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BMW To Sell 100,000 1-Series Per Year


BMW To Sell 100,000 1-Series Per Year

2005 BMW 1-SeriesBMW AG said Thursday it expects to sell 100,000 1-Series vehicles in 2005. The car debuts at the Paris Motor Show in September, but press previews are taking place inEurope this week.

The U.S. will not get a 1-Series until, perhaps 2007, as BMW doesn't want to bring the four-cylinder hatchback version starting off the lineup in Europe to the U.S. The company feels burned by the experience of the 318ti hatchback launched in the U.S. in the early 1990s.

Even before launch, BMW has been hit with brickbats over the styling of the car, which uses some of the so-called "flame surfacing" in the Z4. The car was styled at BMW's U.S. design studio Designworks.

The existence of the 1-Series is in part a replacement of BMW's failed strategy of expanding its operations with the Rover brand in the mid-1990s. Reluctant to develop a BMW-branded line to compete with the Mercedes A-Class and Audi's A3, the Bavarian company sought to redevelop the Rover brand as a premium mass-market brand. BMW engineers struggled in the late 1980s and early 1990s to infuse BMW's sporty driving characteristics into a small-wheelbase sedan/hatch vehicle, which was a contributing reason for buying Rover.

But BMW executives say they have beaten the problems and that the 1-Series will make people think of the classic BMW 2002 launched in the 1960s and established the "sport sedan" segment.

BMW has been entering new product segments at an unprecedented (for BMW) rate, launching the X3 SUV and 6-Series coupe/cabrio this year, in addition to the 1-Series and an all-new 5-Series that debuted last fall.

"Both (sales of the 6-Series and the X3) are developing better than planned, and we're quite confident that the 1-Series will also do so," said BMW sales and marketing chief Michael Ganal.

The 1-Series, built in Regensburg, Germany, and sharing an undisclosed portion of components with the 3-Series, starts at $24,030 for the base 116i model, propelled by a 115-hp gasoline engine. -Jim Burt

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Agree to disagree: Opinions clash over BMW's completely revised 5-Series sedan.

Suzuki to Build GM V-6s for its Vehicles

Suzuki struck a deal with General Motors that will allow the Japanese motorcycle/auto maker to build GM's V-6 engines in Japan for its own vehicles.

GM owns 25 percent of Suzuki, and the two companies have had numerous vehicle and engine sharing projects. Financial terms of the agreement, announced late Wednesday night, were not disclosed. GM introduced the global V-6 engine last year.

Suzuki will build 3.2-liter and 3.6-liter engine variants at its Sagara engine plant in Shizuoka, Japan. Production is scheduled to begin in 2006. Suzuki is counting on the engines to help it expand the appeal of its mid-size cars and SUVs. Suzuki presently markets the Vitara and XL-7 SUVs, which are powered by a 2.7-liter six-cylinder engine, considered small in the market. And its sedans all have four-cylinder engines.

Suzuki, while profitable every year and one of the best-run automakers in the business, is still struggling for credibility in the car and SUV business. In the U.S., Suzuki sold 32,322 vehicles in the first five months of this year, spread across five models. Its newest batch of sedans - the Verona and Forenza, come out of GM-Daewoo in South Korea.

"The automotive industry is experiencing severe competition around the world," said Osamu Suzuki, Suzuki's chairman and chief executive. "By partnering together to produce this new engine, we're able to capitalize on the synergies and savings of our relationship with GM." ­-Jim Burt

2004 Suzuki Forenza by Eric Peters (2/2/2004)
She works hard for the money.

Ford Says So Long, Lorain

Ford said Thursday that it will close its Lorain manufacturing plant in Ohio late next year in favor of lower production capacity in North America and consolidated plants. Ford will move Econoline van production to its Avon Lake, Ohio, facility and move Ford Escape/Mercury Mariner production to existing Escape production lines in Kansas City. The move will reduce Ford's North American assembly plant count to 20, including projects in Mexico and Canada. -Jack Gilbert

2005 Ford Escape Hybrid by TCC Team (5/17/2004)
Can you have it all with this "no compromises" SUV?

Moving Day at Nissan

Carlos Ghosn on Thursday told media Thursday that it plans to abandon its longtime Tokyo headquarters for a planned high-rise complex in Yokohama by 2010. The move comes as the Japanese automaker looks to return to the port city it was founded in prior to World War II. Yokohama is located on the western shore of Tokyo Bay and is only about 18 miles south of Tokyo by rail.

While Nissan officially began operations from Yokohama in the 1930s, its roots trace back to the Kwaishinsha Co., an automobile factory started by Masujiro Hashimoto in Tokyo's Azabu-Hiroo district in 1911. Hashimoto was a pioneer in Japan's automotive industry at its inception, as was Nissan in years to come, both in labor operations and in export strategy.

Nissan, now strongly allied with parent Renault, has been on an aggressive cost-cutting pace throughout the Ghosn administration and this latest move seems to be aimed at grabbing highly sought after tax breaks and lower taxes. Cost-conscious Nissan, however, will have to shoulder major moving expenses in coming years as it seeks to move about two-thirds of its 3000-member headquarters workforce south to Yokohama. -Jack Gilbert

Mitsu Loses Mareski, More Could Follow

Mitsubishi Motor Sales advertising chief Paul Mareski, hired just last February, has left the automaker, and may be just the first of a number of executives leaving as the company's future becomes less certain in the face of mounting bad publicity and falling sales.

Mitsubishi's parent company in Japan, amidst a chaotic and uncertain restructuring, had its credit rating lowered by Standard & Poors this week from B-minus to CCC-plus, implying the company's debt is vulnerable to default and questioned the future viability of the company.

