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Industry Report: Feb. 13, 2006


2008 ToyotaTundra: One Big Mother?

2008 Toyota Tundra

2008 Toyota Tundra

Enlarge Photo
2008 Toyota Tundra

2008 Toyota Tundra

Enlarge Photo
In a market increasingly dominated by imports, there's one segment still controlled by the Big Three. But maybe not much longer, at least not if the 2008 Toyota Tundra connects with demanding American full-size pickup buyers. The long-awaited update of the Toyota truck blew into the WindyCity on Thursday, and as one company executive suggested, "it's a big, bad mutha." The Tundra Double Cab Limited on display at Chicago's McCormickCenter, boasts a whopping 145.7-inch wheelbase, a full ten inches longer than the '06 Access Cab model it replaces.

The 5.7-liter V-8 under the hood of the show car will be one of three different engines Toyota offers when the new Tundra comes to market next January. (There'll also be a 4.7-liter V-8 and a fuel-stingy 4.0-liter V-6, according to Toyota Motor Sales CEO Jim Press.) The big V-8 is mated to a new six-speed automatic. The automaker was selective with statistics, declining to provide precise mileage, power, and performance statistics - perhaps hoping to see what General Motors will claim when it rolls out its own new full-size trucks later this year. But one number did generate a buzz among the attendant horde of automotive journalists: the new Tundra will deliver Class 4 towing capacity of up to 10,000 pounds. Toyota officials are clearly nervous that the big truck will skew downward their corporate fuel economy numbers, tarnishing an image otherwise burnished by the high-mileage Prius hybrid. So they took pains to promise that Toyota will maintain the best overall fuel economy of any full-line manufacturer. And company insiders hint a fuel-efficient diesel option is under development, as well.

2006 Chicago Auto Show Coverage by TCC Team (2/6/2006)

Boom Times for the Industry?

Last year was the third-best ever for the U.S. auto industry, but just barely. Sales were heavily driven by lavish incentives, and tumbled late in the year when the programs wrapped up. Volumes showed some improvement in January, and Toyota Motor Sales' Jim Press believes the figures will reach 17.2 million for all of 2006, which would be the industry's second-best year. But that's just setting the stage for the boom Press is predicting for the next decade. During the keynote speech at this year's Chicago Motor Show, the Toyota executive said "We believe annual sales of 20 million are in reach within the next decade." Press pointed to a variety of factors for his optimism, including the coming of age of Millennial drivers, booming immigration, and the general affluence of American motorists. It also helps to have Baby Boomers living longer than ever and planning to keep driving as long as possible. Press did admit there's a potentially dark side to automotive growth: rising demand for decreasing reserves of oil, for one thing, resulting in global warming and increased traffic congestion. Products like the high-mileage Prius hybrid are an example, said Press, of how cars can "become part of the solution, not the pollution." And he said that while there's clear demand for more highways, technology will be needed to squeeze more cars onto existing roadways without reaching gridlock. -TCC Team

Domestics Pose Sales Surprise in Jan. by Joseph Szczesny (2/6/2006)
GM, Ford and Chrysler all up for the month.

LaSorda: Reports of DCX Collapse Overdone

Tom LaSorda, the Chrysler Group chief executive officer, said despite reports to the contrary, it was premature to suggest that Chrysler's comeback is over. While the company has been reducing production of some vehicles such as the Dodge Durango to reduce inventories, it is using incentives to boost sales of other vehicles. But it also is preparing to launch ten new vehicles this year, which promise to create new opportunities for sales. Most of the new products won't hit the showroom until the second half of the year, he added. However, the Chrysler Group is already studying the feasibility of adding a third shift to its assembly plant in Belvidere, Ill. which is now producing the Dodge Caliber and soon will build the Jeep Compass and Patriot. Production at the Belvidere plant is expected to double this year, he added. The introduction of other new vehicles such as the Dodge Nitro also will boost Chrysler's sales totals this year. LaSorda, however, also stressed the company is taking a close look at costs and has already launched a study of GM's plan to cap the pension benefits and post-retirement healthcare benefits of workers, to see if similar changes make sense for the Chrysler Group. -Joe Szczesny

Zetsche Tightens Control on DC by Joseph Szczesny (2/6/2006)
New DC CEO is putting more distance between his and the Schrempp era.

Chrysler Going Its Own Way to Fuel Gains

Ethanol fuel clearly has a place in the U.S. market. "You need to be there with a product," said Chrysler Group marketing czar Joe Eberhardt. But unlike its cross-town rivals, Ford and GM, the DaimlerChrysler unit does not intend to make a big push for E85. Chrysler will focus more of its attention on another type of fuel that could improve mileage and reduce dependence on import oil, said Eberhardt. "We'll take a leadership role in diesels," he told TheCarConnection.com. Chrysler already offers a diesel version of its Jeep Liberty model and a version of its big Dodge Ram pickup. Eberhardt declined to say what other models might be in the offing, but he said diesel will definitely have more of a role at Chrysler. Part of the problem right now is that tough new emissions standards require the most advanced diesel control systems. But that technology won't work in the U.S. until low-sulfur fuel becomes available, about a year from now. Until then, diesels will largely be locked out of markets such as California and New York. But, added Eberhardt, "Eventually, I would see it (the diesel) having the same penetration as hybrids." -TCC Team

LaSorda Hits Cost of Litigation

Lawsuits are adding $500 to the cost of every car and truck sold in the United States, said one of DaimlerChrysler AG's top executives. Thomas LaSorda, the chief executive officer of DaimlerChrysler's Chrysler Group, said during a visit to the Chicago Auto Show that the legal system levies what amounts to a tort tax, which results in higher consumer prices, higher insurance rates, higher healthcare costs, and less innovation by American-based companies.

"Perhaps a little blue-collar grounding and manufacturing common sense could go a long way in making sense of the U.S. legal system. It would allow all of us in business to use more of our limited resources where they count," said LaSorda, who was raised in a working-class household in Windsor, Ont., across the river from Detroit.

LaSorda said he was prompted to look at the high cost of the American legal system during his drive to cut costs within the Chrysler Group, which has eliminated 40,000 jobs since 2001. "It was the one area where costs kept rising and I asked why," he said.

What he found was that the legal system, which he says allows witnesses in product liability cases to tell only part of the truth, is badly in need of reform. In many states, juries aren't allowed to hear whether someone involved in an accident was wearing a seatbelt or if they were driving under the influence of drugs or alcohol.

"We need to set some reasonable and fair limits on damages," he added. "For every dollar awarded in tort liability, the typical injured party receives only about 46 cents to compensate them for injuries. That means the majority of every dollar goes elsewhere," added LaSorda, who noted that lawsuits have become one of fastest growing industries in the U.S. and now generate more than $46 billion in fees annually.

The U.S. now spends about 2.23 percent of its GDP on legal fees and other costs associated with litigation while countries such as France, Japan, and Canada spend less than one percent of the gross domestic product on litigation. "In my business, we have a word for this kind of non-value added cost: waste," LaSorda said.


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