Variance

Mitsubishi Motors set to buy 20 pct stake in China carmaker Fri Feb 17, 5:01 AM ET TOKYO (AFP) - Japan's Mitsubishi Motors has reached an outline agreement to buy a stake of at least 20 percent in Chinese carmaker South East Motor (Fujian) from Taiwan's China Motor. Mitsubishi Motors, Japan's fourth-largest automaker and the only one now in the red, wants to expand its presence in mainland China. "We have agreed with China Motor that we will buy about 20-25 percent of the shares of South East Motor," said a spokesman for Mitsubishi Motors on Friday. "By the purchase of the stake we aim to strengthen our operation in China although the details of the agreement are still under negotiation," he said. An official at China Motor in Taipei confirmed an agreement had been reached in principle for it to sell a 20 percent stake in South East Motor (SouEast) to the Japanese automaker. The SouEast venture, established in 1995 with registered capital of 138 million dollars, was set up as a 50-50 joint venture between China Motor Corp and China's Fujian Motor Industry Corp. Fujian Industrial Motor Group's stake in SouEast will remain unchanged while China Motor will retain 30 percent after the sale to Mitsubishi. Mitsubishi Motors has previously said it planned to participate in the management of SouEast and make it a production and sales center of Mitsubishi cars in China. The deal will be Mitsubishi's second investment in a Chinese automaker. It already has a 16 percent stake in Changfeng Motor. The mainland China newspaper China Business News cited a top executive from China Motor as saying the deal would be wrapped up next month, ending negotiations that began more than two years ago. SouEast, a relatively minor player in China's booming auto market, has struggled as bigger rivals such as Honda and Toyota have battled for supremacy in the world's fastest growing market. SouEast sales in 2004 slumped to 60,069 units from 83,533 units a year earlier, according to the company's website. In May, SouEast's sales outlets will be integrated into the Mitsubishi network while new SouEast cars will also carry the Mitsubishi brand, the website says. Newly produced SouEast models will have Mitsubishi technology as well access to the company's after-sale services. Link: http://news.yahoo.com/s/afp/20060217/bs_af...wN5bnN1YmNhdA--

Delphi delays motion to void union contracts Friday 17 February 2006, 10:46am EST By David Bailey CHICAGO, Feb 17 (Reuters) - Bankrupt auto parts supplier Delphi Corp. on Friday said it would delay to the end of March filing court papers to void its labor contracts and to cut retiree benefits, citing progress in talks with unions and its former parent General Motors Corp. A filing, which could have come as early as Friday, would not immediately have led to a strike at Delphi, which in turn would quickly cripple U.S. automaker GM. However, it was seen as likely heightening tensions in the complex negotiations among the three groups. Delphi filed the biggest bankruptcy in U.S. automotive history last October amid market share losses at GM and wage and benefit costs inherited from the world's largest automaker when it spun Delphi off in 1999. Delphi said it would file the motions no later than March 31 if it cannot reach an agreement with GM and the unions to slash U.S. wage and labor costs. The new date is firm, while prior deadlines had been flexible. Discussions so far have helped frame the concerns for each group, though major obstacles and difficult issues remain, Delphi Chief Executive Steve Miller said in a statement on Friday. "It is a small, but positive sign," Morningstar analyst John Novak said. "They still have a ways to go. Reaching a win-win is going to be extremely difficult." GM's interest in Delphi is two-pronged: Delphi's parts production is crucial to its operations and the automaker remains liable to cover benefits shortfalls for Delphi's hourly workers under the terms of the 1999 spinoff. BILLIONS AT STAKE FOR GM Analysts believe GM could burn through billions of dollars per month if it was forced to shut down its North American operations because of a parts-choking strike at Delphi. From the outset, Delphi has said that it must cut its labor costs in the United States drastically, and close a significant number of plants, drawing heavy opposition from its unions. Delphi is not the only auto parts maker seeking wage and benefits cuts through court protection. Tower Automotive Inc. (TWRAQ.PK: Quote, Profile, Research), which also filed for bankruptcy in 2005, has asked a bankruptcy judge to toss out its labor contracts, with a hearing set to start on Feb. 27. Union hourly workers at Tower have authorized leaders to call a strike if a judge voids their contracts. At its bankruptcy filing, Delphi had about 34,750 U.S. hourly workers, including roughly 24,000 represented by the United Auto Workers and 8,500 by the industrial arm of the Communications Workers of America. Delphi, GM and the UAW released statements within minutes of each other on Friday, signaling a coordinated announcement that talks were ongoing, but acknowledging that much work remains. The UAW said the delay was "certainly a positive action," while GM said its goal remains to pursue an outcome that serves its stockholders' best interests and enables Delphi to remain an important supplier to the world's largest automaker. Delphi had said it could defer filing with bankruptcy court in New York if it saw sufficient progress toward an agreement. A hearing would have been scheduled to start on March 21. Shares of GM were up 31 cents, or 1.39 percent, at $22.59 Friday on the New York Stock Exchange. The automaker's bonds were up 1-1/4 point early in the day and rose another 1/2 point after the Delphi news, according to MarketAxess. Link: http://today.reuters.com/business/newsarti...5&imageid=&cap=

