, Chrysler's Robert Nardelli and the UAW's Ron Gettelfinger were set to meet with Speaker of the House Nancy Pelosi as well as Michigan Congressman John Dingell and others to plea their case.
With operating revenue becoming an increasingly scarce commodity in Detroit, General Motors Corp.'s and Ford Motor Co.'s luxury of maintaining their premium-brand but low-performing Swedish automaking units is likely to earn deeper scrutiny in the coming months.
Skepticism regarding the wisdom of retaining Saab Cars has been around at parent General Motors Corp. almost since the day GM purchased 50 percent of Saab's automaking unit (actually underbidding future GM partner Fiat Group) in late 1989 for the paltry sum of $500 million. GM acquired the rest of the company
in 2000, and at that time, Saab was losing money and it has been widely believed Saab has never returned a profit under full GM ownership.
But rumors and innuendo about GM cutting Saab adrift have reached a higher pitch in the past weeks as GM, openly seeking cash injections, has shopped its Hummer brand and storied AC Delco aftermarket-parts division, and recently dealt with a crumbled plan to offload its commercial-truck business to Navistar International. The potential for a government cash injection -- never mind the complication of a proposed merger with Chrysler LLC - now seems GM's best near-term option.
As many as 3 million jobs and hundreds of billions of dollars will be lost from the U.S. economy if General Motors, Ford and Chryslercease operations, a new report shows.
The report by the Center for Automotive Research (CAR) details the job losses and economic impact of two scenarios: if all three Detroit automakers cease operations next year; and if Detroit automakers contract by half, likely involving two automakers going out of business.
"Either of these scenarios is possible, and indeed probable, within the next 12 months," the study says.
In both scenarios, the impact is devastating for jobs, income, the nation's tax base and consumer spending that could pull the U.S. economy out of recession.
Other automakers doing business in the U.S., including Toyota and Honda, also would be hit as would Canada and Mexico.
There were almost no words on Monday to describe how abysmal U.S. auto sales were in the woe-begotten month of October.
Bled by battered consumer confidence, by more expensive and harder-to-obtain loans, by financial-market disasters and Election Day anxieties, October sales limped in at only about 852,000 vehicles nationwide, a 32 percent plunge from a year ago.
"This level of sales is not sustainable for anyone in the industry," said Michael DiGiovanni, head of global market analysis for General Motors. "It doesn't matter how deep their pockets are. Everyone is pulling in their reins to one degree or another, but everyone is affected by this."
GM's sales slumped by a horrific 45 percent, the worst showing among the Big Six automakers selling in the United States. Chrysler's declined by 35 percent, Nissan's by 33 percent, Ford's by 29 percent, Honda's by 25 percent and Toyota's by 23 percent.
The industry total comprised its lowest sales volume for any month since 1992. And adjusting for population growth -- that is, on a per capita basis -- October auto sales were the industry's worst since World War II.
Ford Credit, the financing arm of Ford Motor Co., and GMAC Financial Services, the troubled financial arm part-owned by General Motors and Chrysler owner Cerberus Capital Management, will get federal help to access the locked-down commercial credit markets, news reports say.
The move should loosen up credit for customer car loans.
DETROIT - Consumer Reports magazine delivered more bad news to Chrysler Thursday, noting the automaker's vehicle reliability has dropped since Cerberus Capital Management took over the company just over a year ago.
In contrast, Ford's reliability is now approaching that of Toyota and Honda with almost all of its vehicles achieving above-average reliability in the magazine's annual survey. General Motors' results were mixed.
"There has been a systematic, structural change within Ford,'' said David Champion, director of the magazine's auto test center, said. Champion revealed the magazine's survey results Thursday at the Automotive Press Association meeting in Detroit.
SANTA MONICA, Calif. - October auto sales are turning out to be every bit as bad as
forecasters predicted early in the month.
Edmunds.com forecasts October new vehicle sales, including fleet and retail, will again fall below the 1-million mark to 872,000 vehicles sold - about 30 percent below October 2007. October 2008 will mark the U.S. auto industry's lowest sales level since January 1992.
And the industry should brace itself for a terrible November, typically one of the lowest sales months of the year.
DETROIT - At the Convergence 2008 Conference here, a biannual gathering of the auto and electronics industries that examines issues of meshing the two industries, automaker representatives agree electronics content in automobiles will continue to increase - while simultaneously insisting they must safeguard quality.
The quality issue resonated for most participants in a Convergence panel addressing broad issues regarding electronics usage in the auto industry.
PARIS - At the recent 2008 Paris Auto Show, Renault unveiled its new C-segment Mégane hatchback and coupe. Sized and priced to compete withEurope's best-selling vehicle, the Volkswagen Golf,the Renault Mégane is vital to the French automaker's financial health that has been in decline in recent months.
After a week of intense battering, General Motors Corp. and Ford Motor Co. stock prices on Friday were at least standing their ground against a still-plummeting U.S. stock market. The problem is, that ground is practically below sea level.
After seeing its stock price plunge some 50 percent since the beginning of October and with the sub-$5 price hovering around 1950s levels, reports swirled Friday that GM is preparing another round of production cutbacks and possible plant closures. GM moved earlier this year to chop some 300,000 units of truck production from its manufacturing schedule and accelerated the shutdown plans of its SUV assembly plant in Moraine, Ohio.
It's the toughest of times all around the auto sector, and plunging sales for entire companies, much less individual models and nameplates, currently are the rule, not the exception.
But when a staggering giant of a nameplate comes to our attention thanks to the number crunchers at Edmunds.com, cratering sales become an item that can't be ignored.
Exhibit No. 1: Ford Motor Co.'s Explorer midsize SUV. The model that epitomized the mass-market SUV at the zenith of the genre's popularity now has dissipated to barely a blip on the sales charts.
After Monday's stock market plunge and Tuesday's resurgence, General Motors shares closed Tuesday a tad higher, but Ford's stock price continued its slide.
GM shares rose 1.6 percent to $9.60, still 78 percent below its 52-week high of $43.20. Ford shares dropped 7.1 percent to $4.83.
SANTA MONICA, Calif. -- The average automotive manufacturer incentive in the U.S. was $2,801 per vehicle sold in September 2008, down $1, or 0.04 percent, from August 2008, and up $444, or 18.8 percent, from September 2007, Edmunds.com estimates.
"Although up overall from last year, incentive levels remained flat from August to September despite worsening economic conditions and weak auto sales," said Jesse Toprak, Edmunds' executive director of Industry Analysis. "The high incentive costs of heavily discounted 2008 models are being offset by the low incentive costs of the 2009 models entering the marketplace."
Wheezing U.S. auto sales in September fell by 26 percent, coming in below one million units for the first time for any month in more than 15 years and prompting epochal comparisons to the dismal fall of 2001, when American consumers were frozen by the shock of the 9/11 terrorist attacks.
Overall sales for the month were only about 965,671 vehicles, compared with some 1.3 million vehicles sold in September 2007. In September, the seasonally adjusted selling rate -- the industry's most important interpreter of the sales picture -- fell to an abysmal 12.8 million units compared with a rate of 16.5 million last year.
No one is happy about the U.S. House of Representatives' rejection of the $700-billion federal bailout of the financial services sector and subsequent stock market crash - least of all automakers.
In the short term, auto stock prices for almost every global automaker and their suppliers tumbled on the news Monday - some plummeted to record lows. No bailout means no end to the credit crunch that is keeping belt-tightening customers from even bothering to go to a showroom as September sales to be reported Wednesday will show.
Longer term - and maybe not all that long term - even more belt-cinching by automakers will likely result in deepening production cuts and job losses.
DEARBORN, Mich. - The Dodge Challenger and the upcoming Chevrolet Camaro and Ford
Mustang might get a sales lift as truck owners, who bought pickups to show of their machismo, seek more fuel-efficient rides.
Rebecca Lindland, analyst for Global Insight, told the audience at the forecasting firm's economic outlook conference held here last week, that the days of fashion buyers for full-size pickup trucks like the Ford F-150, Dodge Ram and Chevrolet Silverado are over. "The designer buyer is gone," she said.
Job losses and factory downtime at Volvo Car Corp. may not be stopping with recently announced cutbacks, according to a report this weekend from Europe.
Reuters said Swedish television reported the company will cut more jobs than previously announced. Although Volvo would not confirm or deny the report, a spokesperson was quoted as saying, "We are in a tough spot, everybody knows that."
Volvo owner Ford Motor Co. already has jettisoned Jaguar Cars, Aston Martin and Land Rover - divisions that, along with Volvo, once comprised Ford's Premier Automotive Group. But Ford said it will retain Volvo, which it bought in 1999, and work to improve Volvo's profitability. Analysts aren't convinced Ford will keep Volvo, however.
SANTA MONICA, Calif. - September vehicle sales to be reported by automakers on Wednesday are expected to drop to their lowest monthly level since 1993, Edmunds.com forecasts.
September new vehicle sales, including both retail and fleet sales, are expected to be 1.05 million units, a 19.7 percent decrease from September 2007 and a 15.7 percent decrease from August 2008, Edmunds.com predicts.
"February 1993 was the last time that fewer than one million new vehicles were sold in a month, and we're coming remarkably close to that volume again," said Jesse Toprak, Edmunds' executive director of Industry Analysis. "Traditionally, October sales are even worse than they are in September, so we don't likely have much to look forward to next month."
Detroit automakers moved a step closer to obtaining the $25 billion in loans to re-tool their factories to make more fuel-efficient vehicles.
On Wednesday, the U.S. House passed a bill by a 370-58 vote that included a low-interest federal loans to automakers. Congressional leaders took steps to fast-track the money. The Senate was expected to pass the bill Thursday and President Bush is expected to sign it.
Not that it matters at this point, but almost two out of three people surveyed oppose government loans to help automakers, according to the latest Bloomberg/Los Angeles Times poll released Wednesday.
Congress could vote on as early as today - and likely pass -- a bill that includes $25 billion in low-interest loans to help General Motors, Ford and Chrysler develop more fuel-efficient vehicles.
At the same time, the Bloomberg/LA Times as well as a new Washington Post-ABC News poll show Americans growing increasingly pessimistic about the economy. Auto execs are the first to say consumer confidence is a key indicator for where auto sales go.
Because Ford Motor Co. intends to eventually sell the same small Fords everywhere in the
world - similar to the ones Ford of Europe has been selling for years - the automakerhosted media from North America, South America, South Africa and Australia to test-drive its current European offerings.
At Ford's proving grounds in Lommel, Belgium, journalists test drove the current C-segment Focus and Focus-based models already sold in Europe. When the next-generation Focus is introduced in 2010, it will be the same around the globe. Ford also will sell derivatives of that Focus in world markets.
On the following day, journalists test drove the all-important Fiesta on the winding, mountainous roads of Italy. Ford's even smaller B-segment car now is on sale in Europe, soon goes on sale in China and arrives in North America in early 2010.
Here's the review from Chris Walton, chief road test editor for Inside Line, AutoObserver's sibling within Edmunds.com:
For years, automotive journalists, motoring enthusiasts, analysts and even some company insiders have clamored for Ford Motor Co. to sell toAmericans the same vehicles they sell to Europeans - vehicles like the European Focus and the Mondeo.
The list of reasons - or excuses - as to why that wasn't possible has been lengthy. However, Alan Mulally, who took over as Ford president and CEO two years ago, has bulldozed the roadblocks, aided by high gas prices that are pushing consumers toward smaller, fuel-efficient cars and Ford's precarious back-to-the-wall situation.
Finally, albeit still more than a year away, Americans will begin seeing the same models in showrooms that Europeans have been buying for years. The biggest roadblocks remaining for Ford are time and money. Will Ford run out of one or both before it can accomplish its global push?
DEARBORN, Mich. - Everything you read in the media about the poor state of the economy and the struggles of the auto business is true, Ford President and CEO Alan Mulally said Monday.
"The U.S. economy is in recession and the rest of the world is slowing down," Mulally told members of InForum, a Michigan women's professional group. "The Middle East is slowing down, and Europe is slowing down. It really is tough out there."
Sales of automotive luxury brands are struggling just like the overall U.S. market is.
Collectively, so far this year, upscale marques have only managed to hold on to their 11 percent share of the market from 2007. And some of the loftiest brands in the American auto business have been demonstrating some of the least resiliency.
Lexus, for example, is off 15 percent in 2008 sales through the end of August, and BMW brand has suffered a decline of 7 percent. Among domestic luxury makes, Cadillac has plunged 13 percent for the year, while Lincoln has eased by 19 percent.
U.S. auto sales fell by about 15 percent in August compared with a year ago, to approximately 1.25 million units from around 1.5 million units -remaining in their summer-long trough. And a chorus of OEM executives agreed on Wednesday that their forecast for the rest of 2008 looks just about as dismal.
But something else also appeared amid Wednesday's sales reports: reasons to hope that the U.S. market already has flattened out.
"It appears we may have hit the bottom in terms of consumer demand in July," said Jesse Toprak, executive director of industry analysis for Edmunds.com. "Because of factors like lower gas prices and generous incentive spending, we started seeing some improvement in August."
MAASTRICHT, THE NETHERLANDS -- The recent and rapid downshifting of U.S. consumers from large pickup trucks and SUVs to smaller, more fuel-efficient vehicles is not a cyclical but a structural change, says Derrick Kuzak, Ford's group vice preident of Global Product Development.
Kuzak, speaking to media in Europe at a drive of Ford's small cars, including the all-new Fiesta, disagrees with some contrarian analysts who believe Americans, as gas prices drop, will return to buying big fuel guzzlers. Instead, he sees Americans' sensitivity to the environment and concerns for energy security combined withstricter government regulations on emissions and fuel economy driving a permanent shift toward fuel efficiency.
The U.S. automotive market has yet to reverse 2008's serious downward lurch, and automakers continue to pile on incentives to induce customers to purchase a new vehicle. Edmunds.com estimates August incentives were down a scant $3 from the 2008 high point set in July - and increased substantially when compared to the same period last year.
Edmunds.com estimates the average automotive manufacturer incentive in the U.S. was $2,642 per vehicle sold in August 2008, down $3, or 0.1 percent, from July, but up $173, or 7 percent, from August 2007.
Once again, domestic automakers shelled out the most. Combined incentives spending for domestic manufacturers averaged $3,832 per vehicle sold in August 2008, up from $3,762 in July 2008. In aggregate, the domestics spent $387 more per vehicle in August compared with July, which had set the year's record.
SANTA MONICA, Calif. - Despite a slight improvement in sales from July to August, no significant upturn is on the horizon for this year, according to Edmunds.com's latest forecast.
New vehicle sales for August, to be reported by manufacturers on Wednesday, are expected to total 1.26 million units, a 14.4-percent decrease from August 2007 but an 11.4-percent increase from July 2008. "We saw a slight improvement in July, but don't expect to see a major recovery for the remainder of the year," said Jesse Toprak, Edmunds.com's executive director of Industry Analysis.
TRAVERSE CITY, Michigan - Insisting you're working swiftly to transform your manufacturing orientation from trucks and SUVs to more fuel-efficient models seems to be de rigueur for any truck-heavy automaker executive speechifying at this week's Center for Automotive Research Management Briefing Seminars here.
Mark Fields, Ford Motor Co.'s executive vice president and president-The Americas, certainly followed the template, saying Ford has shifted from trucks as 70 percent of its model lineup in 2004 to around 40 percent today.
This as prelude to Fields' detailing of "One Ford," the company's contemporary run at developing so-called "global" vehicle architectures as it tries to quickly adjust its U.S. manufacturing mix to small cars and away from body-on-frame pickups and SUVs.
Well-known auto designer Larry Erickson has left Ford as chief designer of the automaker's advanced vehicle development to chair the transportation design department at Detroit's College for Creative Studies.
Erickson has been named the Paul and Helen Farago Chair of Transportation Design at CCS, considered one of the world's best automotive and transportation design schools. Erickson also will oversee the school's Master of Fine Arts in Transportation Design program when it launches in the fall of 2009.
Erickson most recently served as chief designer in Ford's Strategic Design Group, but is well-known for his hot rod designs, including ones done with the late Boyd Coddington.
DEARBORN, MI - At a press event here to showcase its '09 models, Ford Motor Co.'s top engine-development honcho says the company's gambling its development dollars on gasoline engines, not diesel, as the best path to improved fuel economy and improving the company's sustainability "profile."
Dan Kapp, director-powertrain research and advanced engineering, said Ford essentially is betting the farm on its upcoming "Ecoboost" suite of gasoline-engine enhancements to improve fuel economy, reduce emissions, and, by definition, jack up the company's Corporate Average Fuel Economy numbers towards the eventual federally mandated goal of a 35-mpg fleet average by 2020.
Alert to the American medical community: new evidence proves severe lack of corporate operating capital causes dull and even impaired judgment.
How did I arrive at this breakthrough mental-health discovery? Reading early this week that General Motors Corp. and Ford Motor Co. reputedly are considering co-development of engines.
There may be a nationwide credit crunch, but it apparently doesn't apply to distressed Detroit automakers. General Motors Corp. is circling the banks, Ford Motor Co. is chewing away at the $18 billion it got in late 2006 for mortgaging just about everything the company owns, and this week privately owned Chrysler LLC said it's hitting up the lenders for a hefty $24 billion on its credit lines.
Detroit'srush to credit comes despiteGM's insistence it has $24 billion in cash and Chrysler's admonition the company made $1.1 billion in the first half of this year.
Ford Motor Co. said Friday the Michigan Truck Plant in Dearborn, Michigan, that makes the F-Series will effectively be idled for the entire third quarter. The Kansas City, Missouri, plant that also assembles the F-Series will be dormant for most of the same period, although it will begin single-shift production late in the third quarter of the redesigned '09 F-150.
The tactic is part of Ford's strategy to drastically reduce stocks of the current F-150 prior to the start of production for the substantially revised '09 model late this year -- and to avoid further bloating of inventories of the current model in light of seriously flagging light-truck demand in the U.S.
DETROIT -- One would have to dig into the history books back to 1992 to find a worse month for car and truck sales in the U.S. than July.
The Seasonally Adjusted Annual Rate (SAAR) fell under 13 million vehicles -- 12.55 million to be exact -- the lowest rate since the recession of the early 1990's. Of the Big Six automakers, only Nissan reported an increase in sales. Even Honda, which analysts had predicted would see an uptick, reported lower July sales. Detroit's Three slumped to their lowest combined market share -- 43.4 percent -- in history.
SANTA MONICA, Calif. -- With automakers expected to report Friday that car and truck sales plunged to near-historic lows in July, it's no surprise that manufacturer incentives have reached all-time highs for the year.
Edmunds.com's estimates put July at the industry's highest level of incentive spending for the year so far and the highest level this year for not only for the domestic automakers but also the Japanese and European manufacturers.
The new world order of global auto giants is being shuffled. If first-half sales trends continue through the rest of the year, the new order of automakers, based on vehicle sales, will be: 1) Toyota, 2) General Motors, 3) Volkswagen and 4) Ford.
LONDON -- Two years ago, General Motors launched its then-new Opel Corsa at the inaugural British International Motor Show. The car became a runaway success. Now GM hopes for a similar performance from its new flagship, the Opel Insignia, unveiled in spectacular fashion prior to this year's London show.
Indeed, the Insignia, by far, was the star of the show, in part, for the way it was introduced. GM literally lowered an Insignia from London's famous Tower Bridge.
And GM is looking for towering things from its new flagship.
One doesn't need to be a fortuneteller gazing into a crystal ball to figure out that July vehicle sales, to be reported by automakers on Friday, continue to be in the tank. All one has to do is read recent headlines of downgraded 2008 sales forecasts, more production cuts and boosted incentives.
Edmunds.com released its July forecast Tuesday, predicting monthly sales will drop 10.7 percent from last July, adjusted for the difference in the number of selling days. The decrease is estimated at 3.3 percent on an unadjusted basis. Despite some last-ditch incentive efforts to save the month, all of the Big Six auto manufacturers, with the exception of Honda, are expected to report sales declines from a year ago. Similarly, sales of small compact vehicles continued to boom.
DEARBORN, Mich. - Ford Motor Co.reported Thursday morning a whopping second quarter
net loss of $8.7 billion, the largest quarterly loss in its history.
