DAILY EDITION: Jan. 7, 2004

January 6, 2004

TCC'S DAILY EDITION: Jan. 7, 2004 

Don’t miss our special reports from Detroit:
2004 Detroit Auto Show Coverage by TCC Team (1/5/2004)

 

Sales End 2003 On High Note

The U.S. auto industry finished the year with strong sales in December, while sales for the entire year dropped only one percent despite jitters over war, jobs, and the economy during much of 2003. Ford sales dropped four percent in December; for the year, Ford sales declined four percent. The Chrysler Group also reported that its sales dropped four percent in 2003 but it finished the year on an up note with a modest two-percent sale improvement in December. However, General Motors Corp.'s drive to expand its market share for a third consecutive year fell flat, with sales dropping nine percent in December against a very strong December in 2002.

 

 

More Dodge-u-bishis In the Pipeline?

Expect the Mitsubishi/DaimlerChrysler partnership to result in more rebadged Dodge vehicles going to Mitsubishi's American sales unit in the future. An industry insider not associated with DaimlerChrysler told TheCarConnection Tuesday that Mitsubishi's forthcoming Dodge-based pickup, based on the Sport Truck Concept shown in Detroit, is the first of at least two vehicles Mitsubishi can expect to get in the next few years from its partner in Auburn Hills. In all likelihood, Mitsubishi will get a version of the Dodge Durango, which was redesigned for 2004. That vehicle and others developed by Chrysler could help Mitsubishi pull out of its recent sales dive and resulting financial doldrums thanks to low development and production start-up costs that can come from profit sharing especially when the platform carries a light truck. Mitsubishi begins selling its first pickup since the '90s in late 2005. It will be built at Chrysler Group's Warren, Michigan, plant. DaimlerChrysler holds a 43-percent stake in the Japanese automaker. —John D. Stoll

 

 

No "Blue" for GTO

Some of the biggest fans of Pontiac's new GTO are going to have to go wanting. GM's self-proclaimed excitement division has no plans to muddy the pure sports-car image of its new "halo" car by offering it in a cops and robbers rendition. Company execs aren't surprised at the interest from America's finest who are salivating about the vehicle that can catch up to the bad guys while barely trying. "Police have been making serious inquiries with our fleet department," said Pontiac Communications manager Jim Hopson. Aging police-package Camaros are showing the effects of time and abuse. And with production stopped on the Chevy Camaro and its close sibling Pontiac Firebird nearly two years ago with no current plans for a new one, there's nothing to replace it for fast-paced police chases. Instead, the 350-horsepower, 365 lb-ft of torque GTO reborn with 0-to-60 mph capability of 5.3 seconds, is a tantalizing potential replacement for police coveting it for hot pursuits. "You literally can catch smoke on all six gears if that's what you choose to do," said Hopson. And its rear-drive capability of sliding around corners during a chase only adds to the lure. Hopson has a brother and sister who are police. "My sister wants one because it can do a quarter mile in 13.8 seconds reaching 105 miles per hour," he said. "She said she could chase someone down in about a half-mile." But cops will have to get lucky just like everyone else. Only about 17,000 to 18,000 a year are planned for production, with about half initially sporting a $695 stick shift option. Early signs of a potential bidding war surfaced in December shortly after GTOs first went on sale. A few on eBay were going above cost with one at the time bid at $43,000, some $7500 above retail. And, according to GTO marketing director Robert Kraut, some dealers are dragging their heals with delivery to keep their slim allotment of one or two GTOs on display as long as possible. He had a suggestion for police departments willing to spend the $32,495 including freight charges to buy a GTO. "It could go to the cop of the week to drive," he suggested. —Martha Hindes

 

Kappa Architecture Sure to Spawn More

In a show with plenty of strong offerings, few vehicles have scored such solid reviews as the Chevrolet Nomad concept. And that’s generating increasingly open interest among the General Motors executives who would have to give the go-ahead to put the tiny two-seater into production. “We’re listening,” said a high-level executive, who noted that media and public support helped convince the automaker to build the sporty Solstice after its original debut in concept form at the 2002 Detroit show. What’s clear is that there will be a number of future products based on the automaker’s new Kappa platform, which is used for both the Nomad and Solstice, as well as the Saturn Curve concept vehicle. But while Kappa was envisioned as a global small-car “architecture,” it could have some problems making the trip across the Atlantic. European regulators have enacted new standards designed to reduce injuries when a pedestrian is struck by a car. That would require adding about 40 mm (nearly two inches) of crush space under the hood, a massive amount for a vehicle the size of the Solstice. “Ultimately, I’m convinced we’ll do a Kappa for Europe,” GM “car czar” Bob Lutz tells TCC, but it’s going to require either a different design or the introduction of new technology designed to help improve pedestrian protection. These could include breakaway hood hinges, or even the outside-mounted airbags several suppliers are working on.

