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Industry Report: Feb. 13, 2006 Page 2

LaSorda also said, "There is no question that the employer-based healthcare system is broken. While other countries have found a way to help their businesses with the burden, we've not done this in the United States. Healthcare is an important structural issue that needs to be addressed but this will require long-term solutions across all industries," added LaSorda. -Joe Szczesny

OnStar Readies New Service

General Motors Corp. used the tenth anniversary of OnStar's introduction back in 1996 to bring on a new service that offers drivers directions through the car's audio system. The new system will eliminate the need for video screens and helps the driver keep his eyes firmly on the road, according to Chet Huber, OnStar President. Users call an OnStar advisor and ask for directions. In turn, the advisor, using GPS, sends the most direct, step-by-step directions to the vehicle via the OnStar system. Audio directions are then played through the vehicle's stereo system when they are needed even if the driver is playing the radio or a CD. A small display on the instrument cluster also can be used to relay text directions. The system also will automatically issue corrective instructions if the vehicle strays off course. Huber said GM believes the new system will appeal to consumers who already depend on OnStar for peace of mind. GM is prepared to equip as many as one million new vehicles with the turn-by-turn technology at the start of the 2007 model year later this year, Huber said. The system uses an enhanced wireless data network and improved positioning technology. -Joseph Szczesny

Humvee Out, International MXT In the Army?

A quiet revolution is underway in the sourcing of military vehicles and the International Truck & Engine Corp. of Chicago is hoping that its new $69,900 MXT 4X4 can fit into the mix. "The new MXT is a symbol of our company's commitment to breaking through into new markets," said Dee Kapur, president of International Truck Group. Kapur said that International has been asked to provide prototypes of the truck to the U.S. Department of Homeland Security and the U.S. Department of Defense for use by agencies such as the U.S. Border Patrol, the U.S. Army, and other services. Kapur also confirmed that International also has won one contract from the DOD to build a prototype for a vehicle that would eventually become the replacement for the U.S. Army's fleet of Humvees. Lockheed Martin also won a contract to build a prototype. But AM General of South Bend, Ind., appears to have been shut out of the competition, which is being refereed by the U.S. Army's Tank & Automotive Command in Warren, Mich. -Joseph Szczesny

York: GM Should Drop Saab, HUMMER by Joseph Szczesny (1/10/2006)
Company has 1000 days of cash left, Kerkorian's wingman says.

MotorWeek Gives Civic the Nod

The Honda Civic walked away with "Best of Year" award from MotorWeek, the weekly PBS show that bills itself as television's "Original Automotive Magazine." John Davis of MotorWeek said that "the suite of Civics" that Honda brought out last fall were "the right vehicle for the right time." The Honda Civic also walked off with a Drivers' Choice award from MotorWeek as the Best Small Car, while the Hyundai Sonata was named the best family sedan. The Honda Odyssey was named the best minivan while the Pontiac Solstice was named the best convertible and the Infiniti M was named the best luxury sedan. The Ford Mustang was named the best peformance car and the Toyota RAV4 was named the best small sport-utility vehicle, while the Ford Explorer/Mercury Mountaineer walked off with a Driver's Choice Award as the best family sport-utility vehicle. The Ford F-150 was named the best pickup truck; the Toyota Highlander Hybrid was named the best eco-friendly vehicle; and the Chevrolet Corvette Z06, Dodge Viper SRT10 Coupe, and Ferrari F430 were named the best dream machines. -Joe Szczesny

AutoNation, Lithia Post 2005 Revenue, Profit Gains

AutoNation, Inc. and Lithia Motors weathered severe storms and sales downturns at General Motors and Ford in the fourth quarter, each publicly-owned dealership group recording revenues increases for the full year despite the challenging climate. Lithia's 94 western and southwestern dealers boosted total revenues for 2005 by ten percent to a record $2.94 billion. The Medford, Ore.-based Lithia, whose top vehicle supplier is Chrysler Group, reported that net income for the year advanced to $49.8 million despite a dip in the fourth quarter.  Chairman and CEO Sid DeBoer attributed the late-year decline to a "pullback" of new-vehicle sales caused by the "employee price" strategy used by the American brands in the summer months.