Ford's loss includes an $8-billion write-down to essentially restructure the company by massively realigning its North American product portfolio to put more emphasis on fuel-efficient small vehicles and reconfiguring its manufacturing operations.
"We continue to take decisive action in response to the rapidly changing business environment and remain absolutely committed to the four elements of our business transformation plan," said Ford President and CEO Alan Mulally in a statement. "Our European and South American operations are robust and profitable. We have momentum in Asia. And we are uniquely positioned to leverage our global assets and the global strength of the Ford brand to quickly bring more small, fuel-efficient vehicles to North America."
DETROIT - It's not like the domestic automakers need more worry, but another of their sacred cash cows, the diesel-powered medium-duty pickup, is being slaughtered.
The Detroit Three's "heavy duty," commercially oriented three-quarter ton and one-ton pickups have long been outsized profit centers, largely because their buyers are famously wedded to diesel engines, an expensive option loaded with profit margin.
The industry's overall pickup business already is enduring a well-publicized battering - but now, inflated diesel fuel prices have the historically diesel-favoring heavy-duty customer - those who are still buying, that is - fleeing for the comparative comfort of engines that use $4 gasoline instead of $5-plus diesel.
Expect to see some leg on Ford TV commercials this summer and fall -- as in pants legs, not bare ones.
As Ford begins marketing the Flex, it plans on highlighting unique features that will make this practical vehicle extremely relevant to consumers in an increasingly practical era. And one of the most prominent of these is rocker panels that are integrated into the Flex's doors.
"It's smart engineering that makes getting into and out of the vehicle a lot simpler," said Kate Pearce, Flex's marketing manager. "There's a lot less space that you have to cross over to get into the car. It keeps your pants legs clean."
Led by a startling drop in the stock price of General Motors Corp. to a low not seen in 50-plus years, several major auto suppliers also are along for the wild and not-so-enjoyable ride.
GM's stock price, which had stumbled into single digits earlier this week, recovered slightly just before the market's long pause for the Fourth of July holiday weekend, closing at $10.18.
And as GM goes, so go the suppliers, apparently -- some of whom had marched to reasonable recoveries earlier in the year. But as analysts downgrade GM and other major automakers such as Ford Motor Co., the fortunes of their major suppliers are slipping as well, some also into concerning territory.
Mega-supplier Visteon Corp., for one, this week slid to its lowest price since the company was spun off from Ford in mid-2000. Visteon closed Thursday at $2.18, off nearly 75 percent from this time just a year ago.
ArvinMeritor Inc., which supplies numerous components for both the auto industry and similarly hard-hit trucking sector, also approached a low not seen since its inception in 2000. The company also appeared to be rebounding after tumbling late last year, but now at $10.75 stands with a stock price that has receded nearly two-thirds from its 2002 high point.
Even BorgWarner Inc., supplier of in-demand turbochargers and all-wheel-drive systems and widely considered one of the healthiest of major automotive suppliers, has endured a dip in its stock price of nearly 30 percent just since mid-May.
Zero-percent financing deals aren't anything new to the industry, but General Motors Corp.'s latest riff on that old tune appears so far to have generated some success, even in these most desperate of times for auto sales.
According to exclusive data from Edmunds.com, sales of select GM vehicles -- mostly trucks -- may have enjoyed a shot in the arm from the zero-percent-for-up-to-72-months spiff, which originally was supposed to run only for the final week of June, but GM not unexpectedly extended through the July 4 holiday weekend.
American car buyers became very discouraged in June. Beaten down by high gas prices and other contributors to growing household financial stress, they bought 8 percent fewer vehicles than a year earlier.
And supply constraints actually depressed sales even further, because those who were in the market wanted more small cars than could be built by the industry as it tries to catch up with consumers' desire to downsize.
June sales for the U.S. auto industry were 1.19 million units compared with 1.46 million vehicles during June 2007. (The 8-percent decline is stated on a daily-sales-rate basis because this June, with three fewer selling days, provided significantly less sales opportunity than a year earlier.) On an unadjusted basis, industry sales came in 18 percent lower than a year ago.
Ford reportedly has revived talks with France's Renault about the potential sale of Volvo, Reuters reports. The newswire, quoting unnamed sources, said Ford and Renault held exploratory talks in the third quarter of 2007, but conversations stalled over price. However, sales talks recently re-started, Reuters reported.
The newswire also claims Ford has spoken to China's third-largest automaker Dongfeng Motor Corp., which has joint ventures with Nissan, Honda, Kia and Peugeot in China, about Volvo.
SANTA MONICA, Calif. - Locked in a battle for No. 1 sales in America in June, General Motors and Toyota were the only automakers to hike incentives in June this year compared with last year, according to estimates by Edmunds.com.
"Toyota incentives reached a record high," said Jesse Toprak, executive director of Industry Analysis for Edmunds.com, parent of AutoObserver. "General Motors' last minute 72-hour sales campaign , which is giving buyers no-interest financing for 72 months on most models, helped increase its incentive spending for the month, and Toyota needed some additional dollars to move its large SUVs and trucks from dealer lots."
In total, the average automotive manufacturer incentive in the U.S. was $2,356 per vehicle sold in June, down $22, or 0.9 percent, from June 2007, but up $32, or 1.4 percent, from May.
Still incentives unlikely had little impact as the auto industry is expected to post its worst sales since the 1990s when reports come in on Tuesday. Edmunds.com forecasts a double-digit decline in industry sales. Some analysts predict Toyota may outsell GM for the first time in history when June sales are tallied.
Ford's Volvo Car Corp. announced plans to cut 2,000 jobs as parts of its efforit to slash costs by about $700 million.
The move triggered speculation from a number of European media outlets that Ford was once again considering possible sale of Volvo. Such reports included Ford negotiating with General Motors' Chinese partner Shanghai Automotive Industries Corp. (SAIC) and unnamed Russian investors.
One bizarre fallout from the wild-ride shift in consumer tastes is a spate of new or soon-to-be-released models that were designed and developed under assumptions about the U.S. market that now are absolutely invalid.
The result: a slew of white elephants designed when gasoline was $2 per gallon (or less) and Americans were still buying 800,000 F-Series pickups and everything else that looked big, sucked gas and telegraphed that you had arrived at that special entitlement heaven espoused by Rush Limbaugh and everyone else who insisted cheap energy and cheap mortgages are an American birthright.
It might be almost laughable if the U.S. domestic auto industry weren't in such disastrous shape -- and had the luxury of time to once again make amends for decades of single-minded product-development choices.
Here's a short list of our favorite vehicles that, thanks mostly to the new rules governing the auto industry, suddenly look titanically dumb:
DEARBORN, Mich. -- Ford announced Friday morning that it will delay theintroduction of its redesigned 2009 Ford F-150,the automaker's bread-and-butter vehicle,because of weakening vehicle sales that have taken a tremendous toll on large pickup truck sales.
In addition, Ford said it would cut production through year-end by 90,000 vehicles, mostly trucks and SUVs. It will boost production of small cars, crossovers and fuel-efficient powertrains. Ford also announced future plans to bring small cars in from Europe.
The bottomline is that Ford's financial performance for 2008 will be worse than the automaker had forecasted.
With fuel prices rising, the dollar falling, the economy flagging and fuel prices zooming, industry sales volumes are drooping. One seemingly counterintuitive answer: raise prices.
Despite an Economics 101 guidance that would dictate the opposite, many automakers are responding to currently lousy market conditions by actually hiking sticker prices and -- taking a cue from many other sectors -- bumping fees, most notably, the ubiquitous "destination and delivery" charge.
In a move that was not entirely unexpected, Ford Motor Co. reportedly is studying a plan to implement a hasty and wide-ranging retooling of many of its North American assembly plants, shifting them from production of large pickup trucks and SUVs to smaller, lighter and more fuel-efficient vehicles.
The Detroit News
reports manufacturing executives and local labor leaders will meet in Dearborn on Friday to discuss the plan, which reportedly centers on retooling several plants from production of traditional body-on-frame pickups and SUVs to models and vehicle architectures currently being used in Europe.
It is a strategy many industry analysts have said must be undertaken by all the truck-reliant Detroit automakers. The only surprise, perhaps, is the haste with which Ford is reacting -- a lightning stroke relative to past Detroit responses to major macroeconomic and consumer-preference shifts.
By Dale Buss and Michelle Krebs
Only a few months into the Slump of 2008, at least two things are painfully clear in what has become a topsy-turvy U.S. auto market.
The bigger the carmaker, the harder the ride these days -- even Toyota. General Motors' sales declined the most in May compared with a year ago, by 30 percent; Chrysler's fell by 25 percent; Ford, by 16 percent; and Toyota, by 8 percent. The Detroit Three's domestic market share in May, 45.5 percent, was a record low for any month.
And the larger the vehicle, the faster its sales are teetering into the abyss. Sales of pickup trucks and traditional SUVs plunged across the board in May. So, GM said it is permanently shuttering some truck and SUV plants, adding some car-making capacity, and considering ditching Hummer.
But newly popular small cars are popping up like life preservers on the industry's troubled ocean. Honda's Civic was the top seller for the month, at more than 53,000 units.
Ford Tuesday launched what could be seen as a desperate attempt to jump start sales of its F-Series pickup line by offering "employee pricing" to consumers for the rest of June. This is believed to be the first time since 2005 that any OEM has allowed consumers to pay only as much as its employees pay for a vehicle.
"This is a big deal for us," said Jim Farley, Ford's executive vice president for marketing and communications. "F-Series has spent 31 years running as the leading vehicle in the segment ... We think it's a really important merchandising tool that customers can buy an F-Series for the same price as a Ford employee."
At General Motors Corp.'s annual meeting Tuesday, the stickiest questions may not be about the actual dollars and cents of GM's business. Instead, the major issue may be whether - and how - GM can deal with the shocking plunge in demand for full-size pickups and SUVs, the profit machines that have kept the wandering giant afloat for the better part of two decades.
Punishing fuel prices and increasing environmental awareness have all but crushed the "supersize me" mentality of the American auto customer, and now GM and its Detroit-based rivals Ford Motor Co. and Chrysler LLC, with their manufacturing empires witheringly overweighted to address full-size segments, have little to offer the new age of economy-minded consumers.
Equally troubling, the domestics have scant prospect of reversing the situation any time soon - and the heat may be on Detroit executives to begin explaining yet another instance of their collective inability to identify and adjust to emerging auto-market and macroeconomic trends.
Ford announced Friday its Fiesta small car, unveiled at the Detroit auto show as the Verve
concept, will go into production at its Cuautitlán Assembly Plant in Mexico beginning in early 2010. Ford will build the sedan as well as the sporty European hatchback at the plant for sale in the U.S.
Originally, Ford intended to sell only the sedan in North America but customer response to both the sedan and hatchback was positive enough to prompt the automaker to move forward in building both, Mark Fields, Ford's president of The Americas, said in the company's statement.
SANTA MONICA, Calif. -- April 2008 was a terrible month for vehicle sales in the U.S., but it looks like May, though worse than the year-ago May, might be a tad brighter than April and especially for some vehicles and some makes, Edmunds.com forecasts.
Toyota looks to be a winner with a projected record market share. Honda likely had a good month as well. The Big Three, however, are predicted to show a near-record low combined market share.
And the trend of buyers selected smaller, more fuel-efficient vehicles instead of larger ones likely accelerated in May, according to Edmunds.com's forecast.
Automakers scrambling for quick fixes to polish up vehicle economy numbers in the eyes of fuel-price-fatigued U.S. customers are reaping real results from their -- and the supplier community's -- investments in the new generation of six-speed automatic transmissions.
The powertrain sector's shift to six-speed automatics has been coming since as early as 2001, but $4-per-gallon gasoline and $5 diesel fuel has turned up the heat on vehicle engineers to deliver more or less immediate efficiency enhancements for existing vehicles.
As the arrival of Memorial Day weekend unofficially kicks off summer in America, huge and discouraging obstacles stand in the way of motorists: all the signs on street corners reading "Gasoline, $4.00 a gallon."
But gamely, the industry is trying to get U.S. consumers to look past the truly shocking ascension of gas prices, or at least to get maximum leverage out of fuel economy concerns when they do draw potential buyers to dealer showrooms.
Ford said Thursday it likely will not hit its target to be profitable in 2009, but will just break
even, due to the deteriorating economy, soaring gas, steel andother commodity prices and a dramatically shifting consumer preference toward fuel-efficient cars and crossovers from more lucrative trucks and SUVs.
Ford, which lowered its forecast for 2008 industry sales, announced a major revision to its 2008 vehicle production schedule. The automaker will reduce the total number of vehicles it will produce for the rest of the year. It will increase production of, especially fuel-sippers like the Ford Focus, and decrease its production volume of trucks and SUVs.
DEARBORN, MI -- Ford Motor Co. planners are certain the global market for compact B-segment cars is going to grow. And in the U.S., skyrocketing fuel prices make the migration from pickups and SUVs to small cars no longer a forecast, but a certainty.
It seems like perfect timing: Ford's preparing an all-new Fiesta B-car for the U.S. -- based on the swoopy Verve concept car -- and nobody's disputing there will be a deluge of demand from a fuel-price-weary consumer, even though the U.S. won't see the car until 2010 (it launches in Europe later this year). Enthusiasts for Ford's larger Focus already have registered the Internet domain name fiestafanatics.com in anticipation of the new B-class Fiesta, Sam De La Graza, Focus marketing manager, told AutoObserver.
It looks like General Motors soon will resume production of its hot-selling Buick Enclave, Saturn Outlook and GMC Acadia crossovers as well as launch its new Chevrolet Traverse now that the union members who build those vehicles have settled their month-long strike with the automaker.
Early Thursday morning, GM announced it had reached an agreement with UAW Local 602, which represents the 3,300 workers at GM's Delta Township, Mich., plant who build the crossovers. Officially workers will remain on strike until they ratify the contract; it was unclear Thursday morning when that vote might be taken.
Also on Thursday morning, the Canadian Auto Workers union (CAW) announced it had reached a tentative agreement for a national contract with GM. The CAW also reached a tentative agreement Chrysler Thursday.
And GM averted a strike with one of its locals in Ohio.
DEARBORN, Mich. -- To paraphrase Jim Morrison and The Doors, Ford's been down so long that it looks like up to them.
But within the cloud that has been Ford's long-declining market share - and its shared pain with the other domestic automakers who drank too long at the well of fullsize pickups and SUVs - there's a portion of silver lining: Ford is quietly making moves in some important and competitive market segments. In some cases, with product that ain't exactly new.
TROY, Michigan -- Behind the introduction of the Saleen S5S Raptor at the New York International Auto Show in March is the story of a corporate reorganization that blends two companies previously struggling on their own.
The new Saleen Inc. combines Motor City grit of the former ASC and the California glamour of the former Saleen operations in finely calibrated balance, said Paul Wilbur, CEO of the new Saleen.
Wilbur told AutoObserver that the Raptor is the first project in which both sides of the house have contributed. It combined the efforts of Saleen engineering and ASC's creative team, which usually labors in anonymity for big clients such as General Motors.
Former Ford Executive Phil Martens will become CEO of a new company, Arvin Innovations, a spin-off of auto parts supplier ArvinMeritor, Inc., struggling to return to profitability by restructuring, expanding globally and becoming less dependent on Detroit’s Big Three.
Martens, who ran product development at Mazda and later Ford North America, was among a handful of executives who left Ford in a political battle that had Martens’ rival Mark Fields becoming Ford’s President of the Americas.
Chrysler’s advertising campaign for its new Dodge Journey crossover has greatly boosted initial online interest in the vehicle, according to an analysis by Edmunds.com. But the new omnibus marketing effort launched by Ford recently, Drive One, isn’t packing nearly the same punch.
Those are the conclusions of research by David Tompkins, executive director of business solutions for Edmunds.com, based in Santa Monica, Calif., using consumer visits to the New Vehicle Detail Pages (NVDPs) of the site in April, in the immediate wake of the launches of the two advertising campaigns.
Americans rushed to swap their thirsty trucks and SUVs for fuel-efficient cars in April, making the month a turning point for the industry’s biggest segment shift in memory.
The stampede to cars left in the dust a Detroit Three that simply weren’t ready for its magnitude because of their reliance on truck-based vehicles, while it lifted Japanese automakers whose traditional strength has remained in small cars.
As U.S. consumers definitively reacted to $3.50-a-gallon gasoline, passenger cars outsold truck-based vehicles for the first time in at least 20 years. The move comprised a shift of six percentage points for the industry compared with last April, to 54 percent car sales.
SANTA MONICA, Calif. — As gas prices rise this summer, automakers may well turn to marketing programs that include free gasoline instead of or in addition to cash rebates and low-interest financing, Edmunds.com predicts.
“Gas prices are having a profound effect on the psychology of car-buyers, so we expect that automaker and dealer marketing tactics may include free gasoline programs this summer,” stated Jesse Toprak, executive director of Industry Analysis for Edmunds.com. "As indicated in Edmunds’ True Market Value Predictive Alerts, transaction prices of gas-guzzling large SUVs and trucks will likely continue to fall.”
Meantime, Edmunds.com estimated Thursday that the average automotive manufacturer incentive in the U.S. was $2,449 per vehicle sold in April 2008, up $13, or 0.5 percent, from March 2008, and up $39, or 1.6 percent, from April 2007.
Chevrolet Malibu is helping put Detroit back on the map in the mid-size sedan segment. Even the three-year-old Pontiac G6 and Ford Fusion are helping out on that front as well.
Of course, the real Big Three of the so-called “C†segment of the market remain solidly entrenched atop it: Honda Accord, Toyota Camry and Nissan Altima. Accord was the nation’s hottest-selling vehicle during the first quarter, according to Edmunds.com data, overcoming a sluggish start since the new model’s debut last fall to move 88,000 units from January through March. Camry, at 84,000 units, and Altima, with 76,000 sales, were right behind.
But domestic automakers nevertheless are encouraged by recent glimmers of hope in a crucial segment in which they haven’t been competitive for several years -- even though mid-size sedans used to be the Big Three’s bread and butter. At least the progress lately is a place to start.
The news that Ford reached an early agreement with its Canadian union is being overshadowed by Las Vegas billionaire Kirk Kerkorian's purchase of the automaker’s stock, but the Canadian deal is every bit as significant -- maybe even more so.
Talks between Detroit’s three automakers and the Canadian Auto Workers union regarding a new contract to replace the current ones that expire in September appeared as if they could be extremely rancorous. A strike appeared to be a distinct possibility.
But Ford’s announcement Monday that it had reached an agreement with the Canadian union -- especially in an unheard of four months plus ahead of schedule decreases -- lessens the odds.
SANTA MONICA, Calif. – As gas prices skyrocket, the biggest growth in April vehicle sales
are expected to be in small cars and small SUVS. In total, April vehicle sales likely will show a decline from April of last year but increase from this past March, according to a forecast by Edmunds.com.
Automakers are expected to report new vehicles sales, including fleet sales, of 1.3 million units for April, a 2.2 percent decrease from April 2007 and a 3.7 percent increase from March 2008, Edmunds.com predicts. April 2008 had 26 selling days, two more than last April 2007. When adjusted for this difference, sales decreased 9.7 percent from April 2007.
“It’s clear that gas prices are weighing heavily on car-buyers’ minds," observed Jesse Toprak, Edmunds.com’s executive director of Industry Analysis. “We predict that this month, the segments with the most year-over-year growth will be compact SUVs and compact cars at 52 percent and eight percent, respectively.â€
He’s back and Ford is the object of his affection this time.
Last Vegas billionaire Kirk Kerkorian, through his Tracinda Corp., has amassed 100 million shares for a 4.7 percent stake in Ford just this month. Further, Tracinda said it plans to buy up to 20 million more shares at a premium to last week’s closing price.
Kerkorian’s move on Ford is a vote of confidence for Ford management led by CEO Alan Mulally and the company’s turnaround prospects.
While most eyes are on the global sales and production race between Toyota and General Motors, another interesting contest is developing in the U.S. – between the Ford and Toyota brands.
For the past two months, the Ford brand has outsold the Toyota brand. Ford’s recent gains narrowed the gap for the first quarter to less than 3,000 vehicles between it and Toyota. In 2007, Toyota closed the books 127,606 vehicle sales ahead of Ford. Throughout 2007, Toyota led Ford by about 10,000 plus vehicles a month.