The Magnificent Three.

It was kind of warm yesterday here. (As warm as CT can get in winter, anyway...)

TCC: Spy Shots: 2007 Chrysler Sebring Man, Chrysler is really bad at keeping this hidden. I think this is the fourth set of spy shots on this car. There's a great, clear picture of what the interior looks like. It's kind of a mix of art-deco and Rubbermaid.

Actually, they say more than the 760i (no "L" -- short-wheelbase) and on paper it's true with the expection of shoulder room. But if it doesn't feel like it, it must be a bad interior layout/packaging.

Rick James

Chris Farley

Vehicles are often compared on pricepoint and ranking within a brand rather than size. The CTS and G35 may be closer in size to the 5-Series than the 3-Series but the G and CTS are the entry-level sport sedans within their respective brands with prices closer to the 3-Series.

I agree but If they can't cram an airbag in it, you're likely not going to see a production Camaro with that wheel. There's always the aftermarket, though.

Yes, one of the best Top Gears ever.

New Accord Hybrid fails to deliver on price and fuel By Paul & Anita Lienert If you're a sharp-eyed consumer, you might be wondering about the curious changes that have been made to the redesigned 2006 Honda Accord Hybrid, which is only in its second year of production. We're not talking about dramatic sheet-metal renovations. We're talking about an increased sticker price and a significantly lowered fuel economy rating. What's up with that, we wondered, and then spent a week testing a top-of-the-line model equipped with a navigation system. Bottom line on our test 2006 Honda Accord Hybrid: $33,540, including $550 for shipping. SHE : Maybe I've been clipping coupons and comparison shopping for too long. But when I recently saw the price of the 2006 Accord Hybrid -- $850 more than last year -- and the revised fuel-economy numbers, I called Honda. I was confused because Honda said the EPA ratings on the Accord Hybrid have been changed from 29 mpg in city driving and 37 mpg on the highway in 2005 to only 25/34 mpg for the 2006 model. But it is the same engine. HE: Ok, Inspector Clouseau. Did your glasses just need an adjustment? SHE : Not hardly. Although Honda won't come right out and say it, the new fuel economy ratings on the 2006 Accord Hybrid more accurately reflect real-world results by consumers, which is something I griped about when we reviewed the '05 model. During that test drive last year, we averaged about 21 mpg, way less than what the EPA and Honda said we should expect. HE: If the regular 2006 Accord sedan equipped with an in-line four-cylinder engine and a five-speed automatic transmission already gets 24 mpg in the city and 34 mpg on the highway and costs thousands less than the hybrid, why would you even bother buying the more expensive gas/electric version? SHE : Hold on a minute. Honda has made some changes to the 2006 Accord Hybrid. Vehicle stability control is now standard, which beefs up an already great slate of safety features, including antilock brakes and side air bags and side curtain air bags. The car gets a face-lift, including a rear spoiler, unique alloy wheels and heated side mirrors with built-in turn signals and a standard moonroof and a temporary spare tire. HE: That spoiler is totally superfluous. You should point out, too, that the fuel economy figures aren't the only Accord Hybrid stats to drop. There's also been a reduction in horsepower, albeit a slight one. Despite the carryover of the car's 3.0-liter V-6, the horsepower ratings change from 255 for the 2005 model to 253 for the 2006 model. Honda says this reflects its voluntarily adopting new Society of Automotive Engineer ratings specifications. SHE : Wow. You almost have to be an accountant or engineer to keep all these numbers in your head. I'm glad the Accord Hybrid is equipped with an instrument panel "meter display" that helps you to keep track of what kind of fuel economy you're getting. In a 200-mile test drive, we averaged 23.5 miles per gallon. On a short stretch of road, our best fuel-economy rating was 31 mpg, according to the readout. HE: The Accord Hybrid has lots of power, it's very well equipped and easy to operate, just like the previous model. The electric motor is almost totally transparent. I found the ride to be smooth and compliant. So it's got a lot of pluses. But I did have some gripes. The electric power steering feels too vague, and I noticed some suspension and tire rumble at highway speeds. SHE : We're both in favor of hybrids, on paper. But as companies and consumers get a reality check on just how much -- or how little -- they help conserve fuel and the costly price you pay as you struggle toward that goal, it's often getting harder and harder to argue in their favor. 2006 Honda Accord Hybrid with navigation Type: Front engine, front-wheel drive, 5-passenger sedan. Price: Base: $33,540 (inc. $550 destination charge); as tested, $33,540. Engine: 3.0-liter V-6 plus electric motor; 253 hp; 232 lb-ft torque. EPA fuel economy: 25 mpg city/34 mpg highway. Where built: Marysville, Ohio. 12-month insurance cost, according to AAA Michigan*: $1,274. (Estimate. Rates may be higher or lower, depending on coverage, driving record.) Paul: Likes: Smooth, compliant ride. Plenty of power from V-6 engine. Electric motor is almost totally transparent to the customer. Very well-equipped. Familiar and easy to operate. Dislikes: Pricey at $33,000. Our real-world mileage was lower than the revised EPA ratings. Electric power steering feels too vague. No outside temperature gauge. Rather not pay for the standard moonroof. Deck spoiler is superfluous. Anita: Likes: Five-star safety features, including standard stability control. Totally mainstream -- no extra buttons, levers or gadgets to operate. Very well-equipped. Power moonroof now standard. No direct competition until the new '07 Toyota Camry Hybrid arrives this fall. Navigation system was fairly easy to operate. Dislikes: Hard to justify the price tag, especially when you compare it to conventional Accord. Despite a face-lift, unremarkable styling inside and out. Battery pack robs trunk space. Link: http://info.detnews.com/autosconsumer/auto...ex.cfm?id=22157

