2005 Frankfurt Auto Show, Part VII Page 2

September 14, 2005

The current run-up in fuel prices has VW taking a close look at its product plans, Bernhard said, noting there could be more diesels and even some hybrids added to the lineup.


He also confirmed talks with his former employer, Chrysler, which could result in the U.S. maker building a version of its popular minivans for Volkswagen, an alternative to VW’s own, now-cancelled project. If the negotiations succeed, said Bernhard, “We’re not going to just replace the Chrysler badge. It will have to be a different animal.” The move would significantly reduce VW’s potential investment, while helping Chrysler improve the utilization of its minivan production capacity, he added. Though a deal is still not finalized, Bernhard suggested he would like to see a VW minivan on the market, “in two years.”


Meanwhile, the German maker is studying how to follow up on its current luxury vehicle, the Phaeton. Sales have been minimal, at most, but Bernhard is convinced the model serves as a brand halo, and should be kept alive. “Our customers say it supports the brand, but it’s a hell of a job selling those vehicles.”



Chrysler’s New Team Staying the Course


“Nothing’s changed” as a result of the recent management shake-up at Chrysler Corp., insisted the automaker’s new number two executive, Eric Ridenour. “It doesn’t mean, by any stretch of the imagination, that we’re on an easy course,” the new Chief Operating Officer rushed to add. But in a Frankfurt interview, Ridenour said the company’s top priorities remain product, quality, and cost. On the quality front, Ridenour said, “We intend to be among the leaders in 2007.” Meanwhile, the company has been taking a variety of steps to drive down material costs and to bring down fixed costs. Teaming up with suppliers on a new Jeep plant will bring its investment down to a relatively low $300 million, and the possibility of supplying a line of minivans to Volkswagen would better utilize existing capacity. As for product, “creativity is one of our strengths,” the COO asserted. Chrysler is readying an assortment of new products, including a number of entries into new segments. At this year’s motor show, it unveiled a pair of Jeeps, one a fairly conventional off-roader, another aimed at buyers unlikely to leave the highway but who still want SUV styling and all-wheel drive.



GM Studying European Competitiveness


“We know how to make our workforce more competitive,” said General Motors Europe Chairman Fritz Henderson, during an interview at the Frankfurt Motor Show. What’s not clear is if workers will go along with demands that could result in more work for no more pay. The automaker said unions are not the only reason why European factories are increasingly uncompetitive, pointing to the Continent’s high taxes, used largely to fund social welfare benefits. With a car like the compact Corsa, GME President Carl-Peter Forster estimated there might be a 400-euro labor cost penalty building in a country like Germany, though the central location also has some logistical cost advantages, he added. It’s not only manufacturing that’s threatened, Forster pointed out, noting that a growing share of the company’s 20,000 German employees work out of its design and engineering facilities, rather than on an assembly line.



Henderson Says GM Europe’s Work Not Done


Fritz Henderson

Fritz Henderson

Enlarge Photo
“Never declare victory too soon,” said Fritz Henderson, the head of General Motors’ big European subsidiary, during a small group interview on Wednesday. But with GME having really posted a much-needed quarterly profit, Hendersoncouldn’t resist at least a little chest-pounding, suggesting that, “We’re moving in the right direction.” The current, third quarter will be a tough one, echoed GM-Europe President Carl-Peter Forster. But it’s always the year’s low point because mass vacations in August nearly grind the European new car market to a halt. So far this year, GME’s overall market share has been relatively flat – which is actually an improvement in light of recent declines. The flagship Opel/Vauxhall brands have suffered a modest, 1.2-percent drop in sales, but that’s been offset by a significant, 26.7-percent increase posted by GME’s expanding Chevrolet operations. GM Europe rolled out a wide range of vehicles at this year’s Frankfurt Motor Show, and officials said they’re encouraged that could help them build momentum in 2006.
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