DEARBORN, Mich. -- Ford reported Thursday morning that it was in the black in the first quarter, compared with the red ink it reported in the year-ago quarter, thanks to aggressive cost cutting and strong international sales.
Analysts had predicted Ford would announce a loss. Instead, Ford surprised them by posting net income of $100 million in the first quarter this year, compared with a $282 million loss in the year-ago quarter.
Profitability will be short-lived, however. Ford executives said in a conference call with media and analysts that the automaker will post a loss for full-year 2008, albeit vastly improved from 2007. They added the company is still on target to be profitable for 2009.
As Earth Day comes around once more, there are a few different scoreboards for tracking the relative progress of automakers in their attempt to win the green derby.
According to Toronto, Canada-based consumer-research firm BrandIntel’s recent survey of online discussion, for example, Toyota, Honda, Mercedes and Volkswagen have the most “green credibility†due to their hybrid and diesel vehicles. General Motors and Chrysler have been stuck among the least-credible because of their large fleets of trucks and SUVs and weaker lineups of hybrids and diesel options. Ford sits in the middle.
But several automakers are forging strategies for changing such scoreboards in their green credentials. A look at a few:
Toyota clearly donned it for awhile. Ford tried it on for size. American consumers seem to think it fits Honda pretty well these days. But no one covets it more now than General Motors.
We’ll call it the “green mantle:†a figurative decoration on the shoulders of automaker that tells the world, and competitors, that their company is the most environmentally renowned in the industry, both for their products and technologies and – perhaps even more important – in the public’s overall regard.
And taken particularly in the context of an annual worldwide recognition such as today’s Earth Day, it seems at least as important for any corporation to earn the perception of environmental responsibility as to actually be doing something tangible.
American consumers have had their long fling with raw power and size. They’re continuing to demonstrate that vehicle design is very important to them. And in a softening economy, there’s still nothing that speaks louder than price.
But Ford may be on to something with the new, omnibus Drive One marketing campaign that the company has been revealing in stages over the last few weeks – and plans to use for years. The effort is the first major manifestation of the marketing strategy that has been hatched at Ford over the last six months by Toyota émigré Jim Farley.
And in what it says both about Ford and about the state of the U.S. automotive market, Drive One may be able to create a fortunate synchronicity for the long-beleaguered OEM.
Ford CEO Alan Mulally showed dealers the next-generation Ford Taurus behind closed doors at a Las Vegas gathering. The Taurus is believed to be scheduled as a 2010 model and could be unveiled at the Detroit auto show in January.
Ford has given no official details about the new Taurus to the media yet. However, last week, the Taurus Car Club of America Web site posted a hazy photo showing a far more chiseled shape and European appearance than the current model, as reported by Edmunds' InsideLine.com.
Jim Farley, Ford's group vice president for marketing and communications, told the Detroit Free Press that dealers gave the Taurus a standing ovation.
Anyone who tuned into American Idol Tuesday night saw Ford Chairman Bill Ford and family sitting in the front row. The cameras focused in on Ford at the very start of the show, identifying him even before host Ryan Seacrest took center stage or the judges were introduced.
Ford is a major sponsor of the national talent show, and Tuesday night’s American Idol marked the premiere of Ford’s new “Drive One†advertising campaign starring Ford employees.
Ford may own American Idol but Chrysler managed to uses the popular program to debut
its new ads for the Dodge Journey crossover.
Chrysler aired a 30-second spot it had unveiled to the media on Monday. Entitled Water Slide, the Journey crossover pulls up on a crowded city street on a sweltering day. From its flexible interior space and numerous storage spaces emerge various pieces that are used to build a 700-foot water slide, which Chrysler alleged is “the world’s largest.†Professional types quit their offices and come out to see what all the commotion is about.
The Journey’s theme line is “if you can dream it, do it.†The ad is intended to demonstrate the Journey "is a car that lets you do anything.â€
One of the few highlights of the industry’s dismal sales picture in recent months has been the Ford Focus.
In an otherwise dismal month and quarter for industry sales, March retail sales for the Focus marked their highest level for any month since August 2005 – with retail sales up 36 percent in March and 35 percent in the first quarter compared with the same periods a year ago. Counting fleet sales, Focus sales were up 24 percent in March and 23 percent for the quarter.
The reason for higher retail sales, Ford says, is in large part because younger consumers were flocking to buy Sync, the in-vehicle connectivity system that has been featured lately in marketing for the subcompact car.
Last year's landmark labor contracts and the weak U.S. dollar are breathing new life into U.S. auto plants as Detroit automakers boost exports of U.S.-made vehicles, the Wall Street Journal reports.
General Motors plans to export U.S.-made vehicles to Europe, China and Latin American markets such as Brazil; Chrysler is shifting production from Europe to the U.S. to take advantage of lower costs and available plant capacity; and Ford is considering ramping up exports if it can bring labor costs down, the business journal reported in Tuesday’s edition.
Sunday evening television has become very popular with Ford executives. And no wonder – for them, it’s like watching slickly produced home movies.
But instead of chuckling at their kids’ or grandkids’ foibles, or watching their dogs catch Frisbees, the Ford folks get to see the Edge and the Mustang and the Escape starring in their favorite ABC TV shows: Extreme Makeover: Home Edition and Oprah’s Big Give.
Tonight (April 6) might be the most fun they’ve had all season. Ford has organized more than 1,100 “viewing parties†across the nation to gather charitably minded individuals for what it’s calling The Big Drive. Attendees will watch tonight’s episode of Big Give, help their hosts submit a plan in a contest to give away 10 Ford vehicles to worthy charities, and also be invited to test drive the hosts’ Ford vehicles -- which the company expects to translate into 10,000 to 15,000 test drives in one night.
Next week, Ford’s long-awaited marketing plan will be unveiled by Jim Farley, Ford’s
group vice president for marketing and communications who was lured away from Toyota last fall.
The marketing plan includes an experiential aspect taking place this weekend in conjunction with the ABC TV show "Oprah's Big Give"; a multimillion-dollar ad campaign, with the tagline "Drive One," rolls out Tuesday.
Ford Motor Co. has been offering all kinds of incentives to shed workers from its ranks, but this week it has one less, thanks to a payout bigger than anything Ford could deliver when one of its employees won the lottery.
David Sneath, a Ford hi-lo operator from Livonia, Mich., won Michigan’s $136 million Mega Millions jackpot — Michigan’s third-largest ever — on Tuesday, which was both April Fool’s Day and his 60th birthday.
What did Sneath do first? He quit his job at Ford, where he’d worked for 34 years.
MONACO -- Jan-Olaf Willums, CEO of Think Global and the driving force behind the company’s new electric car, looked like his own batteries were nearly flat by the time AutoObserver sat down to chat with him at the EVER Monaco ecological car show. Held March 27-30, EVER Monaco is an annual exhibition of alternatively powered vehicles and energy systems. After a full day of interviews and roundtable discussions, Willums’ eyes looked weary, his tie was undone, and he bravely tried to stifle a yawn as we began the interview.
Five minutes into our conversation, the fog had lifted and Willums had hit his stride. His eyes were sharp, and the professorial-looking automotive CEO made it clear Think will not be content to simply reignite interest in electric vehicles. Think wants to revolutionize how customers buy a car, how they consume energy and even how they interact with their vehicle.
Automakers in March finally experienced the full brunt of two huge economic problems that had been nibbling at their market for months: rising gasoline prices, and American consumers’ falling economic expectations.
Sales for the industry dropped 11.9 percent in March, to 1,351,838 units, the worst performance for the month since 1993. Even more significant, the results accelerated a market deterioration that saw overall U.S. auto sales fall by 7.8 percent to 3,565,828 units for the first quarter. Annual sales rates, seasonally adjusted, slipped to near 15 million units.
A wicked combination of $3.50-a-gallon gasoline, higher prices for food and other necessities, mortgage woes and a shaky stock market left many American consumers more nervous and dispirited than anyone had expected them to be just a few months ago.
“We’re seeing new-car sales decline, not because people can’t afford them, but because there’s a lack of trust in the stability of the economy,” said Jesse Toprak, chief industry analyst for Edmunds.com. “There’s been a real erosion of wealth, and consumers are not in the mood to shop for a car. This is more of a psychological impact more than the inability to purchase a new vehicle.”
SANTA MONICA, Calif. — The average automaker incentive was largely unchanged in March compared with February, but incentives generally are likely to rise for the next several months as automakers try to break the sales slump, Edmunds.com predicts.
"Incentives are likely to rise through the spring and summer," said Jesse Toprak, executive director of Industry Analysis for Edmunds.com. “We anticipate that this will be especially true for the European automakers, as long as the euro remains strong.”
So, Ford has finally stitched together the long-trailed sale of Jaguar and Land Rover to Tata. It is the inglorious end of the vainglorious Premier Automotive Group that was supposed to challenge the mighty Mercedes-Benz and BMW.
We can now see the venture was doomed nanoseconds after it was created.
The United Auto Workers union reported its membership dropped below a half-million people for the first time since World War II.
In U.S. Labor Department filings, the UAW said it closed 2007 with 464,910 members, a decline of 14.7 percent or 73,500 members from the previous year and more than two-thirds below its peak of 1.5 million members in 1979. It marks the union's low-water mark of membership since 1941.
SANTA MONICA, Calif. — Despite an abundance of rich incentive deals, March
vehicle sales for the industry are expected to be lower than March 2007 and even lower than February when automakers report results Tuesday, Edmunds.com
has forecast.
March new-vehicle sales, including fleet sales, are expected to total 1.33 million, a 13.2 percent decrease from March 2007 and a 13.9 percent increase from February 2008, according to Edmunds’ forecast on sales figures not adjusted for the difference in selling days.
The forecast is less dreary when adjusted for the difference in selling days. This March had 26 selling days, two fewer than last March 2007. When adjusted for this difference, sales decreased 6.5 percent from March 2007.
The long-awaited deal that hands British brands Jaguar and Land Rover over to India’s Tata Motors from Ford is finally done.
So what does Tata get from Ford, at least in the U.S.?
Edmunds.com’s analysis of sales, market share and manufacturer incentives shows Tata has one nearly dead brand with Jaguar; Land Rover appears in recovery but with the cost of its meds climbing.
DEARBORN, Mich. — It's official. Ford Motor Co. announced Wednesday morning
it has signed a deal to sell Jaguar and Land Rover to India's Tata Motors for approximately $2.3 billion.
When the sale closes by the end of the second quarter, Tata will pay $2.3 billion for Jaguar and Land Rover; Ford will deposit $600 million into the Jaguar and Land Rover pension funds.
Analysts and industry-metrics powerhouse J.D. Power and Associates already are predicting a heavy downturn in auto sales for March, based on sales figures from the first half of the month. Now, analysis from Edmunds.com is providing perspective on how bad not just March, but first-quarter sales are likely to be when announced next week.
Based on average sales for the first two months of 2008 compared with last year, the Detroit Three automakers have virtually insurmountable deficits to recover to match first-quarter sales from last year. But longstanding sales juggernaut Toyota Motor Corp. — and several other Japanese automakers — won't be likely to fare much better in what is shaping up to be the brutal retail-sales environment many had predicted.
Indeed, everyone predicted 2008 car sales would be worse than those in 2007; the analysis shows just how much worse in the early going. Some forecasts predict an uptick in the second half; others do not.
Alfa Romeo is returning to the U.S. next year, the Financial Times reports in
Tuesday’s edition.
Fiat Chief Executive Sergio Marchionne told the London newspaper Alfa would beginning selling cars in the U.S. next year and be producing them in North America by 2011 or 2012 — with a partner.
Not surprisingly, major automakers saw retail sales drop in the first half of March compared with the same period a year ago, according to a report by research firm J.D. Power and Associates. The firm predicts total March sales will hit an annual selling rate of 15 million, dramatically lower than the 16.2 million rate of a year ago.
J.D. Power said in a report to its clients cited by Dow Jones that March saw year-over-year double-digit declines in retail car sales at General Motors, Ford and Chrysler. Toyota's sales also were off in the early weeks of the month.
J.D. Power recently reduced its 2008 car sales forecast to below 15 million, which would be the lowest level since 1994.
NEW YORK — The New York International Auto Show opens to the public Friday, and what a difference a year makes.
Toyota is the nation’s second-largest brand not Ford. Jim Press is the vice chairman and president of Chrysler, not Toyota. Cerberus Capital Management, not Daimler, owns Chrysler. The national average price for a gallon of premium gas is $3.60, not $2.80.
And the most interesting cars at the New York auto show are diminutive and original, not colossal and extravagant.
You know the economy is bad when the endlessly thriving Toyota says it may not hit its sales targets.
Remarks by Toyota executives in South Korea on Wednesday about the economy echo those being made by other auto company executives during this week's press days for the New York auto show where the economy, more than the cars, grabbed the spotlight.
When German engineer and businessman Wolfgang Reitzle departed Ford Motor Co. in May 2002, it was expected he eventually would turn up somewhere in the auto industry he’d grown up in.
Dubbed the auto industry’s preeminent car guy by Fortune magazine in 2000 and advocated by some to become CEO of BMW, where he had spent most of his career, Reitzle ended his automotive career as head of Ford’s Premier Automotive Group.
NEW YORK — When the call went out that New York City wanted to reinvent
the venerable taxicab to bring it into the 21st Century, Ford — already the leading provider of cabs nationwide — responded using an upcoming model as its basis.
Ford unveils its concept of the futuristic taxicab based on the Ford Transit Connect at the New York auto show Wednesday.
DUBAI, United Arab Emirates — British luxury car maker Aston Martin Lagonda Ltd. UK is being sued for
$50 million by its distributor in Dubai, Middle East Aston Martin, for breach of contract.
The lawsuit contends the strained relationship between Middle East Aston Martin (MEAM), the exclusive distributor of Aston Martin cars in the region, and the parent company to which Ford sold the bulk of the company a year ago is due “to the entrenched interests of its majority shareholder, the Kuwaiti investment group DAR, and their intention to refinance its stake in the company which had been purchased in March 2007, allegedly for an overprized rate.â€
Ford beefed up its global management team with the elevation of five executives to group vice president reporting directly to Ford CEO Alan Mulally and naming a chief operating officer in Europe.
Since his arrival more than 18 months ago, Mulally, a former Boeing executive, has said repeated like a mantra that he wants Ford to be a truly global car company a la Toyota, not a global carmaker made up of a disparate regional units.
Shares of General Motors and Ford plummeted to historic lows Thursday after Morgan Stanley Research cut its earnings forecasts based on a lowered outlook for U.S. auto sales. The report came on top of waning consumer confidence, higher gas prices, tightening credit availability and issues with auto suppliers.
Despite stock prices and market shares nosediving toward near-historic lows, Detroit scions General Motors Corp. and Ford Motor Co. once again are doling out bonus cash to blue- and white-collar workers alike — but the implied justification that “turnaround†goals are being met is, in the grandest tradition of car-town back-slapping, a bit self-serving.
February was an awful sales month for the U.S. auto market. If the
industry isn’t in its own recession against the backdrop of general
economic uncertainty, it’s surely looking for the bottom.
Overall sales dropped by 6 percent compared with February 2007,
following a year-over-year decline of 4 percent in January. The pace
represented a seasonally adjusted annual rate of 15.5 million to 15.8
million vehicles, General Motors said. In the first two months of the
year American consumers bought about 2.2 million cars and trucks, or
about 126,000 fewer than in 2007.
Automakers will always do brand building via traditional advertising media such as TV, radio, outdoor and print. But in an ever-toughening marketplace, they’re more and more intent on obtaining solid sales leads and on buttressing relationships with existing customers — so they’re putting their marketing resources into the channels that best deliver on those goals.
That’s the main reason the Internet will be vacuuming up a much bigger share of vehicle-advertising dollars in the U.S. market in 2008.
Ford is promoting its new 2009 Flex as a “white-space vehicle†that will be delightfully difficult to categorize. For the privilege of purchasing the flat-topped, three-row vehicle, consumers will have to pay a suggested starting price of $28,995, including shipping charges — a beginning price point that will put Flex atop the automaker’s growing lineup of crossovers.
When it is introduced this summer, the Flex will be offered in three trim series, and in front-wheel-drive and all-wheel-drive versions. Flex SE is the base model, a front-wheel-drive version. Prices for the all-wheel-drive Flex Limited will start at $37,255, including shipping, but options could make the top price much higher.
Ford, which is expected to sign a deal to sell its Jaguar and Land Rover brands to India’s Tata Group next week, will continue to be linked to the luxury brands for years to come, according to a news report.
Ford plans to sell its entire stake in the brands as well as facilities and technology to Tata for $2 billion. But Tata has signaled to British labor leaders that, under the deal, it intends to continue using engines and other parts currently built in Ford-owned plants in the U.K., the Wall Street Journal reports. Tata could continue to get the engines from Ford for the next five years, and perhaps longer, a source told the newspaper.
The not-so-good fleet business — the daily rental-car business automakers are trying to depart — has been much discussed in recent years. But there’s the
often-ignored “good” fleet business, which Ford in particular is trying to capitalize on in the U.S. as it has done so well in Europe.
Ford has made a number of recent moves to enhance its position in the profitable commercial-fleet sector. Its latest comes this week with the introduction of a freshened E-Series van at a commercial vehicle show in Atlanta.
SANTA MONICA, Calif. — February car sales likely will be off some from year-ago levels but improved from dismal January when automakers report them Monday, according to a forecast by Edmunds.com.
February’s new-vehicle sales are expected to be 1.22 million units, a 2.3 percent decrease from February 2007 but a 16.8 percent increase from last month.
"The month is proving better than some industry watchers may have expected," observed Jesse Toprak, Edmunds.com’s executive director of Industry Analysis. “This month should exceed the typical 10 to 15 percent boost in sales from January, historically the slowest car-sales month of the year.”
Ford reportedly is close to signing a long-anticipated agreement with India’s Tata Motors for the sale of Jaguar and Land Rover, having resolved issues with union members in the United Kingdom.
The official sale is expected to be announced next week. Ford had targeted to close the deal by the end of first quarter, which ends March 31.
LONDON — Ford’s sale of Jaguar and Land Rover, to be finalized within days, and General Motors’ continued stumbling in search of a role for its Saab subsidiary, which shows off new concepts at next week's Geneva Motor Show, remind me of something I saw during a tour of the shabby, sprawling AvtoVAZ factory in the Soviet Union in the early 1980s.
The events are unrelated except for the way in which they highlight the laughable results of central planning. For the Kremlin then, read Dearborn and Detroit today.
A lot of people — investors, specifically — are not thrilled with India’s Tata
buying Jaguar and Land Rover from Ford. They insist the company should focus on the $2,500 Tata Nano microcars, not $100,000 Jaguars.
Bloomberg News reported a number of investors, including A.S. Thiyaga Rajan, who manages a $250 million fund, are dumping their Tata stock.
New labor contracts negotiated between Detroit’s automakers and the United Auto Workers union last fall, combined with upcoming buyouts and retirements of aging baby boomers, may lead to a healthy hiring spree of engineers and hourly workers by auto companies nationwide, according to a new study.
The overall employment level for workers at auto companies in 2016 will be about the same as in 2007 — about 355,000 people — well off this decade’s peak of nearly 500,000, says a study on automotive hiring trends released this week from the Center for Automotive Research in Ann Arbor, Mich.
Auto-marketing executives know they’ll be advertising more on cell phones and other mobile devices in the coming months. But they still have a “prove-it†attitude toward the medium, as mobile-service providers work through issues such as image enhancement and platform standardization.
“The biggest issue with mobile is still that we have to do everything different for each different carrier,†said Gregg Benkendorfer, Toyota’s national manager of media and digital. “Until they really sort that out, I don’t think you’re going to see tremendous growth.â€
Christine MacKenzie, Chrysler’s executive director of multi-brand marketing and agency relations, said mobile-advertising providers still can’t “provide us enough data to justify a major move into mobile yet.†She added, “it’s still an area where we’re learning, and we’ll continue to learn.â€
But carmakers clearly are moving into mobile in a significant way nonetheless, encouraged in part by the booming popularity of Apple’s iPhone and the richness of its interface.