In light of the G6 concept to production interior disappointment, I'd advise to keep hope in check about that. Then again, the Enclave concept interior is claimed to be what the production interior will look like for the most part. We'll see about that. I can tell you that I don't see the leather-stitched dash, a lot of the chrome, or the steering wheel making it to production, though.

Bricklin Finds More Funds for Chery By Global Auto Systems Staff February 16, 2006 Chinese automaker continues to move ahead with U.S. entry plans. NEW YORK—Malcolm Bricklin said his Visionary Vehicles, which hopes to begin importing cars next year from China’s Chery Automobile, has secured $225 million in additional funding. Bricklin said the company expects to announce a full network of 125 U.S. dealers by May. Bricklin, the entrepreneur best known for importing the inexpensive Yugo in the 1980s, has been touting Chinese cars and the Chery brand for more than a year. Bricklin has disclosed ambitious plans to sell a broad range of attractively priced vehicles, including hybrid gas-electric models, and eventually to assemble the Chinese designs in North America. The new funding is coming from Atlantic Pacific Capital, an investment banking firm. In an interview with Reuters, Bricklin said the money will be used for product development at Chery. Visionary still has not chosen a brand name for the Chery vehicles it hopes to sell in North America. General Motors has threatened to sue, claiming the Chery name is too close to its own Chevy. The company plans to sell a range of vehicles that includes a sedan, a crossover vehicle, a sport-utility vehicle, and a sporty two-door with a retractable hard top, with prices starting under $20,000. Link: http://globalautosystems.com/index.php?opt...id=257&Itemid=2