Mareski came from Lexus ad agency Team One, and replaced Greg Stahl, who left in December. Mareski is expected to resurface in the ad agency business.

When Mitsubishi CEO Finbarr O'Neill arrived last fall from his successful tenure at Hyundai, he stressed his interest in the job because of its connection to Chrysler. Chrysler has owned 37 percent of Mitsubishi and is in several joint ventures with Chrysler. But since Chrysler balked at upping its investment last April, the size of its stake is going down as Japanese banks pump capital into Mitsubishi. Chrysler's Steve Torok, who recruited O'Neill, is gone already.

Mitsubishi said last week that it would cut employee salaries and speed up layoffs as it expanded a recovery plan to deal with a sharp drop in vehicle sales in Japan. In addition to accelerating previously announced layoffs, the company is cutting executive pay packages by 25 percent to 50 percent, trimming the salaries of middle managers by 10 percent and lowering the paychecks of rank-and-file workers by 5 percent. The company says it expects the cutbacks will reduce costs by $660 million over the next two years.

The company, plagued by cover-ups of quality problems in its trucks, now expects to sell 40 percent fewer vehicles than last year. The company also said it expected its operating losses to grow by a total of 60 billion yen ($545 million) over the next two years because of the decline in sales.

In the U.S., sales are down to a 13-year low. There are rumblings that Mitsubishi's ad agency, Deutsch, may not be long for the business and may go work for General Motors. Other Mitsubishi executives have their resumes out, say executive recruiters. Marketing experts say that Mitsubishi's brand image in the U.S., as well as Japan, is such a long term turnaround that others will jump ship and good people will be hard to recruit.

"This is not a Hyundai situation where quality fell off...this is a case of cover-ups and bad behavior surrounding a brand that barely had a brand image when it was going good," says marketing consultant David Sinclair. "This is like Audi and Suzuki ten and fifteen years ago if you add corruption on top of a PR problem...there are so many other brands for car buyers to choose from that all Mitsubishi will get going forward are bad credit risks and bottom feeders...it isn't pretty or hopeful for customers or employees," says Sinclair.-Jim Burt

Mitsu Troubles Deepen with Recalls by Joseph Szczesny (6/21/2004)
Another revival plan due for beleaguered Japanese carmaker.

GM Shifting Asia-Pacific Offices to Shanghai

General Motors is moving its Asia-Pacific headquarters from Singapore to Shanghai as its strategy in the region increasingly focuses on China. The region, which has more than 22,000 employees, has most of its customers in China, Japan and Korea, a key factor in relocating from the Southeast Asian transportation hub. GM will invest in its technical center in the Chinese city as a part of a $3 billion investment in the country. The world's automakers are steaming ahead into the country as sales are booming - but analysts like Automotive Resources Asia president and TCC contributor Mike Dunne are already predicting a shakeout as capacity climbs too fast for demand.

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Mitsu credit rating downgraded

Standard & Poors has downgraded Mitsubishi Motors Corp.'s credit rating, saying the Japanese automaker's recent problems have called into question the company's ability to survive. The credit rating service Monday trimmed its rating on Mitsubishi bonds to CCC+ from B-, with a negative outlook. "Recent disclosures of additional safety defects -- which have led to further damage to MMC's already weak brand image and plummeting domestic sales -- call into question MMC's viability," an S&P credit analyst said in a new report on the outlook for the company. "It is increasingly unclear whether pending operational and financial restructuring measures will be sufficient to ensure MMC's survival," the report added. -Joe Szczesny

Mitsu Troubles Deepen with Recalls by Joseph Szczesny (6/21/2004)
Another revival plan due for beleaguered Japanese carmaker.

Fall Debut in U.S. Eyed for China-Built Uliou

It was inevitable - exports to the U.S. of a small car from a Chinese automaker. It will start this fall, if Geely Group's agenda pans out. The game plan, says Automotive News (June 21), calls for a car called Uliou, priced in China at about $7,000, to be certified as saleable by the Environmental Protection Agency (EPA) in the U.S. The next step requires existence of franchised dealers, which is already being handled by distributor Autokam, of Scottsdale, Ariz.

The Uliou resembles the Daihatsu Charade four-door sedan. Daihatsu, Toyota's mini-compact subsidiary, exported cars to the U.S. in the 1980s and early 1990s. The Uliou uses a 1.3-liter four-cylinder engine purchased from Daihatsu. A Chinese court has rejected a Toyota petition to bar Geely from advertising Uliou with a Toyota logo.

A number of West Coast dealers have lined up for the Uliou franchise. One of them, Toyota of Berkeley in the hometown of the University of California, lost its franchise this month when it warned other franchisees that their investment was risky because the Uliou had not yet gained EPA and NHTSA approval.

Geely President Xu Gang said Geely will export 5,000 vehicles this year, of which 1,000 have already gone to Mexico and the Middle East. The company's plant is located in eastern Zhejiang province and sold about 80,000 vehicles last year, says Gang, ranging from $3,860 to $10,260 and including sedans and hatchbacks.

If regulatory approval is obtained, dealers are expected to apply in droves for the Uliou franchise. That was Hyundai's experience in 1984, and Kia's down the road. "Who wouldn't want to be the first dealer in town selling a Chinese-built car - and at only $7,000?" exclaimed Tom Horn, a Chrysler-Dodge-Jeep-Mazda dealer in Oakland, California. - Mac Gordon

China an Exporter by 2007? by Joseph Szczesny (6/14/2004)
Will too many cars force Chinese automakers to begin selling outside the Middle Kingdom?

 
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