Maybe, more than six years after 9/11 and nearly five years after the start of the war in Iraq, consumers are tired of patriotic pitches. Maybe the unmitigated globalization of auto production makes it just too hard. It might be that “green” marketing doesn’t leave room for the red, white and blue. Or perhaps the idea is just in a lull.
But whatever the reasons, the use of “Made in America” themes in car marketing seems to be at a generational low these days.
Back in the good old days, when an engine was still an engine and not some fuel-sipping mockery of locomotion, Chrysler dusted off its Hemi tradition, gussied up a powerful new V8 and wrote a great chapter in sub-branding history by promoting its robustness. Consumers went nuts from 2002 through 2006 selecting the 5.7-liter option and turning "That thing got a Hemi?" into a cultural touchstone.
What a difference two years and $3-a-gallon gasoline can make. Nowadays, Chrysler still touts the Hemi. But it is repositioning the iconic engine brand into a platform for powertrain diversity that notably includes a version that boosts fuel economy by shutting down half of its cylinders at cruising speeds.
The evidence is mounting. Big engines and huge horsepower no longer are the keys to the car-buyer’s heart. In fact, it quickly may become the opposite.
Installation rates for V8 engines -- the bread-and-butter powerplant for the horsepower wars that have dominated the U.S. market for more than a decade -- are dropping. And data from Edmunds.com extrapolating the purchase intentions of consumers actively shopping for a new vehicle show those potential customers are markedly less interested in V8 power.
Certainly, it’s a time of deep but swift transition for the U.S. light-vehicle market. At the recent Detroit auto show, there were numerous examples of high-horsepower wares, but they most decidedly were presented in modest tones, taking a back seat to whatever fuel-efficient and eco-friendly model or technology was available. The chest-thumping days of explosive, twin-Hemi concept SUVs are done.
Ford Motor Co. plans to unveil a new marketing campaign in March or April that works to restore consumer trust in the Dearborn automaker's products, according to Jim Farley, Ford's group vice president of marketing and communications.
"The key elements are" to "restore the trust," he said Sunday, following a meeting with Ford dealers in San Francisco at the National Automobile Dealers Association's annual convention.
Farley is expected to lay out his plan for revamping Ford’s global marketing efforts on the eve of the New York auto show in March.
It’s hard to outshine the glitz and glamour of Detroit’s North American International Auto Show. But the Chicago auto show has always drawn crowds, and this year is cause for a true celebration because the nation’s biggest and oldest auto show marks its 100th anniversary.
This impressive milestone is well chronicled on the show’s official Web site, where the history of America’s automobile culture can be viewed through myriad photographs gathered from manufacturers’ and private collectors’ archives. Simply click on the decade of your choice and you can practically hear the music.
The Chicago show was closed during World War II and reopened with well-deserved fanfare in 1950. Through the next two decades you can see America’s soaring confidence, initially through fins and chrome, and then through muscle cars. But signs of a breakdown began to show in the late 1960s. First came Ralph Nader and the safety crusade, and then the oil shock of 1973.
The boom in crossovers is the biggest product story in the U.S. auto market these days. Sales increased to more than 2.8 million last year, extending a seven-year surge, and now more than 50 separate models of utility vehicles are offered on car-based platforms.
A couple more joined the fray at the Chicago Auto Show this week when General Motors unveiled the Chevrolet Traverse and Ford showcased a spiffed-up Ford Edge Sport.
Funny thing is, the more new crossovers that emerge, the more they look and feel essentially the same. One after another they’re being launched by automakers up and down the price scale, but more often than not they pretty much end up looking like some model year of the Lexus RX.
It could be easy to dismiss the Transit Connect unveiled by Ford at the Chicago auto show Feb. 6 as just a commercial vehicle for delivering flowers, toting the Maytag repairman’s tools and hauling a local rock band’s instruments.
However, there’s big significance behind Ford’s boxy little truck/van. The Transit Connect is tangible evidence of Ford executives delivering on their vow to leverage global products. It is already a proven player in Europe’s commercial fleets and has similar potential in North America. And its prospects beyond commercial use in these days of boxy Scion xBs and Honda Elements abound.
There’s been a lot of turmoil in the car market over the past year, and you can see it in the first decline in overall sales in the U.S. in more than a decade.
It leaves us with a new set of winners and losers, evidence of a shift in consumer attitudes.
This is reflected in the unexpected success of Mazda, which expanded its sales 10 percent this year, more than any other nameplate in the U.S.
Higher sales in North America, as well as Europe and emerging markets, led Mazda Motor Corp. in Hiroshima on Wednesday to report profit growth in the third quarter and forecast double-digit increases in the current fourth quarter and for the year when Mazda closes the books on fiscal year 2007 on March 31.
The small-truck market is disappearing, but it appears some automakers are at least giving some thought to trying to resuscitate it by reinventing it.
“It’s pretty bleak,†said Jessica Caldwell, Edmunds.com’s manager of pricing and industry analysis, of small truck sales of late. “They may be even worse than minivan sales.â€
Still, with small cars making a comeback due to high gas prices, automakers such as General Motors, Toyota and Ford think the small-truck segment could be brought back to life as well.
After the giant outpouring of product at last month’s Detroit auto show, there’s barely time for anyone to come up for air before taking in this week’s Chicago Auto Show.
At Chicago, automakers, rushing to grapple with a rapidly changing U.S. market, will stage a bevy of facelifted models and continue to promote fuel-efficient options such as more-powerful but more-efficient four-cylinder engines.
But more important will be new models and concepts that hope to revive interest in two flagging market segments: vans and compact pickups.
The New York Giants certainly achieved their Super Bowl objectives Sunday. Did car companies?
It’s too early to tell. But automakers led the way in a field of Super Bowl ads that largely disappointed on their creative merits and failed to generate the kind of instant excitement that could help them meet their marketplace goals. In some cases, it didn’t seem as if their advertising approach was actually consistent with the strategic challenges faced by the company.
And when you’re paying $2.7 million for 30 seconds of rapt attention by the biggest TV audience of the year, you really should take advantage of the opportunity.
Despite press reports saying Ford is increasing incentives, the automaker is sticking with its plan to keep vehicle production in line with demand to avoid costly incentives, said Jim Farley, Ford’s head of global sales and marketing.
Farley, who came on board only late last year from Toyota, acknowledged in a conference call with analysts and reporters Friday that Ford is deploying incentives in a different way now than it did a year ago. Ford has decentralized, he said, allowing regions flexibility to offer incentives when they want and on what vehicles they choose.
“Incentives in certain regions, on certain vehicles and in certain months will accelerate or decelerate as we work with dealers,†Farley said.
SANTA MONICA, Calif. – The average auto manufacturer incentive in the U.S. was $2,401 per vehicle sold in January, up $167, or 7.5 percent from January 2007, and down $56, 2.3 percent, from December 2007, Edmunds.com estimated Friday.
“In January, automakers decided to be more generous in their incentives spending in hopes of counteracting the slowdown in demand,” said Jesse Toprak, executive director of Industry Analysis for Edmunds.com.
“We do not foresee a dramatic turnaround in market conditions for at least the next several months, and yet the race for increased market share is in full force,” added Toprak. “This will provide a test of the automakers’ discipline about incentives, especially that the of the domestics who have been employing a ‘value pricing’ strategy quite successfully recently."
Ford is forecasting a fifth consecutive year of European profit as new models
such as the Focus, Kuga and Verve boost sales in the region.
"We should have a solid year of profit,'' John Fleming, Ford of Europe chief, said in a telephone interview with Bloomberg News Friday from his office in Cologne, Germany. "I certainly intend for sales to be better in 2008 than in 2007.''
Where would Buick be without Tiger Woods? General Motors executives can’t decide if they really want to find out. They believe the golfing phenom and global celebrity (leading in this weekend's Dubai Desert Classic) is so popular he -- rather than Buick vehicles -- became central to the brand over the years.
But now that the Enclave has rescued Buick from the sales doldrums, a new advertising campaign shows division executives are unafraid to put a renascent Woods front and center with the stylish crossover vehicle.
“These spots are very significant because they represent both Buick and Tiger moving to another stage in our life cycle,†Maria Rohrer, Buick’s marketing director, told AutoObserver. “We’ve used him in testimonial before, but we’ve never used him in this kind of emotional way. It’s wonderful when the stars align like this.â€
Union workers at Ford's Claycomo, Mo., plant have agreed to increase their mandatory overtime work so the automaker can boost production of its popular Ford Escape, Mercury Mariner and their hybrid versions without adding another shift.
They also agreed to increase overtime for the redesigned 2009 F-150 pickup truck.
Ballard Power Systems Inc. of Vancouver, British Columbia, said shareholders have approved the previously reported transaction to sell the company's automotive fuel-cell assets to automakers Daimler AG and Ford, Dow Jones reported.
The hydrogen fuel cells said 97.8 percent of shares voted were in favor. The transaction is expected to close January 31. The company said the transaction would lower its risk profile and enable it to concentrate on growth in the fuel-cell market.
Chris Guzy, Ballard’s chief technology officer, told AutoObserver in November the new Daimler-Ford ownership moves commercially viable fuel cells for cars closer to reality.
The stock price of Harley-Davidson Inc. slid like a greased pig this week to near 5-year low, as even this longstanding media and financial-community darling of
transportation-sector companies appears to have yielded under many of the same economic factors stifling the auto industry.
Harley’s stock price has dropped nearly 50 percent over the past year, and last week influential Citigroup downgraded Harley stock to a “sell†rating, predicting fourth-quarter sales that could be 12-14 percent lower than last year, and the company recorded a heavy sales and profit decline.
Ford announced Thursday morning that it lost $2.7 billion in 2007, but that loss
was significantly less than the record $12.6 billion lost in 2006. Yet, Ford is bracing for a tough 2008 by further cost-cutting.
"Each of our automotive operations is improving, and we are encouraged by the progress, which validates our strategy and plan," said Ford President and CEO Alan Mulally in a statement. Mulally and Ford CFO Don Leclair will host conference call briefings with the media and investment community later Thursday morning.
Despite year-over-year improvements, Mulally noted in the press statement, "The U.S. economy is slowing and the outlook for the auto industry remains challenging."
To that end, Mulally said Ford will cut costs further in North America. Word is the automaker is negotiating with the United Auto Workers union to eliminate another 10,000 plus jobs, details of which are expected soon.
Iconic muscle cars from Detroit automakers faced off at the 37th annual
Barrett-Jackson Collect Car Event held in Scottsdale, Ariz., over the weekend, raising nearly $2 million in charity.
The first 2009 Chevrolet Corvette ZR1 raised $1 million; a 2008 Ford Shelby GT500KR sold for $550,000; and a 2008 Dodge Challenger went for $400,000.
A new chapter in the truck wars begin Sunday when, at the Detroit auto show, Ford officially unveils its redesigned 2009 Ford F-150 pickup truck, the best-selling truck for three decades, and Chrysler reveals the revamped 2009 Dodge
Ram pickup.
Chrysler, known for dramatic vehicle introductions like man-made blizzards and Jeeps crashing through glass, likely wins for most dramatic entrance. Word is the Dodge Ram will be introduced on the streets of Detroit amidst a Red River-style cattle drive.
Ford’s sale of Jaguar and Land Rover to India’s Tata Motors should be wrapped up by the end of March, a rear-drive Lincoln is in the works and the automaker’s future growth will come from outside of the U.S.
Those are just a few of the news tidbits that came out Tuesday during one of the dinner/press briefings Ford CEO Alan Mulally and his management team occasionally host.
NEW DELHI, India -- If you can’t attend the party, then there’s nothing like sending along a half-billion dollar RSVP to ease your host’s disappointment.
Despite being a notable no-show at this year’s New Delhi Auto Expo, Ford announced Tuesday plans to expand its manufacturing capabilities in Chennai, India, to the tune of a $500-million investment. Ford will double its car production to 200,000 cars a year, including a new small car, and construct a new engine factory, capable of producing 250,000 motors a year; Ford now builds 50,000 engines in India.
Ford isn’t saying specifically what car will be built in India, but it likely the next-generation Fiesta, hinted at in the three-door Verve hatchback concept unveiled at the Frankfurt auto show last September.
Moody’s Investors Service confirms what many observers have thought: India’s Tata, the maker of inexpensive cars, may not a good fit with luxury marques Land Rover and Jaguar being sold by Ford and wanted by Tata.
Moody’s has placed Tata Motors’ current rating on review for a possible downgrade, according to AFX International Focus, a European financial news service. It sees Tata's swallowing up of Jaguar and Land Rover as creating digestive problems.
It’s far from new, and it’s not exactly unique, but Ford Motor Co. announces this week that within the next five years, it plans to fit more than a half-million vehicles annually with comparatively smaller engines boosted by turbochargers and fueled by injecting gasoline directly into the cylinders.
Ford’s turbocharged and direct-injected “EcoBoost†four-cylinder and six-cylinder engines are good for up to 20 percent better fuel economy vaguely compared with “larger displacement†engines, Ford promises, not to mention a 15 percent cut in CO2 emissions.
After losing its 75-year position as America’s No. 2 vehicle seller to Toyota last week and after positing a 12% sales drop for 2007, Ford’s stock fell to its lowest price since 1986 on Friday.
Ford’s market value has plummeted to $13 billion from $68 billion in 1998, when Ford sold one of every four new vehicles in the U.S.
The shares have lost 20% in the past year. Friday’s closing price was the lowest since Jan. 15, 1986, when Ford ended the day at $6.11, according to Bloomberg data. Ford went as low as $6 in Friday’s trading.
Withering vehicle demand and a dollar battered on world currency markets means 2008 will see many automakers beginning a high-stakes dance to make more efficient use of production capacity in North America.
The efforts are most critical for Detroit’s Big Three automakers – General Motors Corp., Ford Motor Co. and Chrysler LLC. Each is struggling to rationalize fading market share with a 2008 vehicle-sales forecast projected to be the U.S.’s lowest in a decade or more.
Underutilized plant capacity is an immense black eye for the bottom line in the best of economic environments, much less a 2008 expected to flirt with full-blown recession and what some believe is a dangerously weak currency.
Each of the Big Three recently won momentous labor-cost concessions from the United Auto Workers union, but that won’t change the fact each still must markedly downsize their manufacturing footprints.
The year 2007 was historic for motor vehicle sales in the U.S. on a number of fronts.
Overall, the U.S. auto industry, which reported December and full-year 2007 sales on Thursday, saw sales drop to their lowest level in a decade.
For the first time since 1931, Ford Motor Co. was not the No. 2 automaker in the U.S.; Toyota was, even though Toyota suffered sales declines in some months for the first time in years.
Depending on what you count in the numbers, Toyota Division could be considered the best-selling brand in the U.S. Chevrolet objects, claiming Toyota shouldn't add into its totals Scion-branded vehicles in order to steal Chevrolet’s long-held sales crown.
And in 2007, for the first time in history, domestic automaker’s share of their home market fell below 50% in July, though for the year, they stayed above the 50% mark. Consider it was only in the mid-1980s that they owned 75% of the U.S. market.
Toyota Motor Corp. overtook Ford Motor Co. to become the No. 2 automaker based on U.S. sales for 2007. Ford held the No. 2 spot behind General Motors for 75 years.
The battle for brand leadership between Toyota and Chevrolet is muddied -- but close and intense.
If sales from Scion, sold through Toyota Division showrooms, are included in 2007 sales totals, Toyota wins over Chevrolet for the first time as the top-selling brand in the U.S.
Take out Scion, however, and Chevy holds onto the top spot, but by a narrow margin -- one that has been narrowing in recent years.
The average automotive manufacturer incentive in the U.S. is estimated to have been $2,472 per vehicle sold in December 2007, up $197, or 8.7 percent, from November 2007, and up $157, or 6.8 percent, from December 2006, according to calculations by Edmunds.com.
Domestic automakers as well as European, Japanese and Korean ones raised incentives in December in an attempt to end the year on a high note.
However, sales reports, being released on Thursday, indicate that note was not so high. Industry sales for the year are expected to come in at 16.1 million, the lowest level since 1998.
Ford confirmed what has been widely speculated in recent weeks -- that it has selected India's Tata Motors Ltd. as the top bidder for its Jaguar and Land Rover units.
A statement by Ford said it had entered into "focused negotiations at a more detailed level" with Tata.
"There is still a considerable amount of work to do, and while no final decision has been made, we will proceed with further substantive discussions with Tata Motors over the forthcoming weeks with a view to securing an agreement that is in the best interests of all parties concerned," Lewis Booth, executive vice president of Ford's European units, said in a statement.
Often a particularly challenging year is sent passing into the history books with a collective “good riddance” and sigh of relief. And while automakers selling vehicles in the U.S. surely are glad the tough 2007 is over, they are bracing for rather than embracing the arrival of 2008.
On Thursday, automakers report December and full-year 2007 vehicle sales. 2007 is likely to see the lowest sales since 1998.
Forecasters predict 2008 sales will be even lower. But 2009 could be a turnaround year.
MUMBAI, India — Just in time for Christmas, it appears Tata Motors will win the right to purchase what might be the ultimate bargain of the automotive world: The Mumbai-based auto manufacturer has completed the purchase of Jaguar and Land Rover from the beleaguered Ford Motor Company.
Ford originally bought these icons of the British motoring industry for well more than $5 billion, but the reported price Tata paid is estimated to be less than half that, somewhere in the region of $2 billion.
When Chrysler CEO Bob Nardelli didn’t like the negative stories being written about the automaker in the
business press over the past couple of weeks, he didn’t write nasty letters to the editor that may or may not have been published. He didn’t call a press conference to discredit the reports.
He blogged.
He used Chrysler’s The Firehouse blog to set the record straight that the automaker was not in the dire financial straits that had been reported. He insisted Chrysler was making progress in its turnaround and had the full backing of new owner Cerberus Capital Management.
The day after Chrysler posted Nardelli's blog, newspapers covered it as a story, demonstrating one of the many ways automakers are using blogs to get their viewpoints across as well as to communicate with customers and potential buyers.
TV advertising is spiced with year-end incentives for auto buyers. Mercedes-Benz shows Santa’s elves tinkering in his workshop on E- and C-class sedans for its Winter Event program. It’s Happy Honda Days! General Motors is revisiting its now-annual Red Tag clearance sale for 2007 models.
Lexus has renewed its iconic incentive program that tries to lure consumers into putting big red Christmas bows on new vehicles and parking them in the driveway for their loved ones. And Lincoln is running a copycat campaign.
But don’t be fooled by airwaves full of incentive advertisements: as enticing as they seem, these offers only amount to a holiday treat. That’s because money-back and cut-rate-interest programs aren’t what they used to be in the auto industry.
Ford Motor Co. seems to be nudging its Mercury brand closer to oblivion with its
latest decision: to remove it from national television ads and some other spending on traditional media, instead shifting more resources online and into dealership advertising efforts.
The decision to reallocate marketing resources for Mercury comes as the brand continues to struggle in the marketplace (sales are down about 7 percent for the year) and as Ford reportedly plans no new products for Mercury after the introduction of an overhauled Milan midsize sedan in the 2009 model year.
Ford reportedly will name India's Tata Motors as preferred bidder for its Jaguar and Land Rover brands, according to Britain's Sunday Times.
The paper, in a story picked up by Reuters news service, said Tata will pay about $2 billion for the brands. The deal could be wrapped up in early 2008.
Tata's Indiana competitor, Mahindra & Mahindra, with private equity firm One Equity Partners, led by former Ford CEO Jacques Nasser, also bid on the British brands.
Hyundai Motor America has begun shifting 2008 advertising dollars onto the Internet and away from television, as a result of the continued uncertainty over first-quarter programming stemming from the TV writers’ strike.
Other automakers also are on the verge of deciding whether to cut their dependence on a TV calendar that could become bereft of new episodes of popular dramas and comedies for some time, even if the strike is settled soon.
General Motors captured four of the six spots for finalists for the North American Car and Truck of the
Year awards; a Honda and a Mazda rounded out the roster.
Finalists for the 2008 North American Car of the year are: Cadillac CTS, Chevrolet Malibu and Honda Accord.
Finalists for the 2008 North American Truck of the Year are: Buick Enclave, Mazda CX-9 and Chevrolet
Tahoe Hybrid.
