GM Revises 2005 Losses Up to $10B
General Motors says that it's revising its 2005 accounting to reflect even deeper losses in its automotive businesses. The changes will mean that GM lost $2 billion more in 2005 than previously reported, for a total of $10.6 billion. GM says restructuring costs from upcoming plant closings and the reorganization of Delphi Corp., one of its chief suppliers, are at the root of the restatement, which will cause GM to delay some financial reports. GM had previously stated losses of $8.6 billion for last year.
Plots Future Without GM by Joseph Szczesny (3/13/2006)
Tiny automaker plans on big expansion abroad.
The Acura luxury brand is maintaining a steady growth rate of three to five percent a year in the U.S., even though it does not offer a hybrid model as does its sister Honda brand, says American Honda senior vice president John Mendel. As the first Japanese luxury brand, introduced in the U.S. nearly 20 years ago with only the Legend and Integra to sell, Acura has climbed the U.S. sales ladder steadily to a record 209,610 new-vehicle sales last year, Mendel told the Automotive Press Association in Detroit Thursday.
Mendel said Honda executives approached the proposal for a luxury brand cautiously in the mid-1980s, as did Toyota and Nissan. "Entry premium vehicles accounted for only 17 percent of the market in 1985 and now take up nearly half of all premium vehicles sold," Mendel pointed out.
A technology pioneer since its inception, Acura will unveil its first turbocharged engine in the new RDX SUV, which will "go on the market soon, going head to head against the BMW X3 SUV," Mendel says. A concept presaging the next MDX will be unveiled at the New York auto show in April, in its first full model change.
Mendel also announced that ground will be broken later this month in California for an exclusive Acura design studio. The West Coast studio will be integrated with Acura's vehicle development center in Ohio. Acura has no plans to add U.S. dealerships in conjunction with its volume growth, said Mendel. It has 264 dealers now. -Mac Gordon
Chrysler Revamps Healthcare Benefits
Chrysler Group CEO Tom LaSorda will see a nine-fold increase in his health insurance premiums, as part of sweeping changes in medical care at the DaimlerChrysler AG subsidiary. Like all Chrysler salaried employees, LaSorda is currently paying $1000 a year towards his medical coverage, plus various out-of-pocket expenses. That will jump to $9000 under the new policies, which will impact about 17,600 retirees and 14,900 active white-collar workers. "We all have to do our part going forward," LaSorda said, in a letter addressed to Chrysler workers, "and we have to do it in a way that is innovative, competitive, equitable, and provides a long-term solution."
In 2005, Chrysler laid out $2.2 billion to cover healthcare for its white-
and blue-collar workers - significantly more than its $1.8 billion profit.
Overall costs have nearly doubled since 2000, and are expected to climb to $2.3
billion this year. Like its cross-town rivals, the number-three domestic
automaker is struggling to reign in those costs. Currently,
The company's new approach will take into account such factors as age, income, and rank. Administrative workers will see little to no increase, but among 9400 mid-level managers, healthcare premiums will jump an average $450 annually. Among executives, the increase will run $1500, and at the top level of the company, senior execs, such as CEO LaSorda, will pay most or all of their own insurance premiums, currently $9000 annually. White-collar retirees, meanwhile, will pay more, as well. The biggest impact will be on those under the age of 65, who will pay a share of increasing medical coverage, depending on how much they made at the time they retired.