Wide-body Cadillac CTS-V could debut for 2007 By Ed Hellwig Email Date posted: 02-16-2006 The current Cadillac CTS-V isn't the BMW M5 killer General Motors hoped it would be. With the introduction of the more powerful 2006 M5, the CTS-V is 100 hp off the mark. Add in its lame interior and its vague steering and the Caddy's $50,000 price doesn't look like such a bargain. We know a full-blown redesign of the CTS is already a done deal, but our latest spy photos show a prototype that hints at the possibility of a midcycle upgrade for the CTS-V. Caught testing at GM's Milford proving grounds, this prototype wears extended bodywork from nose to tail similar to Cadillac's CTS-V racecars. We've seen CTS prototypes like this before circling the Nürburgring, but they rarely had the level of fit and finish visible on this test car. This prototype also has a standard set of rear exhaust pipes. On the racecar the pipes poke through the bodywork ahead of the rear wheels. And it's not just the bodywork that looks suitable for production. Check out the wheels and tires. Instead of ultralightweight O-Z racing wheels and low-profile slicks, this prototype is riding on wheels with the same design as the current CTS-V. They're not exactly the same, however, as you can clearly see that these wheels have lots of offset to accommodate wider tires. The change isn't just functional, it emphasizes the car's rear-wheel-drive setup. It's a styling trick BMW has used for decades now; it's about time Cadillac caught up. If this car does turn out to be an actual production model, there will be more than just wider bodywork and a new set of wheels and tires to talk about. We would expect nothing less than a serious suspension upgrade along with the installation of the 505-horsepower, 7.0-liter LS7 V8 from the latest Z06 Corvette. This would put the CTS-V right back into the same league as the 500-hp 2006 BMW M5 in terms of power and at least a little closer when it comes to handling and steering feel. Throw in an upgraded interior and the CTS-V would start looking like a bargain again. Link w/photos: http://www.edmunds.com/insideline/do/Featu...rticleId=109332 ----- Question time: Why are they saying the CTS-V is a M5 competitor? That's the STS-Vs job. And they must be snorting something heavy if they expect to see the Z06's powertrain in there.

The upcoming Equus looks promising, though (the interior at least). http://www.edmunds.com/insideline/do/Featu...rticleId=106903

I see. I just read the article more closely. It looks similar in concept to Hyundai HCD9 Talus Concept, just shrunken-down.

I picture it as more of an FJ Cruiser competitor, if anything.

RAV4 Fighter Geneva concept previews VW's upcoming small SUV By GREG KABLE AutoWeek | Published 02/16/06, 3:06 pm et Volkswagen is getting adventurous. The Concept A, making its public debut at the Geneva motor show later this month, is a precursor to VW’s all-new compact four-wheel drive SUV, planned to launch in the United States in 2008. Billed as a four-door coupe with go-anywhere capability, the production version of the one-off show car will be less flamboyant in production form. Still, now that Wolfgang Bernard is calling the shots in Wolfsburg, the small SUV is crucial to VW’s efforts to give its North American sales a desperately needed boost. Like the Concept A, VW’s upcoming Golf-based SUV (it will be priced to compete against the Toyota RAV4 and Honda CR-V) will have its transverse-mounted engine delivering power permanently to all four wheels via a Haldex multi plate clutch—the same combination used in the 4wd Golf 4Motion and Golf R32. In production the new ute will also have the concept’s taut lines and neat detailing, VW says. So get used to that bold front end: VW claims the Concept A previews the production car’s face, all the way down to its curvy headlamps, brushed aluminum grille and prominent wheel arch flares. The raised ride height and considerable ground clearance also help provide the characteristic off-road look, played to full effect by 20-inch alloy wheels shod with chunky 295/40 profile tires and exposed rear suspension—both aimed at communicating the new car’s off-road capability. Also look for the heavily shouldered flanks, split tailgate and tail lamp design on the production car. The biggest change, according to highly placed Volkswagen officials, will be the roofline, which is set to forgo the sloping effect applied to the Concept A for a much straighter structure. VW claims this will give the Touareg’s baby brother with class leading versatility, and the more upright rear end will add luggage capacity. The one-off show car’s expensive coach style doors will be replaced by conventional front hinged ones, with a B-pillar set to provide the sort of rigidity required in off-road driving. At 171 inches long, 72 inches wide and 61 inches tall, the Concept A is six inches longer, four inches wider and two and a half inches higher than the fifth-generation Golf. The wheelbase is three-fourths of an inch longer than the Golf’s; the additional length and differing proportions being achieved via slightly longer front and rear overhangs as well as a rather shallow glass house topped with a fully retractable sunroof. Considerable attention has been paid to the Concept A’s interior, which boasts a luxurious mixture of stitched black leather and brushed aluminum. There’s seating for five, although the middle rear seat looks cramped. The center piece of the elegantly styled dashboard is a large singular dial that doubles as both a speedometer and rev counter, while also housing a secondary monitor for satellite navigation commands and other information. Powering the Concept A is Volkswagen’s 148 hp, 1.4-liter direct-injection Twin Charger engine, recently launched in the European market Golf GT. The engine has both a supercharger (for solid low-end pull) and turbocharger (for a strong top end). Other engines are rumored for production, including the Golf GTi’s 197 hp turbocharged 2.0-liter and Golf GTD’s 170 hp 2.0-liter turbodiesel. Link: http://www.autoweek.com/apps/pbcs.dll/arti...1024/LATESTNEWS