The finalists for the prestigious awards were announced Wednesday at a luncheon sponsored by the Detroit Economic Club to promote the Detroit auto show. Winners will be announced at the first press conference of the show on January 13, 2008.
GM swept the 2007 awards, with the Saturn Aura winning car of the year and the Chevrolet Silverado
winning truck of the year in January. An encore sweep could be in the offing. If that happens, it would mark the first time a manufacturer won both awards two years in a row since the awards were created in 1994.
DEARBORN, Mich. – In his first appearance before the automotive press corps since joining Ford Motor
Co., Jim Farley, the former Toyota exec now in charge of Ford’s global sales, marketing and communications, exuded warmth, humility, sincerity and authenticity.
Farley spun an emotional yarn about his grandfather, lunch bucket in hand, walking through the same doors of the historic Rouge complex, which served as the stage for Farley’s premier.
Describing himself often as Ford’s “communicator,†Farley demonstrated exactly the qualities he wants the Ford brand to exude when he unveils his new marketing plan in the next 90 days.
SANTA MONICA, Calif. -- With 11 months of vehicle sales reported, the biggest losers and winners –- and those brands that are on the move to new sales rankings –- are being predicted by Edmunds.com’s analysts.
The biggest losers for 2007 look to be: Ford division; Isuzu; Buick; Hummer; Toyota’s Scion; and Jaguar.
The biggest winners for 2007 likely will be Mazda, Lincoln and Mitsubishi, all of which have surpassed total 2006 sales in just the first 11 months of the year.
Okay, so Ford Motor Co. has a brand-new four-year agreement with the United Auto Workers union that markedly cuts the company’s labor liabilities.
November’s handshake with the UAW also brings the union’s blessing to pare Ford’s U.S. manufacturing footprint to just nine assembly plants; the company already has shuttered four major U.S. plants and will close another in 2009 as it right-sizes itself to a near-term market share projected to be around 15 percent. As recently as 2002, Ford share exceeded 20 percent.
But with Ford shedding costly and unproductive manufacturing capacity (and the associated workers, unfortunately), the next problem emerges: much of what’s being built in Ford’s remaining UAW-represented plants is yesterday’s news.
CEO Alan Mulally stresses that savings from the new labor agreement – along with vital new investment to install flexible-manufacturing tooling in all its plants – will enable Ford to accelerate new-product development. That acceleration needs to get started: the Mustang and the F-150 pickup line are the company’s only absolute winners, and even those perennial segment-dominating models are coming under pressure from a flagging U.S. market and ongoing concern about fuel prices.
An assessment of the plants that will take Ford through the pivotal next four years of its restructuring and the vehicles they produce, or are likely to be producing:
Ford doesn't have to look very far to see the dramatic shift in the
marketplace -- away from gas-hungry, larger SUVs to more fuel-efficient, car-based ones.
The automaker just has to long in its record books at the Explorer and the Escape to see the tale of two SUVs.
November car and truck sales weren't great, but, in light of current circumstances, they could have been worse, concluded Edmunds.com's analysis of November sales figures reported by automakers Monday.
Jesse Toprak, executive director of Industry Analysis for Edmunds.com, noted the retail market, despite the weakening economy, the fallout from the housing market and higher energy prices, remained relatively stable this November compared with the last one.
“We’re seeing modest gains though not robust ones,” he said. “We’re still doing fairly well considering the market and macroeconomic issues.
Remember when the Ford Explorer was king of the SUV mountain – the best-selling SUV in America?
The Explorer's reign is long over.
Without fanfare, the Honda CR-V quietly took over the No. 1 spot among SUVs and crossovers this past year. A number of other SUVs have also passed the Explorer by. In fact, the Explorer has been surpassed by the Ford Escape and Ford Edge.
SANTA MONICA, Calif. – Incentive spending by automakers remain roughly flat in November, as manufactured tried to stick their plans for less incentive spending to boost profit margins. Yet, the plan may prove to contribute to softer vehicle sales, being reported by manufacturers throughout Monday.
"Even with the year-end sell-down upon us, the domestic automakers have stayed committed to the value pricing strategy that limits their investment in incentives,” said Jesse Toprak, executive director of Industry Analysis for Edmunds.com.
Ford has few hits these days, but among them are the Ford Escape and Mercury Mariner and their
hybrid versions. Dealers have been screaming for more of them for months, since the redesign for the 2008 model year.
Now Ford is looking at ways to crank up production at its Kansas City, Mo. Assembly plant.
The situation marks the first test case of the new UAW contract, which tried to address the need of automakers to be flexible to respond to increases and drop-offs in sales demand.
SACRAMENTO, Calif. -- Ford’s settlement of class-action lawsuits filed in California related to Explorer rollovers doesn’t sound like a bad deal for the automaker at all.
For starters, it marks the last of the outstanding lawsuits against Ford stemming from the Explorer rollovers.
And the settlement – excluding what must be astronomical legal fees – doesn’t sound that costly. It allows vehicle owners to apply for $500 vouchers to buy new Explorers or $300 vouchers to buy other Ford or Lincoln Mercury products. That’s less than some incentives Ford has offered.
SANTA MONICA -- This month's new vehicle sales (fleet and retail) are expected to be 1.2 million units, virtually unchanged from November 2006 and 2.5 percent below October 2007, according to Edmunds.com.
"Given the industry trends, we have adjusted our year-end forecast," stated Jesse Toprak, Edmunds’ executive director of Industry Analysis. “We now expect 2007 sales to total 16.13 million units, and predict that no more than 16 million cars and light trucks will be sold in 2008."
SHANGHAI, CHINA -- Whiz-bang press conferences on fuel cell technology have been part of the auto show circuit for at least a decade. Journalists have been driving fuel cell cars around parking lots in New York, LA and Chicago for years. Interesting enough, but where’s the beef? When is the public going to be offered a car that is powered by hydrogen?
In a pairing of seemingly strange bedfellows, Daimler and Ford have now formed a joint venture to become more involved in the automotive fuel cell business of Vancouver, Canada-based Ballard Power Systems.
The move suggests a fuel cell car just might be getting closer to the showroom.
Ford unveiled
a second version of its Verve concept, based on a B-segment global platform, at China’s last auto show of the year in Guangzhou Monday.
Signaling the importance of Asia in Ford’s future, this Verve is a four-door notchback aimed at the Chinese market.
Ford revealed its intention for a global B-segment platform at the Frankfurt auto show in September when it unveiled the Euro-edition Verve three-door hatchback. Ford will introduce the next installment of Verve at the Detroit auto show when it unveils the U.S. version.
After nearly four months of earnest talk, surprise strikes at General Motors and Chrysler LLC and some creative wheeling and dealing, American carmakers finally have new labor agreements -- ones that almost wipe out the cost advantage enjoyed by Asian rivals operating in the U.S. without union contracts.
Sean McAlinden, vice president of research at the Center for Automotive Research (CAR) in Ann Arbor, Mich., said it will take U.S. carmakers two to four years to reap the benefits of all the changes embedded in their new contracts with the United Auto Workers.
But the cost savings are genuine and substantial, he said.
DETROIT –- In a conference call to summarize key points of its new four-year contract with the United Auto Workers (UAW) union ratified Wednesday, Ford Motor Co. officials say their U.S. market-share target for the foreseeable future is in the 14-15 percent range, reflecting the new realities of a company that is working feverishly to pare itself to a profitable size.
Ford’s U.S. market share as recently as 2002 exceeded 20 percent. Its share in October was 15.8 percent of the U.S. market, trailing the industry leading 25 percent of General Motors Corp., closely tracking that of Toyota Motor Corp.’s 16.1 percent and easily exceeding Detroit rival Chrysler LLC’s 11.8 percent of the market in October, according to Edmunds.com's calculations.
But Ford’s continuing market-share decline and an ongoing slowdown of the U.S. economy are a double hit that it appears Ford’s cost-saving new labor agreement will not immediately overcome.
The UAW announced Wednesday its members working in Ford plants approved a new four-year labor contract with Ford by a margin of nearly 4-to-1.
The Ford contract is the last of the three to be approved. It was done so without a strike and by the most overwhelming margin.
Little information has been provided about the contract, pending its approval. However, it is known to include a two-tire wage structure and the establishment of a union-run trust fund for retiree health care in exchange for the automaker keeping plants open.
Ford Motor Co. announced the formation of Transformation Advisory Council that consists of Ford
senior executives as well as outside thought leaders to explore solutions to energy independence and global warming.
Initial outsiders selected for the council are big names -- Amory Lovins, Paul Hawken and Peter Senge.
“This is the start of a world-class group of innovative thinkers who will help propel us along the road to sustainability,†said Ford Executive Chairman Bill Ford in making the announcement made Tuesday.
It’s been a grueling week for serious automotive business: more financial losses for General Motors and Ford fueling fears of more job cuts; a lousy economic outlook with oil skyrocketing near $100 a barrel and the U.S. dollar at the bottom of the barrel; and a jittery stock market.
So now for something completely different to end the week on a lighter note.
Now that the “regular-season super bowl†is over -- with the New England Patriots’ defeat of the Indianapolis Colts last Sunday -- football advertisers as well as fans are turning more attention to the official Super Bowl XLII on February 3.
And despite the fact that Fox already has sold out more than 90 percent of its commercial spots for the game broadcast, automakers aren’t among the major advertisers clamoring to get in.
In fact, General Motors and its divisions have decided to cut the company’s total number of in-game TV advertisements down to just one, compared with three during the 2007 Super Bowl, AutoObserver has learned. Honda has decided for the first time in four years to bow out of running spots during the Super Bowl telecast itself. And Chrysler seems likely, just as last year, to stay away from the game telecast itself.
Ford has shortened its list of bidders for its Jaguar and Land Rover units.
Ford CEO Alan Mulally said in a Thursday morning conference call on third-quarter earnings that the planned sale of Jaguar and Land Rover is "progressing" with "selective parties." The sale is expected to be completed "no later than early next year," he said.
A source told Dow Jones Newswires Thursday that Indian automakers Tata Motors Ltd. and Mahindra & Mahindra Ltd. along with One Equity Partners, a unit of J.P. Morgan Chase & Co. that involves former Ford CEO Jacques Nasser, have been selected to have more detailed discussions with Ford.
Ford said Thursday it has a plan for Volvo -- keep it for now, cut its costs and buff up the image of the Swedish marque as a premium automaker.
But that doesn't necessarily mean Ford will keep it forever.
Ford CEO Alan Mulally said Ford will keep Volvo for now, focus on improving its cost structure -- i.e. cut costs -- and reposition it as a premium brand more than a near-premium one.
But reading between the lines, Ford could be sprucing up Volvo to sell it further down the line.
Ford reported Thursday morning a third-quarter loss of $380 million, a significant improvement from
the $5.2 billion loss in the year-ago quarter. Ford credited the smaller loss to cost cutting -- mostly from plant closings and job cuts -- and improvements in its automotive operations.
Excluding one-time cost items, the loss was $24 million, compared with a loss of $850 million a year ago. The results were better than analysts had predicted.
Ford CEO Alan Mulally, in a Thursday morning conference call on third-quarter earnings, said the automaker continues to be on track to be profitable in 2009. Ford CFO Don LeClair said in the call the automaker is "ahead of or equal to plan in all areas" and for the full year of 2007, Ford will report a small loss to break even, excluding any special items.
DETROIT -– Don’t insist on identifying a definitive winner and loser in the tentative labor contract hammered out this past weekend between Ford Motor Co. and the United Auto Workers (UAW) union. There wasn’t one.
In the agreement awaiting ratification by rank and file workers, the UAW got assurances from Ford there won’t be any additional plant shutterings beyond those already earmarked for closure -– despite the fact Ford’s sales suggest the company needs to shed more capacity. And there is some commitment from Ford regarding new models for several plants.
Leaders from UAW locals from around the country are gathering in Detroit Monday to be briefed on the tentative contract reached between its union and Ford.
Contract details have not been officially but the Ford deal reportedly has significant job security assurances, including Ford’s removal of several plants from its pending closure list in exchange for significant, but still unknown, concessions from the union.
It would seem that Ford will be challenged to meet its profitability objectives without the ability to close plants in line with its shrinking sales and market share.
October car sales represented more of the same weakness seen in recent months.
Sales on a seasonally adjusted basis came in at 16.05 million vehicles, down from 16.35 million in October a year ago.
“There was nothing new this month, as we saw General Motors and foreign automakers continue to succeed,” said Jesse Toprak, executive director of Industry Analysis for Edmunds.com. “Ford did better than expected because of its new products, mainly crossovers, and Ford has been able to hold on to its truck buyers, even with an aging product.
“We’re expecting that sales will continue to be sluggish for the rest of the year, and November has typically been a slow month for automakers,” he added.
Ford and the United Auto Workers union reached a tentative contract agreement in the early morning hours of Saturday, after round-the-clock bargaining for the past couple of days.
Few details of the agreement were released. It does contain a union-run trust fund to hand retiree health care obligations, commitments from Ford on new product investments and a two-tier wage structure that pays new non-production employees less than current ones.
Detroit media reporting Ford and the United Auto Workers union could announce a contract settlement as early as Friday.
Negotiators from the two sides remained at the bargaining table Friday morning after an all-night session, suggesting they are in the final phases of the talks.
The critical issues is job security: the union appears ready to give Ford more cost cuts in exchange for fewer plant closings and specific future product programs for plants.
Like the old Taurus in the waning days of its life, the Ford Crown Victoria will be available only in bulk to fleet customers in the 2008 model year. Dealers will not be able to sell them retail to individual customers.
That’s the same strategy Ford used with the old Taurus – put it in daily rental fleets and commercial fleets with no retail sales before pulling the plug altogether.
Negotiators for Ford and the UAW adjourned their marathon bargaining session in the wee hours of Thursday morning, but the buzz is the two sides are close to a deal. Talks resume later Thursday morning.
It is speculated that Ford may agree to close fewer U.S. plants than it had previously announced in exchange for increased cost savings from the union.
October’s new vehicle sales are expected to be 1.24 million units, a 2.4 percent increase from October 2006 on an unadjusted basis, according to a forecast by Edmunds.com. Automakers will report October sales results on Thursday.
This October had 26 selling days, one more than October 2006. When adjusted for this difference, sales decreased 1.6 percent from October 2006. (The chart below sets forth other adjusted and unadjusted comparisons.)
"Sales are strong for vehicles at the far ends of the price spectrum, as consumers affected by the housing market bust seek bargains while luxury buyers are largely untouched," observed Jesse Toprak, Edmunds’ executive director of industry analysis. “Meanwhile, sales of midrange vehicles like large cars and minivans are suffering."
Every year when the vehicle-customization industry gathers at the Specialty Equipment Market Association (SEMA) show in Las Vegas, one group of attendees is always more engaged than the year before: auto company executives.
Tapping into the customization and specialization craze is boosting their top lines and beefing up their bottom lines more than ever before, producing juicy double-digit growth that normally isn’t part of the landscape in the highly mature U.S. automotive market.
At least 14 automakers were expected to exhibit at the SEMA show that began in the Las Vegas Convention Center on Tuesday. Understandably, each automaker is getting more and more serious about pursuing slices of what has become a $36.7-billion industry, according to figures compiled by Diamond Bar, California-based SEMA.
Now that the United Auto Workers union has settled contracts with the Chrysler and General Motors, it turns its attention this week to Ford.
The union is well aware of Ford’s financial situation -– the most precarious of the Big Three –- and is likely to give Ford more cost concessions than it did Chrysler and GM. But, in return, it wants more job guarantees.
Richard Parry-Jones
, one of Ford’s executives who last week announced his retirement from the company, told AutoObserver at the Tokyo Motor Show that he’s headed for the beach and three straight months of decompression after his departure at year-end.
But the talented engineer, who, at 56, seems too young and energetic to retire completely, appeared open to new possibilities after a vacation. Maybe he’s got something lined up already.
Ford reported that engineer extraordinaire Richard Parry-Jones is retiring at year's end. General Motors announced that its oft-quoted top analyst Paul Ballew was moving on to a new job in the insurance business.
DETROIT -- After years of sterling reliability, Toyota is showing cracks in its armor, according to data
from Consumer Reports’
2007 Annual Car Reliability Survey revealed Tuesday before the Automotive Press Association in Detroit.
By contrast, Ford’s domestic brands have made considerable improvements. Consumer Reports said 93 percent of Ford, Lincoln, Mercury models in the survey scored average or better.
“Ford continues to improve,†said David Champion, senior director of Consumer Reports’ Auto Test Center. “The reliability of their cars has steadily improved over the years, and is showing consistency.â€
He added, “We believe Toyota is aware of its issues and is trying to fix problems quickly.â€
Despite the problems, Toyota (including Lexus and Scion) still ranks 3rd in reliability among all automakers, behind only Honda and Subaru.
Now that United Auto Workers (UAW) unions at General Motors have ratified their new contract and Chrysler workers are voting on their new agreement, it is Ford’s turn to negotiate a new deal with the union. And its deal is likely to be similar to those at GM and Chrysler.
Ford Chairman Bill Ford, through a company spokesperson, told Dow Jones the framework of the deal between GM and the UAW was "certainly something we can work with."
Similarly, Ford CEO Alan Mulally told The Associated Press a deal with the major elements of those hammered out at GM and Chrysler will help Ford be more competitive. "The basic framework, the elements of it are very transformational," Mulally said. "It'll increase our competitiveness tremendously."
Ford announced Thursday that it has hired Jim Farley away from Toyota. Farley, 45, currently group vice president of Lexus, will be Ford's first global chief marketing and communications officer.
"I wanted to bring to our team world-class marketing talent," Ford CEO Alan Mulally told AutoObserver in a phone interview just after the Ford board of directors agreed to hiring Farley.
In his October 3 column entitled “Et Tu, Toyota?”New YorkTimes columnist Thomas Friedman expresses his shock and utter dismay that his beloved Toyota is siding with Detroit automakers in what he calls a Michigan-style “assisted suicide” –- opposing stringent fuel-economy standards proposed by the Senate.
In previous columns, the Pulitzer Prize-winning Friedman advocated Toyota take over General Motors and rule the automotive universe on the basis of its pioneering leadership in fuel-efficiency as expressed through a single model, the Toyota Prius hybrid.
Now, Friedman is disappointed and stunned: Toyota, along with GM, Ford and Chrysler, is opposing the tough mileage standards in the U.S. Senate’s draft version of the energy bill, and are lobbying for another bill that is more stringent and separates cars and trucks.
Toyota wasted no time in responding to Friedman's column. General Motors has as well. And so have other industry watchers, including columnists from Motor Trend and Fortune magazines
Automakers reported weak September vehicle sales against a backdrop of continued
economic headwinds. Still, some automakers -- especially those with new models -- fared better than those without new wares.
General Motors, Nissan and Honda reported gains; Ford, Toyota and Chrysler saw declines. Total industry sales in September ran at a seasonally adjusted rate of 16.23 million units compared with 16.6 million in September last year.
"This month was pretty much in line with what we expected," said Jesse Toprak, executive director of Edmunds.com's industry analysis. "Auto manufacturers that saw the most gains had new or freshened models -- GM with the Cadillac CTS and new crossovers, Honda with the Accord, Nissan with the Altima."
The average automotive manufacturer incentive in the U.S. was $2,293 per vehicle sold in September 2007, down $176, or 7.1 percent, from August 2007, and down $267, or 10.4 percent, from September 2006, according to Edmunds.com's monthly True Cost of Incentives (TCI) report.
"Some may have thought that this soft market would inspire the automakers to increase their incentives to boost sales, but that isn’t happening," said Jesse Toprak, executive director of Industry Analysis for Edmunds.com. Edmunds’ report on incentives was released just before automakers began reporting September sales, expected to be soft compared with a year ago.
New vehicle sales in September are expected to be 1.29 million units (retail and fleet), a 4.5 percent decrease from September 2006, according to Edmunds.com’s forecast.
"This month, the automakers with the most momentum are faring well even given the constraints of the marketplace," observed Jesse Toprak, executive director of industry analysis for Edmunds.com. "Especially in a soft market like this, compelling new products and effective marketing campaigns are the keys to success."