 

Big Successes in Small Packages

“If we’d listened to the market research, we’d have never done the MINI,” says the British brand’s boss in the U.S., Jack Pitney. They didn’t, and it proved a good thing considering the MINI Cooper was one of the hits of 2003. Now, other automakers are wondering whether they also need to be thinking small in a big way. The Chevy Nomad was just one of several downsized concept and production vehicles debuting in Detroit. Nissan introduced a Micra show car, while Toyota’s youth-oriented Scion division said its third model will be the tC, a hatchback touring coupe based on the European-market Toyota Avensis. Over at Mazda, meanwhile, “There’s a good possibility” the MX Micro Sport show car could presage a production minicar, acknowledged Jim O’Sullivan, CEO of the automaker’s U.S. operations. There are already plans to produce a version of the Micro Sport for other markets around the world later this year. “All our research says there’s a societal shift,” adds MINI’s Pitney, suggesting a small but growing number of buyers that see minicars as the “anti-SUV” statement. How big a market might that group make up? If manufacturers can figure the right questions to use in their research, they’d probably be more ready to bring products likes the Nomad and Micro Sport to market.

 

Is the Car Resurgence Real?

Call it “the year of the car.” Well, Ford execs will, at least, while their counterparts at General Motors agree that it’s time for Detroit to start putting more emphasis on the passenger car side of the equation. But exactly what does that mean in the marketplace? Industry analysts and insiders offer various explanations why the Big Three are bringing so many products like the Ford Five Hundred and Pontiac G6 to market at this particular moment. With the Japanese taking aim at the large and profitable truck market, Detroit is losing its last protected sanctuary, suggests Dr. David Cole, of the Center for Automotive Research. Whatever the reason, will it actually help halt the steady, decade-long light-truck boom? In 2002, minivans, pickups, and SUVs collectively outsold sedans, coupes and wagons for the first time, and that trend continued in 2003. But Ford design chief J Mays argued that the market might stabilize with the launch of so many new passenger cars, such as the Five Hundred, offering all-wheel drive, “command seating” and other SUV-like attributes.  “We think you’re going to see people slowly move back from trucks to cars,” says Mays, though GM Vice Chairman Bob Lutz is less certain. He predicts the “glacial” pace of the shift from cars to trucks is more likely to continue, though models like GM’s G6 could slow the defection.

 

Bill’s Not Going Anywhere

Ford Motor Co. Chairman Bill Ford isn’t updating his resume anytime soon, he says. There were some rough and unhappy times during his first year on the job, which Ford compares to a “high wire act without a net.” But “I’m actually enjoying the heck out of it at this time,” he insists, adding that “seeing this battleship turn around is giving me enormous satisfaction.” There’s been some speculation in the Detroit automotive community about just how long the young family heir might want to maintain the grueling pace managing a company in turnaround. But if anyone expected him to hand over the reins to an outsider, Ford asserts “I’ve got a job and I’m going to see it through.”

 

Cowger, Wagoner Upbeat on GM Gains

The New Year is getting off to a good start, or so says Gary Cowger, president of General Motors’ North American automotive operations. He reckons that “the combination of new products and the improving economy bodes well.” That should help GM endure the withering rebate wars. “Incentives will stay,” said Cowger, “but I do not see an incremental rise,” unlike 2003, when givebacks surged to record levels. Cowger even draws comfort from the latest market-share figures despite their showing the Big Three again losing ground to their import rivals. “In November and December, we had 30 percent plus” share, well over the automaker’s stretch goal of 29 percent for the year as a whole. GM’s new product will account for about 24 percent of the vehicles it sells in North America, and that should draw in more customers, according to the executive. The big challenge will be winning back passenger car customers ceded to the Japanese over the last two decades. GM is trying to win them back by demonstrating the merits of its new products through its 24-hour test-drive program. And to Cowger, it is proving a solid success. “We’ve done 500,000 test drives,” he tells TCC, “and they have resulted in 170,000 sales.”

GM officials are upbeat about more than just the U.S. market. Despite the economic uncertainties that gripped many of the world’s major nations, booming demand in China helped propel global car sales in 2003 to a record 58.5 million, according to General Motors Chairman Rick Wagoner. And the CEO told TheCarConnection, “It could be closer to 60 million” in 2004, “with growth in every region.”

 


DAILY IN DEPTH

Bentley Wading Downmarket But Not Too Far

Bentley and Rolls Royce have little to agree on these days. One walk down super-luxury row at the Detroit auto show will reveal the degree of separation between the two ultimate luxury car super powers. Rolls Royce’s display was positioned closer to Kia than it was to its fellow countryman and former business partner. On this, however, the elite pair agree: The super-luxury class may be growing product-wise with fresh assaults from Maybach, Bugatti, Rolls Royce, Lamborghini and Ferrari trickling into the market, but the buyer base for  $200,000-plus supercars is not going to boom anytime soon.

“This is our view,” says Adrian Hallmark, Bentley Motors’ member of the board in charge of sales and marketing, “we don’t believe that big luxury cars will grow at the pace it’s been forecasted.” Hallmark says that the worldwide demand for such cars, including Rolls Royce Phantom, Bentley Arnage and Maybach’s 62 and 57, is limited to 2000 vehicles. He says that the market will not increase to the 3000 units that many analysts are predicting in coming years.