A strike at Delphi could cripple GM -- analysts Wed Feb 15, 2006 4:28 PM ET Printer Friendly | Email Article | Reprints | RSS By Jui Chakravorty DETROIT (Reuters) - As the deadline for Delphi Corp. to ask a court to void its union contracts edges closer, analysts worry a strike at the auto parts maker -- General Motors Corp.'s largest supplier -- would deepen the financial crisis at the automaker. Bankrupt Delphi Corp. has threatened to ask the court to void its contracts with the United Auto Workers union if it cannot reach an agreement by Friday to lower labor costs. This could result in a strike, which could shut down plants and force GM to burn through billions of dollars, according to analysts. "A work stoppage that shuts down GM's North American operations would result in cash burn of around $5 billion per month," JP Morgan analyst Himanshu Patel wrote in a research note. "The working capital outflow could begin to diminish after the first month, but GM's desire/ability to sustain a strike beyond a month seems low." In November, UBS analyst Rob Hinchcliffe said a strike at one or two strategic plants would force GM to use up $19 billion in cash and liquid assets in about 10 weeks. Deutsche Bank analyst Rod Lache also said that month that GM may burn through $13 billion in cash if a strike were to last a quarter. Some analysts said GM is considering offering buyouts to Delphi workers. GM, which spun off Delphi in 1999, has said it could be on the hook for as much as $12 billion in contract obligations to its former employees as Delphi demands deep pay and benefit cuts from the union. The world's largest automaker lost $8.6 billion in 2005 due to high labor and commodities costs, loss of U.S. market share to foreign rivals and sluggish sales of sport utility vehicles. As part of a broader restructuring effort, GM has said it plans to slash 30,000 jobs and close a dozen facilities through 2008. If talks fail and a bankruptcy court tosses out Delphi's labor contracts, union workers could strike the auto parts maker -- a move that would halt GM production quickly, hampering new vehicle launches critical to GM's success. GM is currently ramping up production of the critical T-900 series -- redesigned SUVs that are more fuel efficient. "We believe a protracted strike which affected this launch should be viewed as a significant "opportunity cost" for the company," Patel said. A 1998 strike at Delphi essentially halted GM's North American operations for nearly two months. GM spokesman Jerry Dubrowski said the three parties are in talks. "We continue to be in discussions with Delphi and the UAW, to reach an agreement that would allow Delphi to emerge as an important supplier to GM, but also that would make sense for GM and its stockholders," he said. A UAW spokesman said the talks were "ongoing," but refused to disclose any details. "(An agreement) is very complicated, but doable," David Cole, chairman of the Center for Automotive Research, said in reference to the possibility of Delphi, GM and the unions eventually reaching an agreement on cost cuts. It is in the interest of the judge and the parties to work this out and they are making some progress, he added. To compound matters, GM is in talks with potential partners to sell its finance arm, General Motors Acceptance Corp., in an effort to restore an investment-grade rating to GMAC. "One of the likely sticking points in the pending sale of GMAC may well be resolution on Delphi, further emphasizing GM's interest in avoiding a labor dispute," Patel said. The industrial arm of the Communications Workers of America, which represents about 8,500 Delphi workers, is also involved the discussions. IUE-CWA spokeswoman Lauren Asplen said there had been little interaction with Delphi so far, but the union expects to continue talking even if Delphi files the motions on Friday. The union would not be free to strike until the contracts were tossed out by the bankruptcy court, something that would be many weeks away, but a filing would add "unnecessary pressure," Asplen added. Link: http://today.reuters.com/business/newsarti...M-DELPHI-DC.XML

FYI: That's not a Cobalt. It's a Metro. Carry on.

Humvee's replacement may be a hybrid Posted Feb 16th 2006 9:30AM by John Neff Filed under: Hybrids/Alternative, SUVs The current military-issue Humvee will be replaced by 2011, with contracts being awarded to suppliers sometime in 2009. At the moment the Army and Marine Corps are researching hybrid drivetrains for the Humvee replacement, with the Army conducting research on six different hybrid Humvees and the Marine’s testing the RST-V (Reconnaissance, Surveillance, Targeting Vehicle) that employs electric motors in each wheel hub, just like Mitsubishi's Concept-CT unveiled at the Detroit auto show. Hybrid technology is particularly attractive to military types because it’s capable of near-silent operation when running solely on battery power, provides a source of electricity for troops out in the field, and offers better acceleration in short bursts than either its diesel- or gas-only counterparts. The Hybrid Humvee, however, could be eclipsed by even more advanced hydrogen fuel-cell powerplants almost as soon as it reaches the battlefield. Since everyone says these guys and gals do more before 7AM than most people do all day, we should expect a commercially viable hydrogen fuel cell vehicle from them by next Wednesday. Link: http://www.autoblog.com/2006/02/16/humvee-...ay-be-a-hybrid/