Honda, which just launched the Accord accompanied by a significant advertising campaign, is the only one of the six major automakers predicted to show a sales increase, on both an unadjusted and adjusted basis. This September had 25 selling days, one less than September 2006. When adjusted for this difference, sales decreased 0.7 percent from September 2006.
Nissan’s Jan Thompson, one of the auto industry’s top female marketing executives, has resigned, under pressure. Ex-Ford marketer Ben Poore will replace her.
Thompson, well known in the automotive marketing community having worked at Nissan, Mazda and ad agencies handling other major automotive accounts, had been head of both Nissan and Infiniti advertising and marketing.
Her resignation comes as no surprise. Nor is Poore's departure from Ford a shocker.
Francisco Codina, Ford’s top sales and marketing executive, will retire on November 1, the automaker announced Thursday.
The retirement of Codina, better known as Cisco, comes as no surprise. Ford CEO Alan Mulally told a roundtable of reporters in August that marketing is one of his top priorities as he enters his second year as head of Ford.
The automaker, on and off, has searched inside and outside of Ford for a chief marketing officer. But none has ever been hired.
General Motors and the United Auto Workers union, at an impasse on a proposed union-run retiree health-care fund, reportedly have set aside that issue for the moment and moved onto other matters.
After negotiating all day Wednesday on health care, UAW President Ron Gettelfinger ended discussions on creating a Voluntary Employees Beneficiary Association (VEBA) for now.
Instead, negotiators for both sides are expected to be back at the bargaining table sometime Thursday – the sixth day since the September 14 expiration of the UAW’s four-year contract.
They will discuss other issues -- sticky ones. They include wage cuts for active employees, higher insurance co-pays for active workers, cutting back on overtime, outsourcing of jobs and a two-tier compensation structure that pays new hires less than current employees, gives them lesser health-care benefits and no pension, perhaps a 401(k) instead.
Mark Fields, Ford’s executive vice president in charge of North and South American operations, told the Wall Street Journal
the automaker could accelerate cost-cutting if a slowing U.S. economy puts the company at risk of missing key financial goals in 2008 and 2009.
"There's more risk than there is opportunity going forward," Fields told the newspaper Monday. Fields cited weak job numbers along with turmoil in the debt and home mortgage markets that have led Ford to hold down fourth-quarter production to avoid building excess inventory.
In the summer of 2006, no one around the United Auto Workers (UAW) union would have been surprised if its president, Ron Gettelfinger, had decided to call it quits.
Rumors that Gettelfinger was tired of the union presidency floated through union halls for months prior to the UAW's constitutional convention in Las Vegas last year.
The 63-year-old Gettelfinger, however, said he never really considered retiring even though he is now caught in a tense struggle between the union's proud legacy and traditions and the forces of globalization, which have left American carmakers with only half of their home market.
Yet, in what is Gettlefinger’s swan song, a deal that both sides can live with appears imminent.
The United Auto Workers' contracts with General Motors (which the union selected Thursday as its strike target), Ford and Chrysler officially expires at 11:59 p.m. Friday.
What will happen as the clock strikes midnight?
Exactly nothing. At least as far as the outside world is concerned.
Ford and Chrysler have signed temporary extensions. And even with GM as the lead target and UAW’s local preparing strike posters, the talks likely will continue on past the witching hour and possibly days, if not weeks, thereafter.
With three-quarters of the year over, 2007 has proven to be far more difficult for automakers to sell cars than they had anticipated at the start of the year.
Worse, the rest of the year looks like more rough sailing.
Analysts and auto execs, commenting on August sales Tuesday, used the word “headwinds” frequently the headwinds of the housing market, the credit crunch and higher fuel prices, all of which lead to slumping consumer confidence.
September sales may improve, but don’t get your hopes up, warns Jesse Toprak, Edmunds.com’s executive director of industry analysis. Those market forces will still be with us through year-end.
The average automotive manufacturer incentive in the U.S. was $2,362 per vehicle sold in August 2007, down $159, or 6.3 percent, from July 2007, and up $51, or 2.2 percent, from August 2006, according to estimates issued by Edmunds.com Tuesday.
"It is unusual for incentives spending to fall from month to month this time of year, as manufacturers typically offer generous deals in order to clear old inventory," said Jesse Toprak, executive director of industry analysis for Edmunds.com.
"This year the domestic automakers are staying true to their value pricing strategy and carefully picking and choosing where to offer marketing support, rather than blanketing the whole lineup with incentives," he added.
The United Auto Workers union’s contract with General Motors, Ford and Chrysler expires in just over a week on September 14. While little has been reported publicly on the progress of negotiations, the towering cost of health care undoubtedly is the top issue in the talks.
How health care will be resolved has yet to be seen. And the recent turmoil in the financial markets makes one possible scenario more challenging.
Not surprisingly, based on the latest dreary economic news, August vehicle sales will be down, according to Edmunds.com’s forecast. Automakers report sales Tuesday.
Industry vehicle sales, including retail and fleet, are expected to be 1.42 million units, a 4.5 percent decrease from August 2006 and an 8.7 percent increase from July 2007. Big Three share is predicted to be below 50 percent for the second consecutive month.
"Early in August, sales were dismal," observed Jesse Toprak, Edmunds' executive directory of Industry Analysis.
"To generate showroom traffic, most automakers introduced incentives programs midway through the month," added Toprak. “That effort was relatively successful."
Still, noted Toprak, the uncertainty in the housing market is likely to continue suppressing consumer demand for new vehicles for some time.
It is looking increasingly likely that an automaker from India could become the new owner of the now Ford-owned Jaguar and Land Rover.
Two Indian automakers, Tata Motors Ltd., and Mahindra & Mahindra Ltd., are among the bidders for Jaguar and Land Rover, which Ford hopes to sell as a package. And they may well be the front-runners among the bidders.
House Energy and Commerce Committee Chairman John Dingell, D-Dearborn, Michigan, told reporters Monday that 163 House lawmakers have signed on as co-sponsors of a bill to require new cars to use fuel at a rate of from 32 to 35 miles a gallon on average, starting in 2022, less stringent than a plan approved by the Senate. Dingell pointed out that means lawmakers are adding their names to the measure at a rate of more than one a day.
Ford’s sale of Jaguar and Land Rover will occur late this year or early next, while the decision to keep or sell Volvo will be made within the next two to three months, a Ford official said.
Lewis Booth, Ford’s executive vice president in charge of Europe, told reporters at a briefing Wednesday night that Jaguar and Land Rover would not be sold by the end of September, as many publications have been reporting. Instead, it may take until the end of the year or into 2008 to finish the deal.
At the same time, a strategic review of Volvo and its fate should be completed within three months, he said.
If The Graduate were remade today, the advice to Benjamin for a certain life of corporate success would center around “electronics” instead of plastics.
Indeed, about the only jobs in Detroit’s auto industry are in electronics to work on hybrids and the like.
Small cars are on track for a record sales year this year and third
consecutive year of growth, according to an analysis by Ford.
Last year, small car sales totaled almost 2.7 million, a record for the segment, according to the analysis done by George Pipas, Ford's U.S. sales analysis manager. In the first seven months of 2007, segment sales are up 3.5 percent, while the overall market for cars and trucks is down 4 percent.
Further, small cars, the largest vehicle segment for years until 2004, are on track for three straight years of growth. In addition, getting them while they're young is why foreign automakers, which by Ford's calculation, capture 76 percent of small car sales.
Ironically, Ford's only entry in the growing segment is the Focus, which is revised for the 2008 model year.
As the U.S. auto-buying public resigns itself to handing over $3 for a gallon of gasoline or more, automakers are hitting high gear to firm up alternative-power strategies that certainly seemed much fuzzier at this time last year.
It’s come time to decide how to best save fuel, and for the next several years, the battle will be between hybrid-electric vehicles (HEVs) and sophisticated new diesel engines.
Ford’s proposed sale of its British marques –- Jaguar and Land Rover –- is growing more intriguing by the day.
We’ve got a couple of up-and-coming car companies from India looking to expand globally through the acquisition of the brands, and two former Ford execs bidding against each other.
Ford has announced the price of its Sync option, an in-car communications and entertainment system developed with Microsoft, will be $395.
Sync will be available on a dozen 2008-models beginning this fall. It will be standard on Lincolns and widely available as standard or an option on Ford and Mercury models. Ford plans to offer it on nearly all Ford, Lincoln and Mercury models within two years.
Sync is voice-activated and accommodates Bluetooth-enabled mobile phones and digital media players.
Ford's impending sale of Jaguar and Land Rover is shifting into high gear, with participants who made it through the first round of bidding now receiving detailed financial information on the two British luxury brands, the Detroit News reports.
Ford reportedly wants a deal wrapped up by September 30.
The profit-per-vehicle gap between the American Big Three and the Japanese Big Three automakers soared 32 percent between 2005 and 2006 to $3,814, according to a new report.
The results of the report, done by financial firm Stout Risius Ross and its managing director, Laurie Harbour-Felax, were revealed at the Center for Automotive Research Management Briefing Seminars being held this week in Traverse City, Michigan.
Reasons for the widening cap are a lack of commonizing parts and platforms as well as lower sales and market share of the domestic brands. Of the Big Three, GM made the most improvement.
General Motors, Ford and Chrysler would save only $500 a vehicle in production costs if they "get everything they are asking'' in U.S. labor talks, said Buzz Hargrove, head of the Canadian Auto Workers union, in a speech reported on by Bloomberg News Monday.
"Labor concessions cannot possibly have any meaningful effect on the Big Three's market share in their home market,'' Hargrove said at an analyst presentation in Dearborn, Michigan, according to a union summary of his remarks obtained by Bloomberg. Reporters weren't allowed to attend.
July wasn’t kind to any automaker with Toyota registering its first sales decline in almost three years. But Detroit automakers made history: their combined market share of the U.S. vehicle market fell below 50 percent for the first time ever.
The combined market share for Chrysler, Ford and General Motors stood at 49.7 percent in July, according to Edmunds.com’s calculations. It was only the mid-1980s that their combined share was nearly 75 percent.
"It's probably a turning point for people who look at the record books. Domestics on their home turf are being beaten by the foreign automakers in terms of their market share," said Jesse Toprak, Edmunds.com's executive director of Industry Analysis.
After seven quarters of losses despite cost-cutting, Ford reported a surprise second-quarter profit.
Ford posted a net profit of $750 million, compared with a loss of $317 million a year earlier. Revenue increased to $44.2 billion from $41.9 billion a year earlier.
"Overall our plan is working and is showing clear signs of progress. We have a long way to go," Ford CEO Alan Mulally said Thursday in a statement. Ford is closing 16 plants, cutting up to 45,000 jobs and trying to sell Jaguar and Land Rover.
Ford said it was doing a strategic review of Volvo, which has been rumored to be up for sale. That review will conclude by year-end.
Summer 2007 is turning out to be rather unusual compared to summers of the recent past, and it is showing up in sales.
This summer, no big blowout, model-year-end incentives are being offered -- yet -- to consumers to clean up leftover inventories. In recent years, General Motors has led the parade with big campaigns that have forced others to follow, But throughout this year, GM has tempered its incentives.
As a result, in part, July new vehicle sales, to be announced next week, are expected to be down for the industry, according to Edmunds.com's forecast.
They’re all smiles now, but we likely won’t see many grins come September.
United Auto Workers President Ron Gettelfinger performed the ceremonial handshake with GM Chairman Rick Wagoner and Ford Chairman Alan Mulally today as the union kicked off talks with both companies. A similar ceremony at Chrysler was held Friday.
While all parties are amiable now, this round of contract talks is predicted to be the most contentious and high stakes of any undertaken in recent memory. The viability of the domestic manufacturers –- particularly Ford –- hangs in the balance in these talks, which could continue on after the mid-September deadline.
A showdown gets under way in Detroit today as domestic carmakers open contract negotiations with the United Auto Workers (UAW) union, contract talks that are more critical for both sides than any in recent memory with not only jobs but also the very survival of the automakers at stake.
Negotiations for a new contract to replace the one that expires in September begin today at Chrysler with the ceremonial handshake; talks at General Motors and Ford officially start on Monday.
The UAW enters negotiations with its influence greatly reduced. And GM, Ford and Chrysler are in a weakened condition. The Big Three can ill-afford the sort of winner-take-all confrontations that could produce the sweeping changes some analysts think are necessary to reshape Detroit's creaky business model.
"Everybody's scared," said one veteran UAW representative. "Nobody really knows what's going to happen.â€
Turns out, suitors -– as many as a half-dozen –- are interested in Jaguar and Land Rover.
The Financial Times in London reports today that Ford expects up to six bids for the two British marques, which could kick off a surprisingly competitive auction.
Among the suitors are –- not surprisingly –- private equity firms Cerberus Capital Management (the upcoming owner of Chrysler), Ripplewood Holdings and One Equity Partners. Another is India’s Tata Motors.
Maybe it makes sense, but it seems ironic. Ford has sold Aston Martin, put Jaguar and Land Rover on the auction block and may be selling Volvo.
At the same time it ditches these famous marques, Ford is investing in a Romanian carmaker most of us, even in the auto business, have never heard of. Ford said Monday it plans to invest $930.6 million for a majority stake in Automobile Craiova. That's about $100 million more than Ford received for selling almost all of Aston Martin; Ford has maintained a tiny piece of the British luxury maker.
Ford says it plans to boost employment to between 7,000 and 9,000 people from the current 3,900 and, by year-end, increase vehicle output to 300,000 units from a scant 24,000 last year.
Talk has heated up once again that Ford is selling Volvo.
London’s Sunday Times, citing unnamed sources, said the decision to sell Volvo, which is part of Ford's Premier Automotive Group (PAG), was made in the past two weeks, but that the timing of the sale had yet to be decided.
If Ford sells Volvo it would the final piece to completely dismantling the automaker’s European luxury collection, the Premier Automotive Group.
Ford said the 2008 Mustang will be outfitted with soybean-based foam cushions,
as part of an effort to cut the use of petroleum in its auto manufacturing. Other models may get the foam as well.
Developed by Ford researchers with seat supplier Lear Corp., the foam is 40 percent soy and 60 percent oil-based. Most manufacturers use an average of 30 pounds of petroleum-based foam per vehicle, with 9 billion pounds of foam sold a year to the auto industry.
Ford said the environmental advantages are reduced carbon dioxide emissions in manufacturing, lower energy use to produce the soy foam and reduced dependence on foreign oil. Currently, the soy-foam costs about the same as conventional foam that is fully oil-based but Ford, which is applying for patents on the technology, hopes with increased volume the cost will drop.
Ford announced a partnership with Southern California Edison to test and develop plug-in hybrid electric vehicles.
The utility will get one plug-in hybrid to evaluate and test this year, with as many as 20 vehicles by 2009. Ford hopes to work with the utility to help develop the infrastructure side of the electric car network. The utility will study the vehicles and will place them in the hands of real-world consumers so that Ford can get information on their durability and usage in true life situations.
"By partnering with these two industries... we're hoping that it does accelerate the commercialization and certainly drive some of the cost issues down," said Ford Vice President for Sustainability Susan Cischke.
Don’t expect the automakers to fight for a product placement in this film!
The story of Robert W. Kearns, inventor of the intermittent windshield wiper systems used on most vehicles for decades, will hit the silver screen. Detroit’s Big Three automakers will play a starring role –- as the bad guys –- who lost after long court battles that ultimately reached the Supreme Court.
Actor Greg Kinnear, most recently appearing in the Oscar-winning Little MissSunshine, plays Kearns in Flash of Genius.
New vehicles sales for June (retail and fleet) are expected to be 1.55 million units, a 3.4 percent increase from June 2006, according to Edmunds.com. Automakers will announce sales on Tuesday.
“In order to understand the year-over-year comparisons of sales for each automaker this month, one must remember that last June was one of the best sales months of the year for some automakers, and was particularly disappointing for others,” observed Jesse Toprak, Edmunds.com’s executive director of Industry Analysis.
“This month, automakers seem to have achieved sales at more typical and sustainable levels rather than the dramatic highs and lows of last June,” he added.
Ford executive Elena Ford has changed jobs. She’s moving from
the car side of the business to financial services.
Effective August 1, Elena Ford will become executive vice president in charge of global brand and marketing at Ford Credit.
She had served as Ford’s director of product marketing, planning and strategy for North America. However, many inside –- and outside –- of the company questioned Elena Ford’s expertise in such a key role during Ford's critical turnaround effort.
Ford reportedly has hired accounting firm KPMG to examine the books of its Premier Automotive Group brands Jaguar and Land Rover so that they can be properly valued when suitors come knocking.
KPMG was brought on to give a “clear picture of Jaguar and Land Rover’s performance as businesses separate from the influence of Ford,” according to the Sunday Times in London.
Union work rules and job classifications at Detroit automakers have resulted in 8,200 assembly jobs that wouldn't be needed if the automakers had the flexibility of Toyota’s U.S. factories, according to study by Detroit turnaround expert, AlixPartners.
"Our analysis of the cost differential between the domestic automakers and Toyota just due to work rules and job classifications further points up just how important this year's labor negotiations are to the Detroit Three," John Hoffecker, managing director of AlixPartners, said in a statement, published in today's Detroit Free Press.
The study also confirms why private equity firms are so interested in auto companies and parts-making companies: they are getting bargains.
Ford missed its cost-cutting and retail sales targets in May, according to its monthly report card for North America obtained by Dow Jones Newswires.
Ford fell behind its material cost-cutting target through May by 5 percent. Its retail market share, excluding fleet sales to rental car companies, was 10 percent, down 0.7 point from forecast due mainly to weakness in truck sales.
What an interesting concept: a car company that sells Chrysler, Dodge and Jeep models as well as Land Rover sport-utes and Jaguar cars.
It is a possibility, according to the Financial Times in London. The newspaper reported over the weekend that Cerberus Capital Management Group, which is set to close on its purchase of Chrysler next month, has expressed interest in bidding on one or both of the luxury brands put up for sale by Ford.
Another familiar name popped up in regard to Land Rover and Jaguar. Jac Nasser, former Ford CEO, reportedly is heading a study of the brands on behalf of buyout firm One Equity Partners.
And Automotive News reports rumors have former Ford exec, David Thursfield, head of Cerberus’ automotive units, leaving the firm. Thursfield had told the trade publication some time ago that he felt it was inappropriate for him to be involved with a Cerberus-owned Chrysler, given his long tenure at Ford. Maybe the addition of Land Rover and Jaguar will lure him to stay.
I was at a Ford dealership Thursday when the first 2008 Ford Taurus arrived at
the showroom. The dealership positioned the pearlescent white car right at the door so it could not be missed.
The big question is how will the Five Hundred renamed the Taurus play? Will Taurus be recalled as the blockbuster innovator it was in the 1980s? Or will it be seen as the dying-on-the-vine rental car it became at the end of its life?
The sales staff inside the dealership wonder the same. They are about evenly divided on what the Taurus name stands for. Now they’ll see what customers think.
Advertising for the new Taurus, which tries to reestablish the nameplate and promote the Taurus as the safest full-size car in America, launches Monday.
French automaker Renault reportedly is considering creating a cheaper version of its no-frills Logan sedan that would reportedly cost $3,000. Ford, meantime, has selected Brazil to build its next-generation Fiesta subcompact, which would be sold in North America as well as its traditional markets.
Both moves illustrate accelerating trends: the emphasis on small, inexpensive vehicles for emerging markets as well as mature ones like North America; and the increased use of low-cost production sources for vehicles.
Things seem to be happening at Ford Motor Co. these days, which suggests CEO Alan Mulally is making
some moves and putting his stamp on the place.
Though he’s only been on the job since fall, many of us are saying: “Finally.â€
Among the latest moves at Ford:
Mulally reportedly is boldly pushing for a 30 percent cut in hourly labor costs in this summer’s national contract talks with the United Auto Workers union in hopes of reaching parity with Asian automakers.
Ford confirmed it has put Land Rover and Jaguar on the block; it already sold Aston Martin in March.
After rampant speculation mostly in the British press this past week, Ford decided to publicly confirm today that it is, indeed, intensifying discussions regarding what to do with its Jaguar and Land Rover brands.
A Ford spokesman said the company is working with financial advisers on strategic options for the brands, part of Ford’s Premier Automotive Group (PAG) that also includes Volvo. The company also told legislators in the U.K. Monday that Ford was looking at all options that may or may not include a sale of Land Rover and Jaguar.