Rolls Royce’s James Selwa says, “Just because there are new brands or new vehicles doesn’t mean that there will be more buyers.” Selwa says that BMW’s Rolls Royce will continue to stick to its commitment to build 400 cars per year. It sold an estimated 178 units in an abbreviated 2003. “We look for what we call ‘low hanging trees,’” he says, meaning Rolls Royce buyers are easy to spot. “But not easy to convince.”

That’s where the agreement between Bentley and Rolls seemingly ends; at least for now. Hallmark says that in order for Bentley to survive and return to its pinnacle sales totals of the early '90s, when the company neared selling 4000 units annually, including Rolls Royce, the company has to dance around the $150,000 price tag with future product. Hallmark says that the $150,000 mark represents a “psychological barrier,” that differentiates car buying segments.

It hit that mark with the Continental GT, which some say is simply a glorified Volkswagen because of similar underpinnings as Volkswagen’s Phaeton and the Volkswagen W12 powerplant under the coupe’s hood. Some interior components are also carried over from VW and Audi products. “People don’t cross shop a $60,000 Volkswagen and $150,000 Bentley,” he says. “If you want to spend $150,000, you’ve got to really make a hard decision…there’s not a lot to choose from and you’re spending a lot of money. If you spend $60,000, you’ve got a relatively endless list of options.”

“The only reason people say the Continental GT is ‘too cheap’ is because it’s a Bentley.

Hallmark says that he’s conducted clinics where the Continental GT is driven against Phaeton-like products and people rarely rate lower-positioned cars on par with Bentley’s super coupe, mostly because of the cachet. “The key difference is the emotional value. We could stick a Volkswagen badge on the car, but how many do you think we would sell and for how much? Half as many and half the price.”

 

Ford Dealers Vie to Win GT Franchise

Ford has set the stage for a ding-dong scramble for which dealers will handle the new GT supercar and which customers will be lucky enough to buy one (starting at $139,995) from the mere 3500 slotted for production this year and next.  Ford has 3850 dealers in the U.S., many of whom would like to acquire several GTs in order to keep one on a turntable so as to draw muscle-car buffs and curious consumers into their showrooms. 

The criteria for landing a GT license, says Ford Division general marketing manager Martin Collins, in the Detroit News (December 30), are high sales volume, a President’s Award for superior customer service and a lucky draw in a distribution lottery.  Collins says dealers have taken in $10,000 deposits for the GT without knowing if they’re even going to make the cut.  A descendant of the Ford GT race cars than outran Ferraris in early 1960s “24 Hours of Le Mans” races in France, the new GT will pump 500 hp and be built at the Lincoln plant in Wixom, Michigan.  Collins says that some 700 prospects have bypassed dealers to appeal for a GT to company executives, including CEO William Clay Ford, Jr.

The GT, which will end production in 2005, was benchmarked against the Ferrari 360 Modena and will price out at about $14,000 below the Italian supercar.  Dealers will be chosen by April. Mac Gordon

 

 

FROM THE SOURCE headlines from the latest press releases

PRNewswire

Delphi Corp. (NYSE: DPH ) will display another industry-first at the 2004 International Consumer Electronics Show this week (Las Vegas Convention Center, North Hall, Booths #5206 and #5213). Delphi's innovative antenna system tracks a geo-stationary satellite from a moving passenger vehicle.  The technology is the first-known application to achieve this functionality while adhering to the stringent compact packaging and styling, cost, and performance constraints associated with passenger-car requirements.

 

 

THE TICKER

 

Name

Symbol

Last

Chg

AUTOLIV

ALV

38.57

+0.37

AUTONATION INC

AN

17.97

-0.06

ARVINMERITOR

ARM

24.97

+0.37

AMER AXLE & MANU

AXL

41.07

+0.24

BALLARD PWR SYS

BLDP

12.39

+0.04

BORG WARNER

BWA

87.93

+1.94

COLLINS AIKMAN

CKC

5.06

+0.19

CUMMINS INC

CMI

52.48

+1.53

DANA CORP

DCN

18.97

+0.35

DAIMLERCHRYSLER

DCX

47.39

-0.56

DELPHI CORP

DPH

10.69

+0.02

EATON CORP

ETN

110.22

+2.12

FORD MOTOR CO

F

16.54

-0.05

GENERAL MOTORS

GM

54.26

-0.33

GENTEX CORP

GNTX

44.00

-0.13

GOODYEAR TIRE

GT

7.94

-0.11

HONDA MOTOR CO

HMC

22.57

-0.77

JOHNSON CONTROLS

JCI

58.95

-0.36

LEAR CORP

LEA

63.18

+0.10

MAGNA INTNL

MGA

81.32

+0.44

MOTOROLA INC

MOT

15.02

-0.03

NISSAN MOTORS

NSANY

23.681

-0.109

SONIC AUTOMOTIVE

SAH

22.45

-0.04

TOWER AUTO

TWR

7.16

+0.08

TOYOTA MOTOR

TM

70.78

-1.51

UNIT AUTO GRP

UAG

30.36

-0.08

VISTEON CORP

VC

10.91

+0.09

 

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