Chrysler Hopes to Consolidate Dealerships Voluntary program targets Toyota's per-store sales By MARY CONNELLY | AUTOMOTIVE NEWS AutoWeek | Published 02/16/06, 10:06 am et In a bid to boost dealership profits and sales, the Chrysler group wants more metropolitan stores selling the company's three brands under one roof. "One thing that is very important to us is if our dealers are profitable, and a key to profitability is throughput," says Mike Manley, Chrysler group vice president of dealer operations. Throughput is the number of new vehicles a store sells annually. Combining Chrysler, Jeep and Dodge in a single metropolitan store increases sales volume beyond what the brands would sell in separate stores, strengthening dealer profits, Manley says. Well-capitalized dealers with up-to-date stores, large inventories and the money to attract and train top-notch employees boost volume, the company says. Currently, about 150 of the Chrysler group's 1,150 metropolitan dealerships are selling the three brands, he says. Chrysler's so-called Alpha strategy encourages profitable large-volume dealers - both inside and outside the company -- to acquire poor performers. The program is voluntary, Manley says. It will reduce Chrysler's dealership count, but the company is not saying by how much. "We don't have a target number for Alphas," Manley says. "But long-term, you will see more Alphas. We have a number of markets where we have too many dealers, and it is difficult for dealers to make the level of profit we want." Eye on Toyota Chrysler wants a network of large, profitable dealerships that can compete with industry leaders such as Toyota for vehicle sales per store. "Toyota dealers on average have significantly more throughput than our dealers do," Manley says. "And we know that throughput is a key indicator of the profit opportunity for a dealer." Toyota Division averaged 1,487 new light-vehicle sales per dealership in 2004. The Chrysler brand averaged 223 new units per dealership, Dodge averaged 405 units and Jeep's average was 169 units. The Alpha strategy boosts volume, says Cory Shea, vice president of Central Florida Chrysler Jeep Dodge in Orlando. "I have an Alpha store in Orlando and a single-point Dodge store in Nashville, Tenn., and I am working around the clock to Alpha the Dodge store," Shea says. More inventory Why the enthusiasm? "It doesn't cost any more to facilitize all three franchises in one place," Shea says. "I don't have to buy a building, my electric bill doesn't go up, my fixed costs don't change." And sales increase because inventories are larger, Shea says. "Chrysler has done a wonderful job in the last couple of years of diversifying Chrysler, Jeep and Dodge," he says. Each product line is distinct, he says. The Orlando store opened in May 2003. The three franchises were additional points because the market needed more dealerships, Shea says. In Nashville, he says, "we're working diligently at some buy/sells and acquisitions." Chrysler's Manley says that "by far the majority" of the Alpha stores are created when one dealer in a market wants to expand and approaches another dealer. "They put together the deal and come to us and say, 'This is what we want to do'," he says. "But there are times we will talk to our dealer body in a market where we see there is a situation that needs to improve," Manley says. "We talk to the parties involved about how you would resolve the situation." Getting it right Dealership consolidation is critical to the Chrysler group's strategy of profitable sales growth. "If we don't have the right dealers in the right markets, it affects our volume," Manley says. Dealers do not feel pressured to sell to create Alpha stores, says Andy Palmen, chairman of the Dodge National Dealer Council and owner of Palmen Motors (Chrysler-Jeep-Dodge) in Kenosha, Wis. But metropolitan stand-alone dealers do worry about the larger dealerships, he says. "The dealers that can get all three franchises view it as very positive," Palmen says. "The dealers that aren't in a position to get all three are more concerned about their franchise as a stand-alone." The Northeast has a history of dealership crowding, Manley says. "In New York, Chicago and Boston, the domestic manufacturers have significantly more dealers than new entrants like Toyota and Honda," Manley says. Dealership sales up Dealer Bill Golling opened Golling Chrysler-Jeep-Dodge in Bloomfield Hills, Mich., in a new 83,000-square-foot store in July 2005. "I was in six different buildings (operating three different franchises)," Golling says. "If we were just Chrysler-Jeep or just Dodge, this would not have been possible to do. You need the throughput of all three brands." Golling will not specify his investment, except to describe it as considerable. "Our sales have gone up about 20 percent," Golling says. "In December 2005, we did 691 units new. A year ago we were in the low 500s." "We have established a sales forecast that is up for this year over last," he says, declining to provide numbers. In 2005, new-vehicle volume totaled 5,100 units. "We have been as profitable every month as we were beforehand in spite of the launching expenses," he says. "We had to move, relocate everybody, buy new furniture and new showroom furniture." The appeal of the new store and a large inventory boosts sales, Golling says. "The facility, the branding, the location, the street presence we have," he says when asked what contributes to the sales increase. "In the old buildings, the most we could keep was about 80 cars. Now we have 800." "The showroom is much more comfortable and inviting. We have a child's play area. We have a cafe so you can eat while you are waiting for service. We have a wireless waiting room overlooking service." He adds: "There is no way I would want to go back." Product bonanza Neither would Cass Burch, owner of Cass Burch Chrysler-Dodge-Jeep in Quitman, Ga., a suburb of Valdosta. "People are looking for ways to save themselves some time," Burch says. "In an Alpha store you can look at three brands that have a lot of variety." Customers are more likely to buy and less likely to leave the store to do more shopping, he says. "My store sells 11 times what the planned penetration is for my market," Burch says. Burch also owns Cass Burch Chrysler, a 25,000-square-foot stand-alone Chrysler store in Valdosta. Sales at the two stores combined total about 1,000 new vehicles annually, he says. Both dealerships were built within the last four years. "I see the expenses under a microscope in my own stores," he says. An Alpha store streamlines staffing and operations, he says. "You create savings," Burch says. "And every dime you save is a dime made." But for Burch, future product is the strongest argument for an Alpha store. "We aren't rolling the dice on two or three cars and hoping one hits," he says. "If you've got an Alpha store, you have 20-something new vehicles coming out over the next 30 months," he says. "That is almost one new vehicle every month for the next two and a half years. You can unveil something fresh in your store every time you flip the calendar. "And product is the absolute remedy to every problem we've got in this industry." Big metro players Selling Chrysler, Jeep and Dodge under one roof in metro markets will boost per-store sales, the company says. 2005 Average annual light-vehicle sales per store Toyota Division 1,487 Chrysler brand 223 Dodge 405 Jeep 169 Link: http://www.autoweek.com/apps/pbcs.dll/arti...E/60213012/1041