Rumors are running rampant, based on various news reports out of Europe this morning, that Ford is selling its Premier Automotive Group (PAG) or parts of it.
CityAM newspaper in Europe reported today that Jon Moulton, the venture capitalist who tried and failed to buy MG Rover, is preparing a $6-billion bid for Land Rover and Jaguar. Moulton, a partner in Alchemy Partners LLP, denied those reports in a telephone interview with Bloomberg News today.
Meantime, trade journal Automotive News Europe reports today that Ford has been actively seeking buyers for its European luxury brands after negotiations for Italy’s Fiat to buy Land Rover and Jaguar broke off late last month.
Last week, the rumors had BMW considering the purchase of Volvo.
Where there's this kind of smoke, there's bound to be fire.
General Motors, Ford and Chrysler may propose in this year’s labor talks that the United Auto Workers (UAW) manage a health-care fund financed by the automakers, Bloomberg reports sources as saying today.
The U.S. automakers have discussed such a fund as a possible alternative to eliminate most of a combined $114 billion in retiree health-care obligations, sources told Bloomberg. Under the joint fund proposal, the companies would contribute a percentage of their retiree liabilities to the fund, whose assets and investment proceeds would cover retiree medical benefits.
Small cars are hot and getting hotter this summer. Big trucks as well as large, midsize and luxury SUVs are not. And the Buick Enclave looks like another winner for General Motors, according to Edmunds.com's analysis of consumer intent.
Consumer intent is determined by what vehicles consumers are shopping for right now on Edmunds.com and what they likely will buy in the next 30 to 90 days. That demand -– or lack thereof -– has a direct correlation to prices and incentives.
For consumers in the market for small cars, buy now because the prices won’t be better and might even go higher. For large truck and SUV shoppers, hold off; bigger incentives are on the way, says Edmunds.com CEO Jeremy Anwyl yesterday in a presentation to the Society of Automotive Analysts.
Here’s a rundown by category and individual models of what’s hot and unlikely to see higher incentives or increased discounting so now is as good time to buy as any. Also following is a listing of what categories and individuals aren't so hot, indicating buyers should hold off their purchases for richer incentives and deeper discounting:
Ford Motor Co. managed something of an upset Wednesday as J.D. Power & Associates released the results of its closely watched Initial Quality Study (IQS) of 2007 models. Neal Oddes, J.D. Power’s director of product research and analysis, said the results of the quality survey contained very good news for Ford.
“Fourteen Ford Motor Company models placed in the top three of their respective segments — an achievement unmatched by any other corporation this year — which is a testament to the improvement in quality for Ford Motor Company vehicle models and plants. In addition, their Lincoln nameplate, which receives two segment awards, improves considerably to rank 3rd in 2007, from 12th in 2006,” Oddes said.
As has been the case for years, automotive suppliers like doing business with Toyota and Honda but their relationships with General Motors are improving, according to a new report.
Toyota ranked first, followed by Honda, Nissan, Chrysler, GM and Ford, respectively, in their relationships with suppliers, according to the study by Planning Perspectives Inc., a consulting firm in Birmingham, Michigan, released today.
GM wins for most improved. It had the most dramatic year-over-year increase in the 15 years of the study, said company President and Chief Executive John W. Henke, Jr. GM has held last place for the past 15 years; now it ranks second to last above Ford. Henke credits the improvement with a program instituted by GM in 2005 to enhance supplier relations.
Reports that Ford might sell Volvo to BMW have certainly raised eyebrows in the auto industry. After all,
it’s only a few months ago that Ford told Renault in no uncertain terms that its Swedish luxury brand was not for sale.
Furthermore, Ford claims Volvo is profitable, and its role within the company’s Premier Auto Group (PAG) has become more sharply focused in the wake of Ford’s ongoing downsizing of Jaguar into a Porsche-sized prestige-and-performance car brand.
This leaves Volvo as Ford’s European luxury brand –- a direct rival to BMW and Audi. Why would Ford suddenly decide to exit this sector and surrender to a rival a brand whose star is on the rise?
For only the fifth time in history, Toyota surpassed Ford in monthly sales last month. In May, Toyota outsold Ford 10,870 vehicles, according to Edmunds.com's analysis.
Toyota outsold Ford for the first time in July 2006, beat Ford again in November 2006 (by the widest margin of any month), December 2006 and January 2007.
Month/year Toyota's Margin of Vehicle Sales over Ford July 2006 5,473 November 2006 20,544 December 2006 3,552 January 2007 14,605 May 2007 10,870
My son and I were piling into the Volkswagen Rabbit test car in
front of the 7-Eleven, loaded up with our favorite after-school snacks – frozen Cokes, Twinkies and Cheetos – when my teen noticed the woman passing in front of our car with two small children in tow.
“That’s a yoga mom,†he said matter-of-factly. I’d never heard the term before, but it rolled off his tongue as if it were an everyday label. And I knew what he meant.
Edmunds.com estimated today that the average automotive manufacturer incentive in the U.S. was $2,497 per vehicle sold in May 2007, up $44, or 1.8 percent, from April 2007, and up $123, or 5.18 percent, from May 2006. Honda, in fact, hit a record for incentives.
"The summer incentives hike has started," said Jesse Toprak, executive director of Industry Analysis for Edmunds.com. In previous months, we have seen year-over-year declines in incentives spending, but this month the trend reversed."
As the summer wears on, incentives will grow even bigger, Toprak predicts.
The North American auto industry received its first important grade on its
2006 report card today when Harbour Consulting revealed the outcome of its annual manufacturing productivity study.
Top scorers among the six major automakers evaluated (General Motors, Ford, Chrysler, Toyota, Nissan, Honda) are:
Toyota - first in total manufacturing productivity, which includes final car assembly as well as also stamping, engine and transmission production.
Honda - first in vehicle assembly productivity.
General Motors – first to win three of the four plant awards. No. 1 were GM Oshawa #2 for vehicle assembly; GM Spring Hill, engine assembly; GM Toledo, transmission production. Honda Marysville stamping took the fourth plant award.
“Toyota was the overall leader but with a slim and marginal lead,†said Ron Harbour, president of the Michigan-based Harbour Consulting.
The productivity gap among the six manufacturers was the closest in the nearly two-decade history of the study. That gap is so close, Harbour said, “There’s no telling who will be on top next year.â€
Trying to wean itself off unprofitable fleet sales to rental car companies, Ford
expects to report its first year-over-year retail sales increase since last fall when automakers post May sales on Friday.
“That’s particularly noteworthy because it would be our first year-over-year retail sales since last October,†George Pipas, Ford’s sales analyst, told AutoObserver.com.
Still, Edmunds.com predicts Ford sales, both retail and fleet, will be down about 12.3 percent compared with May 2006.
In addition, for the first time since the 1980s heyday of the Taurus, Ford’s retail sales volume is expected to be around 50 percent cars and car-based models.
The Chinese government reported auto industry profits in the country soared 70 percent in the first three months of this year compared with last year.
The country's major automakers had a combined profit equivalent to $1.7 billion (U.S.) in the first quarter, jumping by 69.9 percent from a year before, the country’s Ministry of Commerce announced in Beijing Tuesday.
Interestingly, while Chinese automakers -- and there are many of them -- cumulatively made $1.7 billion in the quarter, the three U.S. automakers combined lost about $1.9 billion.
To win in the auto business, various paths to glory exist. At the Mazda Motor
Corp., they’re doing it the classic, time-honored way: by building sharp-looking vehicles with spirited driving dynamics and a solid image, cars people actually are excited to buy.
Cars like the Mazda 3 and Mazda 6, plus the Mazda 5 minivan and new wave CX-7 and CX-9 crossovers, are increasingly putting Mazda on the map and in American driveways.
Mazda’s lightweight MX-5 Miata two-seater is the world’s best-selling sports car. The radical four-seat, rotary-powered RX-8 remains an innovative and unique contender in the enthusiast sport coupe market.
Mazda’s all-new Mazda 2, its latest entry, had its world premier at the Geneva show in March. The new 2, well packaged and impressively light, already is earning glowing reviews, though it won’t immediately be heading for North America.
Something’s clearly going right for Mazda. What we are seeing is the classic product led recovery.
Automakers apparently hope to end what looks to be a flat-to-down month of sales in May on a high note by announcing Memorial Day sales that actually run through the end of the month.
General Motors’ "Memorial Day Sale" campaign, announced Thursday, runs through May 31. GM is offering zero percent financing deals for 36 months and a $1,000 bonus on several Buick, Chevrolet, GMC and Pontiac vehicles in its lineup, including large pickup trucks and SUVs from the 2006 and 2007 model years. GM is also offering zero percent financing for 60 months on three Saturn models -- the Vue SUV, Ion small car and Relay minivan. Separate sales incentives on GM's luxury Cadillac, Hummer and Saab brands will also be available.
On Wednesday, Ford began offering a $1,000 rebate on certain Ford F-Series Super Duty pickup trucks, specifically regular and super cabs, through the end of the month. Ford just launched the redesigned Super Duty truck as a 2008 model-year product.
The rebates, of which more are likely to be announced, come on the heels of dismal April sales and, as Edmunds.com predicts, a flat-to-down May during this normally brisk sales time.
New vehicle sales, including both retail and fleet sales, are expected to be 1.48 million units when May sales figures are announced next Friday. That’s down from last May, according to Edmunds.com.
This May had 26 selling days, one more than May 2006. When adjusted for this difference, sales decreased 4.2 percent from May 2006. On an unadjusted basis, sales this May are down 0.3 percent.
"As gas prices climb, many consumers are taking a conservative approach to car buying. Additionally, numbers are down because domestics continue to cut production, reducing fleet sales and better matching supply with retail demand. However, these factors are not causing sales to fall as dramatically as one might expect," said Jesse Toprak, executive director of Industry Analysis for Edmunds.com.
Ford delivered a fleet of hydrogen-powered shuttle buses to the state of
Florida Wednesday in conjunction with the state opening its first hydrogen fueling station.
The Ford E-450 shuttle buses have an internal combustion engine, modified to run only on hydrogen fuel instead of gasoline. The buses can travel 150 to 200 miles before refueling, deliver five to 10 miles per gallon –- the equivalent of similar diesel-powered buses –- and release about 1 percent of the carbon dioxide that a Toyota Prius gas-electric hybrid does, said Sue Cischke, Ford senior vice president in charge of sustainability.
The U.S. auto market will pick up in 2008, but Detroit’s three automakers won’t be beneficiaries, according to a new forecast from the London-based market research firm Global Insight.
Light-vehicle sales will rebound next year after dipping to 16.2 million in 2007, said George Magliano, Global Insight’s director of North America, at a conference in Tokyo and reported by Automotive News. Magliano said sales would rise gradually, but they won't regain the 17 million level -- last seen in 2001-- until 2010. By 2012, sales will climb to 17.7 million. Between now and then, General Motors, Ford and Chrysler combined will lose seven points of market share.
New York City Mayor Michael Bloomberg announced on NBC’s Today
show Tuesday that the city’s cab fleet will go entirely hybrid within five years, and all of its vehicles for hire must meet new emissions and mileage standards by next year.
New York now has just 375 hybrids among its 13,000 taxis. That number will increase to 1,000 by October 2008 and will grow by about 20 percent each year until 2012, when every cab is a hybrid, the Associated Press reported. The shift to hybrids is part of Bloomberg’s sustainability plan for the city that includes a 30 percent reduction in carbon emissions by 2030.
Ford has a lot at stake in the New York cab business with the large, fuel-guzzling Ford Crown Victoria being the cabbie’s favorite ride, and having the most hybrids in New York's taxi fleet.
Ford was quick to jump on Bloomberg’s announcement, sending out a press release on the virtues of its Ford Escape Hybrid, including its average 36 miles per gallon compared with the 14 miles per gallon of the Crown Vic.
India's Tata AutoComp Systems and France's Valeo are in discussions to buy a stake in Visteon Corp., the Business Standard in India reported today, citing unnamed sources in the article picked up by Reuters news service.
It was not clear whether the two firms would jointly or independently bid on the ailing parts-making unit that was spun off from Ford.
The newspaper said a deal could be valued between $1.5 billion to $2 billion.
Palladium is this year’s best investment among precious metals, due to high demand, in large part from the auto industry, and tightening supplies, according to Bloomberg News.
A cheaper alternative to platinum, palladium is used in catalytic converters that reduce emissions from exhaust systems of motor vehicles. Palladium use has been increasing in all vehicles, and last year, it was used for the first time in diesel-powered cars. A palladium-based pollution-control device for diesels was developed in 2004 to replace the more expensive platinum-based ones.
The demand for palladium is increasing fast enough to outstrip the supply, Bloomberg reports. Supplies of palladium are declining because Russia, the producer of about half of the global supply, will slash exports for the second straight year, causing palladium prices to jump 37 percent to $500 an ounce by year-end, experts predict.
General Motors reportedly is considering selling its medium-duty truck business to Navistar International Corp. GM apparently is looking to shed businesses its deems non-core and generate cash for its automotive operations. GM sells about 40,000 medium-duty trucks a year, sold as the Chevrolet Kodiak and GMC TopKick, built in Flint, Michigan, Navistar builds trucks that compete directly with GM’s models.
The private ownership of Chrysler may be just what the doctor ordered for the American automobile industry since it will force its long overdue restructuring.
For the past couple of decades, experts have predicted a major downsizing of the U.S. auto industry because it has too much plant capacity, too many employees for its shrinking sales and market share and too high costs, notably health care, pensions and union wages.
Automakers have tried to ward off this inevitable transformation by attempting what now can be looked back upon as merely a nip and tuck here and there. But cosmetic surgery is no longer enough as a Cerberus-owned Chrysler will put increased pressure on General Motors and Ford.
Members of Ford Motor Co.'s founding family are discussing the
sale of part of their controlling stake in the automaker, sources with direct knowledge of the talks told Bloomberg
in a post today.
Bloomberg reports Chairman Bill Ford briefed Ford’s board directors on family members' views before the annual shareholders meeting last week in Wilmington, Delaware. At a gathering last month, some family members urged that investment bank Perella Weinberg Partners be hired to advise on a share sale or alternative strategies, Bloomberg reported.
A family attorney denied the reports to Dow Jones.
April brought a deluge of bad news in terms of lower vehicle sales for automakers. Could flowers be far behind the showers?
Maybe not for the automakers, but certainly for consumers. They took a wait-and-see attitude in the incentive-sparse month of April. Their wait may prove worthwhile. Automakers are likely to launch a new crop of incentives, some of which have already sprouted, to spur sales and keep vehicle inventories in check.
“Based on last month's sales, I would almost guarantee that incentives will be up significantly this month,” said Alex Rosten, Edmunds.com’s manager of pricing and industry analysis.
Some automakers already have launched new incentives.
Writer and reporter David Halberstam, who died in a car crash Monday at the age of 73, is best known for his Vietnam War reporting, for which he won the Pulitzer Prize, and other best-selling books.
But in Detroit and the auto industry, he’s recognized for his groundbreaking work, The Reckoning, a study of the American and Japanese automobile industries, using Ford and Nissan as its study subjects.
Upon news of his death, I recalled running into the amiable Halberstam in the elevator of Ford’s Glass House headquarters as he was researching the book. I also recalled Halberstam being pooh-poohed in some Detroit quarters because, when his book was released in 1986, the fortunes of Ford and Nissan had reversed from their situation in Halberstam’s book. Ford was on a roll, having just introduced the trend-setting Taurus; Nissan was in a slump.
But that reversal of fortunes proved temporary. Today, Ford is in dire straits; Nissan, while stumbling a bit, has experienced a phenomenal turnaround.
The sale of Aston Martin has gone a long way toward
clearing up the brand confusion within Ford’s Premier Auto Group.
About time, too. The muddled mass of British luxury nameplates, created by former Ford CEO Jac Nasser in 1999, has singularly failed to present a serious challenge to BMW, Mercedes-Benz and Audi. And it’s been a drain on Ford, largely because it includes the financial black hole that is Jaguar.
So selling Aston to a wealthy consortium headed by respected British motorsports figure David Richards is both a good deal for Ford, which gains a useful $848 million windfall, and good for Aston, which departs PAG with a stable of modern cars and the technological resources, via Richards’ Prodrive organization, to keep on growing.
And it just might turn out to be the best result for Jaguar, too, giving the brand some clear direction at last.
If you watched American Idol this week, you might have
seen two new ads for the Ford Edge
. The commercials were directed by Pulitzer Prize winning writer/director David Mamet.
Using Mamet’s signature for dark imagery and fast-paced dialogue, the spots feature two men sitting, each in a Ford Edge. Talking out their windows, they boast the Edge is quieter than a Lexus RX 350 and quicker than a BMW X5.
The ads -- Mamet's first -- are Ford’s latest attempt to draw attention to its vehicles and convince consumers to put Ford vehicles on their shopping lists.
An analysis of March shopping consideration trends by Edmunds.com’s AutoObserver shows Ford has much room for improvement in that regard.
Ford's newest models, including the Edge and Fusion, run midpack among vehicles considered by shoppers within their segments. Ford’s Mustang and F-150 pickup top their segments for shopper consideration. But Lincoln and Mercury vehicles barely generate a blip on shopper radar screens.
Ford Chairman Bill Ford and Ford CEO Mulally do not rule out an eventual sale or partnership for the company, according to interviews in a new magazine.
"We felt the best thing we could do was get our house in order. That doesn't preclude anything down the road. Because even if ultimately a partnership made sense, we'd be a much stronger partner if we were a strong stand-alone company," Bill Ford told Portfolio, a new Conde Nast business magazine released today.
The lengthy article headlined "Driven to the Brink," written by Betsy Morris, appears in the debut issue of Portfolio. The article reveals Ford family members, who own a controlling interest in the auto company, were pressuring Bill Ford to find an outsider to run the company.
Last month, vehicle manufacturers launched a host of new incentives on their full-size pickup trucks in
response to Toyota introducing its new Tundra to the market and immediately promoting it with dealer incentives.
March full-size truck sales overall declined from a year ago, prompting truckmakers to try to not only hold onto their loyal owners but steal potential buyers from their competitors. Edmunds’ AutoObserver.com’s analysis of March sales figures showed some incentives succeeded in conquesting buyers; others did not. Here’s a snapshot of what worked and what didn’t:
· Toyota’s incentives of dealer cash paired with low-interest loans on the Tundra didn’t move the needle much in either direction in terms of conquest sales.
· General Motor’s incentives on its recently redesigned Chevrolet Silverado and GMC Sierra combined a relatively small cash bonus with low-interest financing. The incentives helped attract non-GM buyers to its fold.
Ford Chairman Alan Mulally capped off a week of whirlwind visits to key media outlets and dealerships,
where he played salesman, with a keynote speech opening press days at the New York auto show.
In the off-the-cuff speech and lengthy question-and-answer session as well as in his visits with the media, Mulally has revealed virtually nothing about what he plans to do to turn around the ailing automaker.
Mulally was asked point blank by Edmunds.com President Jeremy Anwyl about incessant rumors that Mark Fields, president of the Americas and devisor of the Way Forward turnaround plan, and Cisco Codina, group vice president for North American marketing, sales and service, were history.
Seemingly surprised to hear of the rumors, Mulally responded he’s standing by his men and the plan.
Mulally reinforced that message during his speech in New York. He claims no further, deeper cuts are required, as analysts and industry observers insist are needed.
Asked at the New York show about Ford’s prospects for survival, highly respected auto analyst, Joe Phillippi, of AutoTrends, in Short Hills, N.J., responded: “Dicey.â€
Ford CEO Alan Mulally received $28.18 million compensation in 2006; it included an $18.5 million bonus, according to the company’s annual proxy released today. The former Boeing executive replaced Bill Ford as CEO in September.
Mulally received a $7.5 million hiring bonus and $11 million to offset the compensation he gave up for leaving Boeing. He also received 4 million Ford stock options last year; at least 3 million of those are not available until the company is turned around. The expense for Mulally’s options and other stock-based awards totaled $8.6 million. It includes cost recognized in 2006 for a $5 million stock option grant that he received in March as part of his 2007 option grant, Ford said.
