New Passat Wagon Bows

New Passat Wagon Bows

Volkswagen on Wednesday released the first official pictures of the new Passat Variant - the Passat Wagon to American shoppers. Due for a formal introduction at the Frankfurt Auto Show in September, the Passat Wagon is expected to be offered with a 200-hp turbo four or a 3.2-liter V-6 in the U.S., along with a diesel model at some point in its life cycle. The new Passat Wagon goes on sale in the U.S. in the spring of 2006.

Future Cars: Volkswagen/Audi (5/16/2005)

Asian Brands Climb in Annual Brand Ranking

In an annual survey ranking global brand value put together by Interbrand Corp. and Business Week magazine, Toyota, BMW, Honda, and Nissan made gains while Mercedes-Benz and Ford continued to fall.

Toyota was ninth overall in the world with a global value of $24.8 billion, and gained 10 percent. Mercedes was 11th overall with a value of $20.1 billion, down 6 percent. BMW was 16th overall with a global value of $17.1 billion, up 8 percent. Honda ranked 19th overall at $15.8 billion, up 6 percent. Ford ranked 22nd at $13.2 billion, down 9 percent. Volkswagen ranked 56th at $5.6 billion, down 12 percent. Porsche ranked 76th at $3.8 billion, up 4 percent from a year ago. Audi ranked 79th at $3.7 billion, up 12 percent. Hyundai ranked 84th at $3.5 billion and was new to the Top 100 ranking. Nissan ranked 85th at $3.2 billion, up 13 percent.

Interbrand determines global brand value starting with those brands that are worth more than a billion dollars and derive at least one-third of their business outside of their home market. Interbrand then projects five years of sales earnings for the brand based on publicly available financial reports and deducts costs including operating expenses, taxes, and costs of capital to arrive at a value that can be ascribed to the brand. It’s a bit of a “black box” valuation, but one that the firm and magazine have been doing for five years. General Motors brands didn’t make the list because of the way the company is structured and because its brand tend to be regional. Cadillac, for example, does not derive a third of its sales and profit outside the U.S. Likewise, Vauxhall in the U.K.

The rises and falls in brand value seem to mirror the trend of sales, earnings, and brand performance as it can be determined from the success of the brands and individual products. Nissan, Hyundai, and Audi posted strong gains as all three have been enjoying great momentum from new product designs. Mercedes, Volkswagen, and Ford have all be falling in earnings and reception of new products. Interbrand global director Jan Lindemann says that VW is seeing a decline in brand value in part because its newest products are muddying what VW stands for in the global marketplace. The design of the new Golf, he says, was too conservative and product choices like the luxury Phaeton and Touareg SUV have created a situation where the VW brand counts for less in the overall value of the company. Meantime, Nissan has the opposite situation, he says, in that it’s been growing the value of its once moribund brand through expressive designs that generate higher sales profit per vehicle. The Ford brand has been falling on all cylinders in terms of profitability and reception of new designs. —Jim Burt

Survey Says Big Three Quality Soars by TCC Team (7/25/2005)
But convincing consumers isn't easy.

GM Challenges Chrysler on Commercials

A Chrysler Group commercial featuring Lee Iacocca has aroused the ire of General Motors and its corporate attorneys — and GM is putting Chrysler on notice that it wants the ads stopped. Chrysler won’t change the commercials, Reuters reports, because it insists that its vehicles do retain their value better than vehicles from GM or Ford, as the Lido ads say. General Motors, the news agency reports, takes issue with the way those value numbers are calculated. Chrysler says it used figures from Automotive Lease Guide, which pegs the average residual value of Chrysler Group vehicles at 41.8 percent after three years; ALG puts Ford at 40.9 percent and GM at 39.8 percent. GM claims that if Chrysler compared nameplates to nameplates, its vehicles would be on top. Chrysler officials told Reuters they had received GM’s letter and respectfully declined in return. None of the Big Three matches the residual value of Honda, at 53 percent, or Toyota, at 52.8 percent, according to the ALG.

Iacocca Back in Chrysler Commercials by TCC Team (7/11/2005)
All is forgiven for company's long-time CEO and chief salesman.