Top megadealer AutoNation was hit hard in the final period by Hurricane Wilma, which damaged nearly all the Fort Lauderdale-based group's Florida dealerships. Chairman and CEO Mike Jackson said that the fourth-quarter sales declined at AutoNation to $4.485 billion and net income to $75.3 million from $4.751 billion and $161.8 million a year earlier. "All our Florida stores are back in operation now," said president and COO Mike Maroone in a media/analyst conference call.

For the full year, AutoNation's 280 dealerships tallied $19,253 billion in revenues, up one percent from the prior year. Net income reached $496.5 million, up from $433.6 million in 2004. Jackson called on automakers to adopt "transaction prices" as their listed suggested retail prices, which would be markedly lower than the prices shown now on the Monroney labels. "If we can deal with market prices, we can accept the profit-margin trims the Detroit automakers have imposed," Jackson said. -Mac Gordon


GM Following Yellow Line; Who's Following?

2007 Chevrolet Avalanche

2007 Chevrolet Avalanche

Enlarge Photo
2007 Chevrolet Avalanche

2007 Chevrolet Avalanche

Enlarge Photo
The billboards plastered all over Chicago's
McCormick Place
generated a bit of confusion when the media hordes descended on the WindyCity convention center. "Live Green, Go Yellow," they declare. And it turns out they're the slogan for General Motors big push for ethanol, a campaign teased with a pair of commercials aired during last weekend's Super Bowl. The automaker hopes to see a rapid increase in production and distribution of E85 - a blend of 85 percent ethanol and 15 percent gasoline, said marketing executive Brent Dewar. Since ethanol can be produced from a variety of grains, such as corn - hence the reference to yellow - it is a renewable alternative to imported oil, and said Dewar, part of the process of "ultimately removing the automobile from the environmental debate."

So far, GM reported, it has produced more than 1.6 million flex-fuel cars, trucks and crossovers, vehicles that can run on any blend of gasoline or ethanol. The problem is that few consumers actually use the fuel. At the moment, there are no more than 500 E85 pumps in the United States. But "the intent is to build the infrastructure," asserted Beth Lowery, who heads GM's environmental efforts. The more E85-capable vehicles, she added, the more likely energy companies will provide the fuel. The effort is also getting a push from the President, who spotlighted ethanol during his State of the Union speech. With automakers like GM and Ford partnering with Shell, VersaSun and other ethanol providers, industry prognosticators are hoping there'll be 2000 E85 pumps dotting the U.S. map by the end of 2006.

GM Slashes Exec Pay, Dividend by TCC Team (2/7/2006)
Still more "shared pain" could be in the offing, CEO Wagoner suggests.

Ford Gets E85 Out with Kermit

Kermit and Anne Stevens

Kermit and Anne Stevens

Enlarge Photo
Kermit and Anne Stevens

Kermit and Anne Stevens

Enlarge Photo
Ford had some E85 announcements of its own to make in Chicago. It rolled out a prototype Escape Hybrid that can run on gasoline or ethanol, with the help of Muppet Kermit the Frog. Like GM, Ford is partnering with various energy suppliers to expand availability. "Consumers aren't willing to drive 50 miles" to find ethanol, said Anne Stevens, Ford's second-in-command in the U.S. But more pumps mean more motorists will actually fill their flex-fuel vehicles up on E85, rather than gasoline, she contended. But not everyone is quite so confident. For one thing, ethanol is currently a good bit more expensive than gasoline and doesn't deliver quite as much mileage-not to mention the fact it competes with food production from the same basic grains. "There are still a lot of questions about what the real benefits (of ethanol) will be," cautioned Jim Press, CEO of Toyota's U.S. operations.

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