Mulally also received other compensation totaling $334,433, which included $172,974 for required use of the corporate aircraft, and $55,469 for relocation costs and temporary housing.
The Union of Concerned Scientists released its latest report on the environmental performance of the world’s eight largest automakers this week based in 2005 model-year vehicles.
The group assigned each automaker a global warming and a smog score for its performance in limiting emissions of greenhouse gases -- blamed for global warming -- and smog-producing pollutants.
Honda took 1st place for the fourth consecutive report, followed closely by Toyota. Volkswagen was 3rd in its global warming score but near the bottom for smog production. Hyundai-Kia ranked 4th in both categories. Nissan was 3rd in the smog score.
Detroit’s Big Three ranked last. Ford’s smog rating was better than Volkswagen’s. DaimlerChrysler was the worst in both categories.
Ford and Chrysler issued public statements denouncing a free trade agreement signed by the U.S. and Korea this week. Their objection is that the agreement doesn’t force Korea to open its restricted market.
General Motors has been mum thus far on the topic. GM has important operations in South Korea created from Daewoo that are helping buoy GM’s global sales, while Ford and Chrysler do not have anything similar. The Chevrolet AVeo comes from Korea.
Under the agreement, which must be approved by Congress, the U.S. would immediately drop a 2.5 percent tariff on small cars and auto parts. It will phase tariffs out for trucks, larger engines and tires over the next decade. In return, Korea eliminates engine taxes that penalize U.S. automakers as well as an 8 percent tariff. It agreed to create a "working group to review auto-related regulations being developed," a joint statement said.
Ford announced today the 2008 Ford Taurus will have a base manufacturer’s suggested retail price
(MSRP) of $23,995, including destination and delivery. The automaker claims the Taurus, previously known as the Five Hundred, will be priced thousands of dollars less than comparably equipped sedans like the Toyota Avalon and the Chrysler 300.
The price appears competitive depending on how you look at it – or who is looking at it.
“Considering the size, powertrain and features the new Taurus offers, it undercuts its closest competitors on price by several thousands dollars, which is good,†noted Alex Rosten, manager of Pricing and Market Analysis for Edmunds.com’s AutoObserver.
“However, old Taurus buyers looking to check out the new Taurus are in for some significant sticker shock,†he noted. “The 2006 Taurus started at $21,000, and, after discounts and rebates, could be purchased for $16,000 to $17,000. Granted, the new Taurus is a much better car, but it’s not the most affordable to Taurus loyalists.â€
Automakers are adding spiffs other than low-interest financing and cash rebates to spur sales.
Ford announced today it will make Sirius Satellite Radio standard in some Lincoln models. Chrysler started promoting a free DVD system with the purchase of a Chrysler Town & Country or Dodge Caravan minivan. Last month, Chrysler pitched free Hemi engines on some models.
These spiffs come as March sales are being reported today and Wednesday. Edmunds.com predicts March sales will be down from year-ago levels. Edmunds.com further reported today that incentive spending edged higher last month.
Automakers are resorting to feature spiffs because financing and cash rebates may be losing their allure. In addition, automakers, especially domestic ones, are trying to boost their resale values and images. Adding content boosts resale value whereas rebates decrease it. Edmunds.com analysts estimate 80 percent of the cash rebate comes off the resale value of a one-year-old car.
Features allow automakers to focus on the vehicle and its content without screaming "distress sale." While, psychologically, the consumer loves getting something seemingly for free.
The value of the Ford family's stake in the ailing automaker has dropped by half since 2001, prompting worried heirs to discuss their options with investment banks, Fortune magazine reports.
The family's class-B Ford stock was valued at $1.14 billion when Bill Ford took over as CEO in 2001. Since then, it has dropped by $581 million in market value, the magazine notes. The shares' dividend payouts -- $28 million in 2005 -- will be zero this year.
Presumably Ford CEO Alan Mulally understood when he took the job that he’d not only have to turn the automaker around but hand-hold the Ford family.
The United Auto Workers (UAW) lost nearly 19,000 members in 2006, dropping the union's ranks to a new post-World War II low, according to a story in the Detroit News, citing a union report filed with the U.S. Department of Labor.
The lower number of members decreases the union’s clout as it enters negotiations for new national contracts for Ford, Chrysler and General Motors. With the current contract expiring in September, these negotiations are critically important for the union, which is trying to protect the jobs, pay and benefits of its remaining members, and the automakers, which need concessions in health care and retiree costs to compete with foreign automakers that don’t have the same legacy costs.
Automakers begin reporting March sales figures on Tuesday, and, based on those numbers, new incentives could be announced on slow-selling models shortly thereafter.
Edmunds.com forecasts new vehicle sales (including fleet sales) in March to come in at around 1.48 million units, a 3 percent decrease from March 2006, which was last year’s biggest month. Despite the decrease this year, March still could be one of 2007’s best months. And the industry, according to Edmunds.com, is still on track for annual sales volumes of approximately 16.5 million vehicles, along the lines of what we saw in 2006.
The compact-car segment is predicted to be the industry’s hottest for the month.
Chrysler, Ford and General Motors are expected to post declines, putting their combined market share lower than last month or year-ago levels. Toyota and Nissan are predicted to report sales increases. Chrysler will report its sales on Tuesday instead of Wednesday, likely to coincide with the DaimlerChrysler annual meeting in Berlin.
This is the kind of story that might normally come out of Korea or some far away place, but it happened over the weekend in neighboring Ontario, Canada.
Workers occupied an auto supplier plant in Toronto owned by bankrupt Detroit-based Collins & Aikman throughout the weekend. Workers at another Collins & Aikman plant in Guelph, Ontario, did the same on Saturday, forcing one of its customers, a Chrysler plant in Brampton, Ontario, to stop production. At another plant in Ingersoll, Ontario, workers threatened to stop work Sunday.
The drain of talent, both male but especially female, is one of the most dangerous signs of weakness
for Big Three automakers and top suppliers, says a former Ford executive and television broadcaster turned industry consultant.
Anne Doyle, president of Anne Doyle Strategies, is a leadership and communications coach appearing on the television program, AutoLine Detroit, which began airing Sunday. Hosted by John McElroy, the show’s segment features Sarah Webster of the Detroit Free Press and me as guest panelists to discuss the massive departure of women from the top ranks of the auto industry.
For few decades, women executives were on the rise. The 1990s, says Doyle, a pioneer in sports broadcasting in Detroit before she went to Ford, were the golden years for women in the auto industry. But in the last few years, an alarming number of top-level female auto executives have left the industry. Scan the list of Automotive News top 100 women in the U.S. industry, published in 2005. A number of the women have left the auto industry for extremely significant jobs in other businesses.
One of the highest profile women to leave the industry of late was Anne Stevens, one of the industry's highest ranking women. She had been Ford executive vice president and chief operating officer of the Americas, working with Ford President of the Americas Mark Fields, heading the automaker's turnaround plan. She left Ford to take a top job with Carpenter Technology Corp. in Pennsylvania late last year. And just this yesterday, Ford announced its treasurer, Ann Marie Petach, was leaving to take a newly created position with BlackRock Inc. as managing director and head of business finance.
Downsizing isn’t the only reason, says Doyle. Many women are abandoning the auto industry for a better life, both professional and personal.
If you work in the auto industry, Cerberus Capital Management may well be your next employer.
The private equity firm is becoming a household name in the auto industry, especially in Detroit, as it expands its automotive base and shows interest in even more holdings.
On Wednesday, after the stock market closed, it was announced that Cerberus had agreed to buy bankrupt auto supplier Tower Automotive Inc., in a deal valued at about $1 billion.
Cerberus is said to be a front-runner to purchase Chrysler. It is part of a group planning an investment of up to $3.4 billion for bankrupt Delphi Corp. Cerberus led a consortium of investors to buy 51 percent of General Motors Acceptance Corp., a deal worth $14 billion in cash over three years to General Motors. And Cerberus purchased the flooring and acoustics business of Collins & Aikman, another bankrupt automotive supplier being dissolved.
Not only is Cerberus adding to its holding, its adding high-powered automotive talent to its roster. Cerberus just signed Wolfgang Bernhard, formerly of Chrysler and Volkswagen, on as an advisor, likely to provide guidance in a potential Chrysler purchase. Cerberus also signed on former Ford executive Robert Rewey. They join former Ford executive David Thursfield, who heads Cerberus’ automotive unit.
Talk about being stuck between a rock and a hard place.
UAW President Ron Gettelfinger opened Tuesday’s convention of 1,500 union delegates in downtown Detroit with a fiery speech about protecting worker interests amidst pressure by Detroit automakers for concession. The convention marks the start of negotiations between the UAW and Detroit automakers for a new contract to replace the one that expires in September.
“Our union does not want to strike,†Gettelfinger told delegates, “but when employers act as if collective bargaining is a one-way street and not a two-way street, we will do what we have to do.
“Collective bargaining is not collective begging,†he added, drawing cheers from delegates. “Where we have demonstrated cooperation, it would be a grave mistake to equate our action to capitulation.â€
Despite the tough talk, Gettelfinger is a smart man. He recognizes General Motors, Ford and Chrysler are in a tough spot, having lost money as well as sales and market share to Asian automakers and are encountering soaring health care costs and unfunded pension liabilities.
Ford CEO Alan Mulally said Ford will expand its collaboration with other automakers, particularly in such areas as powertrain engineering and manufacturing.
In an interview with trade journal Automotive News, Mulally said he has made it a priority to meet leaders of other auto companies during his first six months on the job. He now says he's "just about talked to all of them" and that new business relationships are likely to result.
"We have a really good set of partners and alliances on both technology and the vehicles themselves," Mulally said in the interview. "As we go forward, we'll see more of it. Even more collaboration will be a big part of our plan."
The good news is: March may be one of the best months of 2007.
The bad news: March sales will be lower than last year and still be one of the best months this year, suggesting little for the industry to look forward to for the rest of the year.
This month's new vehicle sales (including fleet sales) are expected to be 1.48 million units, a 3.0-percent decrease from March 2006, according to Edmunds.com. Though sales are lower this March than last, Jesse Toprak, executive director of Industry Analysis for Edmunds.com, notes more cars were sold in March last year than any other month of last year. He predicts that this March may be one of the best months of 2007.
"This month, the industry faced debilitating winter storms, less compelling marketing messages and reduced fleet sales, so it is no surprise that year-over-year comparisons reflect a relative downturn," said Toprak. “Nevertheless, I believe we are still on track for annual sales volumes of approximately 16.5 million vehicles, along the lines of what we saw in 2006."
Typically, the summer has been the strongest period for new-car sales. This may be shifting because new-model introductions come earlier in the year than they used to, possibly sparking traffic to showrooms during historically quieter months.
My Sunday afternoon nap was interrupted by a neighbor pounding on my door. She was desperate to get
a closer look at the test model GMC Acadia parked in my driveway. It was exactly like the one she had spec'd out on the Internet, right down to its candy-apple red paint.
The Acadia is the second member of a family of new crossovers, featuring three rows of seats, from General Motors. Saturn was first with the Outlook. Buick’s Enclave comes on stream soon.
I’m betting the Acadia, generating some buzz already, will be the sleeper of the trio -– from the sleeper GM division. GMC has been a roaring but completely overlooked success story for the past decade. Last year, GMC and Saturn were the only two domestic brands to show year-over-year sales increases.
Ford has puts its pedal to the metal in developing the next-generation diesel engine for its F-Series Super Duty pickup truck after an ugly contract dispute and quality issues with its current diesel engine supplier, Navistar International Corp.
Sources say Ford is hustling to quickly develop its own diesel engine, which accounts for 40 percent of its F-Series pickup sales, so it doesn’t have to rely on Navistar.
Some important auto-related meetings are on the docket this week and worth watching.
First up, President George Bush meets again with General Motors Chairman and Chief Executive Officer Rick Wagoner, Ford CEO Alan Mulally and Chrysler CEO Tom LaSorda.
On Tuesday, 1,500 UAW delegates meet in downtown Detroit to discuss issues for upcoming negotiations. The UAW’s contract with GM, Ford and Chrysler expires in September.
First a legal dispute stalled Ford’s Super Duty sales; now a quality issue halts sales.
Ford ordered dealers Wednesday to stop selling its Super Duty pickup with the 6.4-liter diesel engine Wednesday and recalled the 8,400 trucks already sold. The automaker has received three reports about flames shooting out of the tailpipes.
The Super Duty, on the market for two months, is a critical vehicle for sales and profits –- it is one of Ford’s most lucrative models and the diesel version represents 40 percent of Ford’s F-Series sales. In addition, Ford is positioning the Super Duty as a halo over its full-size pickup line as Toyota launches its Tundra pickup.
Executives of Detroit auto companies have complained –-
appropriately so –- that they have not received the attention of the White House that they deserve.
Indeed, President Bush has made time to meet with the winners of the American Idol television show and award-winning athletes but has held only one brief meeting with auto company executives.
But yesterday Bush paid a personal visit to General Motors and Ford plants in the Midwest. His message to executives and plant workers: ethanol, hybrids and fuel cell vehicles will aid national security by reducing the nation’s dependence on foreign oil.
Top auto executives from General Motors, Ford, DaimlerChrysler and Toyota go to Washington, D.C. tomorrow to testify on proposed higher fuel-economy standards.
GM CEO Rick Wagoner, Ford CEO Alan Mulally, Chrysler CEO Tom LaSorda and Toyota Motor Sales President Jim Press are scheduled to appear before the House Energy and Commerce subcommittee on energy and air quality.
A number of proposals to address global warming through increased fuel-economy standards and stricter emissions regulations are on the table. Predictably, the automakers will argue tomorrow that any of them will cost their industry billions of dollars.
Average transaction prices of most hybrids are at historical lows, incentives are being offered on many popular models, certain hybrid tax credits will be lower soon, and gas prices are rising.
Toyota launched the Tundra pickup truck only last month, and so far, based on Edmunds.com’s analysis, it is drawing sales largely from Toyota loyalists rather than stealing sales from General Motors, Ford, Chrysler and Nissan.
Based on February sales data, Edmunds.com puts Toyota’s loyalty rate on the Tundra -- calculated based on what make vehicle was traded in for the Tundra -- at 50 percent, up dramatically from 38.3 percent the month before. That indicates Toyota owners are trading their current Toyotas -- Tundras, largely -- for the new Tundra.
Mary Ann Wright, who headed the team that launched the Ford Escape Hybrid, has joined auto supplier Johnson Controls as CEO of Johnson Controls-Saft Advanced Power Solutions LLC, a joint venture between Johnson Controls and French battery maker Saft Groupe SA.
Luring Wright to Johnson Controls, headquartered in Milwaukee but with major operations in Detroit, is a coup. She’s the real deal, according to everyone who worked with her inside Ford.
In her new job, Wright will be responsible for accelerating the growth and executing the launch of hybrid, plug-in hybrid and electric vehicle battery programs with emphasis on state-of-the-art technology, manufacturing and electronics integration, her new employer said in a statement. In addition to leading the joint venture, Wright will also have the role of vice president and general manager, Johnson Control's hybrid systems.
Ford has boosted the compensation package of CEO Alan Mulally, who has been on the job six months, by giving him another $1 million in stock options, putting the total at $6 million, and giving his family corporate aircraft privileges, even if he is not on board.
Noted in Ford’s annual report filed with the U.S. Securities and Exchange Commission Thursday, Ford’s board approved the pay package enhancements saying Mulally’s “leadership role in progressing his key priorities.â€
Only a week ago, Ford’s President of the Americas Mark Fields informed employees the automaker is missing key targets. Fields gave up his use of the Ford corporate jet for his weekend flights home to Florida, after the media reports made it public.
Ford reportedly has hired an international headhunting firm to find an executive to fill the new post of global marketing director –- again.
This is not the first time Ford has gone through this exercise. A couple years ago it did the same thing, recruited candidates, put them through the interview process, narrowed the field to some finalists -– and then hired no one with no explanation given for its inaction.
Maybe with CEO Alan Mulally at the helm, someone will actually be hired.
Ford is extending its Fusion Challenge marketing effort to include not only its midsize sedan but also the Expedition EL SUV and the F-Series pickup in a new campaign running through March and April called the Ford Challenge. Television spots, unveiled to the media today, start running next week.
Ford also has signed Mike Rowe, creator of the Discovery Channel’s Dirty Jobs program to be a new spokesperson for the F-150, in addition to country singer Toby Keith. In the Dirty Jobs series, Rowe and his crew travel the country doing real-life dirty jobs –- the kinds of jobs real people perform “to make civilized life possible for the rest of us,†said Rowe, who will also appear in print and digital ads.
Navistar International Corp. will stop supplying diesel engines to Ford for its all-important F-Series Super Duty pickup trucks, just now hitting showrooms; and the automaker confirms its February sales will show a double-digit drop when reported later this week.
Ford’s President of the Americas Mark Fields reached out to the Detroit Free Press, which ran a
Page 1 profile of him in Sunday’s edition, in an apparent attempt to soften his image, get the troops on his side and show he’s got what it takes to turn around the automaker.
Fields, author of the automaker’s Way Forward recovery plan, has been under intense fire, most recently for missing various targets for sales. That has led to increasingly harsh criticism and speculation that he might be fired.
“I’m human,†he told the paper. “I would have liked to have gone faster.â€
A new book entitled Boeing vs. Airbus
, by veteran journalist John Newhouse paints anything but a glowing picture of Ford’s new CEO Alan Mulally, who was plucked from the aircraft manufacturer last summer to turn around the automaker.
Reviewed on Sunday by the suburban Detroit newspaper, The Oakland Press, the book chronicles the contest between Boeing and its European rival Airbus. It specifically blames Mulally for being slow to address some of the aircraft makers’ problems that finally led Airbus to overtake Boeing in sales.
It quotes former Boeing CEO Harry Stonecipher as saying he came close to firing Mulally, when he was president of Boeing’s commercial airplane business between 1998 and 2006. It notes the 777 program was more than $6 billion over budget. However, it concludes, the 777 program and Mulally’s career were saved by the boom in sales of new aircraft of the deregulated airlines in the early 1990s.
UAW President Ron Gettelfinger did have something to say about Ford. It’s not as bad off as everyone is making it.
His comment to Detroit radio station WJR came a day after one of the nation’s top auto economist expressed its extreme worry that Ford was running through cash quickly, which, in turn, would force major concessions by UAW workers to Ford. Sean McAlinden, chief economist for the Center for Automotive Research in Ann Arbor, Mich., said Ford could ask the union to cut wages and benefits by 20 percent for a $1.4 billion savings in this year’s negotiations. The union’s contract with Detroit automakers expires in September.
Gettelfinger said: "They just went through this huge financing. They've got a ton of cash. They've got great leadership at the top of that company. They've made some tough decisions, but so have we. That company is in great shape."
What Detroit automakers gain or don’t gain from upcoming contract talks with the United Auto Workers union will determine where domestic auto producers build future vehicles, one of the nation’s top auto economists told reporters this week.
Sean McAlinden, chief economist for the Center for Automotive Research in Ann Arbor, Mich., predicts hourly workers will have to give up more than ever before in order to protect U.S. assembly jobs. The UAW’s national contract with General Motors, Ford and Chrysler expires in September.
Ford is not meeting the goals of its Way Forward turnaround plan and employees are losing confidence, according to an internal report released to employees and obtained by the Detroit News. (It’s a subject I’ll discuss live on CNBC this morning at 11 a.m. EST)
Ford missed its retail sales goal in January and expects to miss goals again for February and March. The company did hit its material cost reduction target for January, but will miss targets for February and March by a wide margin, the Detroit News reported Friday.
Ford did not say if it can still meet its goal to be profitable in its North American Automotive Operations in 2009.
Edmunds.com's Inside Line reported yesterday that VW officials closed the door on longstanding speculation the company was eying the U.S. market for introduction of the Amorak, a midsize pickup that essentially could be seen as VW's interpretation of the Ford Explorer Sport Trac. In Brazil, one of the prime markets for the Amorak, media relations manager Gilberto dos Santos told Inside Line, "Volkswagen is not planning currently to market the Amarok in the U.S. 
SANTA MONICA, Calif. -- The still-deteriorating economy and the continued uncertainty about employment kept consumers away from buying new cars again in February despite the record-breaking deals available to them.