GM Sells Off Loans to Bank of America

 

In a move designed to strengthen its balance sheet, GM agreed to sell off $55 billion in auto loan receivables to Bank of America over the next five years. The move spurred GM shares three percent on Tuesday before giving some of that gain back in after-hours trading.

On the downside, the sale was a signal to some analysts that GM figures to do less auto financing going forward. GM’s credit rating was lowered to junk status last spring, which increases its costs of borrowing to cover loan financing. It also means that by holding fewer loans, GMAC’s earnings will likely be less going forward. GM is immediately offloading $5 billion in loans to BoA to initiate the agreement. GM will retain the servicing of the loans, which delivers fee income to the lender.

GMAC originates about $20 billion to $25 billion a year in retail auto loans in the United States. GMAC has been delivering higher earnings than the auto operations for some years now. GM needs the added liquidity so that it is free to use GMAC financing offers to drive sales of its vehicles. GMAC’s underwriting of auto loans tends to be easier for consumers than credit unions and banks.

GM posted a $1.1 billion first-quarter loss and a $286 million loss in the second quarter. The core North American auto operations lost $1.2 billion in the second quarter. —Jim Burt

GM Gets New Credit Rating Warning by Joseph Szczesny (7/11/2005)
Even in a strong year, GM and Ford still are hurting.

Nissan Earnings Up in Quarter

Though its earnings rose 10.7 percent in the most recent financial quarter, Nissan Motor Co. expects that its earnings for the year will be flat, due to pricing pressures in the U.S. and the higher cost of materials around the globe. The company's operating profit in the first quarter of the Japanese fiscal year, which ended in June, totaled about $1.85 billion and met targets, but net profit fell by 14.2 percent, Reuters says, because of accounting changes. Sales of Nissan-made vehicles rose 12.6 percent in the period, with the Altima and Pathfinder performing especially well in the U.S.; Japanese sales rose nearly 19 percent and sales in the rest of Nissan's markets were up by 18.2 percent.

Keep Employee Pricing, Lithia Urges Big Three

 

Employee pricing, currently offered by Detroit Big Three automakers, won endorsement Tuesday from the chairman and CEO of another publicly owned megadealer, Lithia Motors’ Sid DeBoer.

 

“If employee pricing sets the stage for permanent fixed pricing of new cars,” DeBoer told a conference call of investment analysts and media, “it will greatly simplify the sales process. Employee pricing gave new-car sales a big boost in June and so far in July, and I have urged the automakers to continue it indefinitely.” Lithia’s 88 dealerships, mostly in western midsize markets, comprise the eighth largest dealership group. The network raised its second-quarter sales 13 percent to $762.4 million from a year ago, DeBoer reported, as net profit rose 18 percent to $12.8 million. DeBoer said he expected foreign brands to adopt employee to stay competitive with the Big Three, with Honda being among the first to do so.

 

The subject of employee pricing has figured in all three megadealer reports on second-quarter financial results. UnitedAuto Group chairman and CEO Roger Penske touched on the issue last week, voicing his endorsement of “fixed pricing” as a solution for long-standing tensions between dealers and consumers in negotiations over prices and optional equipment.

 

The president and COO of Sonic Automotive, Jeffrey C. Rachor, took a less enthusiastic view of employee pricing Tuesday, saying the GM-pioneered incentive brought in traffic at Sonic’s 146 stores but “largely from those who would have bought later this year.” The “pull-ahead effect” of employee pricing was discounted by DeBoer, who said that for Lithia the main impact was to substitute purchase of a new car for a used one.

 

Sonic increased its second-quarter revenues 13.7 percent to $28 million, but reduced margins cut its profit to $28.7 million from $30.6 million a year ago. Lithia, based in Medford, Oregon, increased its quarterly dividend 50 percent to twelve cents a share. UnitedAuto Group, the second largest megadealer with 155 stores, is based in Bloomfield Hills, Michigan. Sonic, the third largest, is headquartered in Charlotte, North Carolina. —Mac Gordon

GM Sales Explode in June by Joseph Szczesny (7/4/2005)
"Employee discount" offer sends sales skyrocketing.