Hyundai Hopes New Ad Campaign will Equate Azera with Luxury By GREG BOWENS | AUTOMOTIVE NEWS AutoWeek | Published 02/14/06, 9:01 am et DETROIT -- Hyundai Motor America is earmarking 20 percent of its media advertising spending this year to launch the Azera -- its first foray into the premium market. To help pay for the launch of the mid-sized sedan, Hyundai officials say they are boosting the company's media spending by as much as 40 percent in 2006. "We know we have a job to do with a new name, a new product, in a new segment for us," said Michelle Cervantez, Hyundai's vice president of marketing. "We want to make sure consumers understand that this is a Hyundai you may not have experienced in the past," Cervantez told Automotive News at last month's Detroit auto show. Cervantez would not disclose the cost of the Azera launch. Hyundai division spent $232.2 million to advertise in U.S. media in the first half of 2005, according to TNS Media Intelligence. The Azera went on sale late last year. A national TV advertising campaign for the car, called "Ripples," began this month. The base-model Azera lists for $24,995, including shipping. Cervantez says Hyundai seeks to gain conquest sales for the Azera from such cars as the Ford Five Hundred and Nissan Maxima. Other sales leaders in the mid-range premium segment are the Chrysler 300, Buick LaCrosse, Dodge Magnum and Volkswagen Passat. Sales in the segment rose by 51.4 percent last year over 2004. Bring it on Hyundai dealers say they are looking forward to the Azera ad campaign. "Our expectations are high," says Jimmy Ellis, of Jim Ellis Hyundai of Atlanta. "We have sold a good many more (Azeras) than we did when (Hyundai) launched the XG350. That came with a lot of fanfare and a lot of noise. But it has taken the market a while to adjust to the idea of an expensive Hyundai." Says Bill Drew, of Drew Ford-Volkswagen-Hyundai-Isuzu in La Mesa, Calif.: "People have to know about the vehicle first. That will take some time. It will get us into the game and into the upper-end arena we have been trying to get into." The Azera TV spots will run on broadcast networks and on such cable networks as Fox News Channel, CNBC, Travel Channel, National Geographic Channel and Fine Living. The print campaign will appear in March editions of such magazines as Golf Digest, SmartMoney, Newsweek, Forbes and The New Yorker. Hard road Industry analysts say Hyundai, a brand known for value, faces an uphill climb in establishing the Azera in the premium segment. "The Azera may be the most successful automobile to ever roll out of an assembly plant, but I am not going to put 50 cents on it being successful," says Michael Bernacchi, a marketing professor at the University of Detroit Mercy. "Developing a brand in the upscale range is very difficult." Consumers who buy costlier vehicles seek the status of an upscale brand, Bernacchi says. Hyundai, he says, does not connote status. Jesse Toprak, an analyst for the automotive Web site Edmunds.com, says Hyundai has a history of loading up its vehicles and offering them at bargain prices. "If they essentially offer people $40,000 worth of car for less than $30,000, they could be successful," Toprak says. "That's how they went head-to-head with Toyota in the small-car segment." Hyundai's Cervantez says the company is eager to chip away at its bargain image with the Azera campaign. "We can't have any patience," Cervantez says. "I think our patience is done. We need to get out there." Link: http://www.autoweek.com/apps/pbcs.dll/arti...1024/LATESTNEWS