TCConfidential: Krugman Gets It Wrong - Again

 

Paul Krugman has some rather flaky opinions about the state of America. But we’re not a political site — and Krugman’s no car writer, which is why neither of us should try to cover the others’ territory. Except Krugman has tried — and has gotten it wrong when it comes to Toyota’s new plant in Ontario.

 

The plant is due to open in 2008; it’ll build 100,000 RAV4s a year and employ 1300 people. It will stand less than a hundred miles from Toyota’s existing plant that builds Lexuses and Corollas and Matrixes.

 

Now, getting a plant for some states is akin to winning a lottery — only the tickets for the lottery cost about $250 million, as they did for Alabama when they lured Mercedes-Benz to the state in 1993. In this case, Canada offered up a total of about $100 million in subsidies, far less than some U.S. states were bidding, apparently.

 

Krugman argues that America lost out on the plant (remember, it’s 1300 jobs, not the 4000 that Nissan brought to Mississippi) because American workers were “illiterate.” He cites a comment from a Canadian partsmakers’ booster group as his evidence. And in the process, he falls back on ugly stereotypes and simultaneously shows off the thin research he performs as habit to write his columns…

Read more in TCConfidential

FROM THE SOURCE headlines from the latest press releases

PRNewswire

Sonic Automotive, Inc. (NYSE: SAH), a leader in automotive retailing, today reported that its 2005 second quarter income from continuing operations was $28.7 million, or $0.66 per diluted share, compared to $30.6 million, or $0.70 per diluted share, in the prior year period. Revenue increased $248 million to $2.1 billion or 13.7 percent above the prior year quarter. On a same store basis, revenue increased 8.6 percent from the same quarter last year.

Name	Symbol	Last	Change
Autobytel, Inc.	ABTL	4.70	-0.03 (-0.63%)
Autoliv Inc.	ALV	45.00	+0.22 (+0.49%)
AutoNation Inc.	AN	21.28	-0.12 (-0.56%)
ArvinMeritor Inc.	ARM	18.93	+0.12 (+0.64%)
American Axle & Mfr. Holdings Inc.	AXL	25.71	+0.17 (+0.67%)
Ballard Power Systems Inc.	BLDP	4.76	-0.09 (-1.86%)
BorgWarner Inc.	BWA	58.40	+0.05 (+0.09%)
Cummins Inc.	CMI	85.26	+0.28 (+0.33%)
Dana Corporation	DCN	15.80	-0.10 (-0.63%)
DaimlerChrysler AG (ADR)	DCX	42.98	-0.18 (-0.42%)
Delphi Corporation	DPH	5.22	+0.12 (+2.35%)
Dura Automotive Systems	DRRA	6.68	+0.40 (+6.37%)
Eaton Corporation	ETN	66.01	-0.31 (-0.47%)
Ford Motor Company	F	10.86	+0.25 (+2.36%)
General Motors Corporation	GM	36.96	+1.09 (+3.04%)
Gentex Corporation	GNTX	17.72	+0.11 (+0.62%)
Goodyear Tire & Rubber	GT	17.34	+1.17 (+7.24%)
Honda Motor Co. Ltd. (ADR)	HMC	25.05	-0.01 (-0.04%)
Johnson Controls Inc.	JCI	58.24	-0.20 (-0.34%)
Lear Corporation	LEA	40.89	+0.04 (+0.10%)
Magna International Inc.	MGA	76.09	-0.21 (-0.28%)
Motorola Inc.	MOT	20.69	+0.15 (+0.73%)
Nissan Motor Co. Ltd. (ADR)	NSANY	20.20	-0.23 (-1.13%)
Sonic Automotive Inc.	SAH	23.51	-0.25 (-1.05%)
Siemens AG	SI	79.21	-0.05 (-0.06%)
Sirius Satellite Radio	SIRI	7.00
Toyota Motor Corporation (ADR)	TM	74.45	+0.04 (+0.05%)
TRW Automotive Holdings	TRW	25.54	-0.13 (-0.51%)
Tower Automotive Inc.	TWRAQ.PK	0.09	+0.02 (+25.00%)
United Auto Group Inc.	UAG	35.03	+0.24 (+0.69%)
Visteon Corporation	VC	9.00	+0.60 (+7.14%)
XM Satellite Radio Hold.	XMSR	36.45	+0.09 (+0.25%)