GM is Among Both Most and Least Trusted Firms in US By BRADLEY JOHNSON | AUTOMOTIVE NEWS AutoWeek | Published 02/14/06, 9:02 am et General Motors is loaded with debt and is the subject of bankruptcy speculation. But give it credit: GM scores tops for trust among U.S. consumers. There's a downside, though: GM also shows up on the list of companies that Americans trust least. These are among the findings of the American Demographics 2006 Consumer Perception Survey. The survey was conducted by Synovate for Advertising Age, which, like Automotive News and AutoWeek, is published by Crain Communications Inc. Last November, the online survey sought the views of more than 6,000 consumers in the United States and western Europe. Here's what they had to say. For all industries regardless of location, what's the most trustworthy company? The least trustworthy? The General rules: 9.3 percent of U.S. consumers cited GM as the company to trust among automakers. Ford and Toyota tied as the second most trustworthy companies. Honda followed. Ford scored first among lower-income households. Toyota came out No. 1 in households with annual incomes of more than $75,000. Consumers with high school diplomas chose GM as their most trusted company. Those with college or graduate degrees put their trust in Toyota. The oldest consumers trust Detroit: GM (the favorite of Americans between the ages of 55 and 64) and Ford (first for 65-plus). Honda was the top pick for 25-to-34-year-olds. But 18-to-24-year-olds also ranked GM first, ahead of Honda. Now the bad news: American consumers' picks for the five least trustworthy companies include GM, Ford and Kia. Kia's score -- 3.6 percent of U.S. consumers listed it as least trustworthy -- reflects its perception problems. Kia's corporate parent, Hyundai, scored least trustworthy for 1.8 percent of consumers. Thomas Mularz, senior vice president of Synovate, says these scores may reflect consumers' continued misgivings about Korean cars. "They have a big uphill battle," he says. Mercedes-Benz is the most-trusted automaker among consumers in western Europe. The least trusted: Fiat, followed by Kia. What company's advertising is most believable? What company's advertising is most at odds with its image, reputation or product? First place in advertising credibility for U.S. consumers was a virtual draw among the world's three largest automakers. GM was listed by 7.0 percent of consumers, Toyota and Ford by 6.9 percent apiece. Honda came in fourth with 4.3 percent. GM had its highest credibility scores among older consumers and in households with annual income of less than $50,000. Toyota's ads were tops in credibility among younger and wealthier consumers. "Toyota has a very favorable image, especially in the States," Mularz says. Asked which advertiser was least credible, 7.0 percent of consumers named Ford, followed by GM (5.7 percent), and Kia (3.1 percent). When do you expect to be driving an alternative-fuel vehicle? On average, Americans don't expect to switch to gasoline-electric hybrids or other alternative-fuel vehicles until 2025. One of every nine drivers doesn't expect to make the switch in his or her lifetime. Younger, wealthier, better-educated and West Coast consumers expressed the greatest optimism about alternative-fuel vehicles. Consumers between the ages of 25 and 34 say they expect to switch in 13 years on average. Consumers with household incomes of more than $75,000 expect to switch within 14 years. How we react A recent survey asked American consumers to identify the first thing that came to their minds when they thought of automakers. These were among the responses. General Motors Positive comments about product (more mentions of "good" than "bad" for vehicles and quality), but many negative views of business (poor management, job cuts, bankruptcy) Toyota "Reliable," "quality," "economical" - a clear and consistent image Link: http://www.autoweek.com/apps/pbcs.dll/arti...1024/LATESTNEWS