2006 Detroit Auto Show, Part XI

January 10, 2006

2006 Detroit Auto Show Index by TCC Team (1/7/2006)



GM Slashing Prices, Hoping to Cut Incentives


General Motors will slash prices on about 80 percent of the cars, trucks and crossovers it sells in theU.S. the automaker announced Tuesday, a significant ramp-up of the Value Pricing strategy the automaker began last year. “These are broad, sweeping changes,” GM marketing director Mark LaNeve revealed during a preview of the new strategy attended by TheCarConnection.com. On average, the sticker price of new GM vehicles will be cut by $1300 when the program officially debuts on January 11th. On some slower-selling models, the cuts will reach as high as $3000. The 2007 remake of the Chevrolet Tahoe, for example, will come in at $33,990, $2000 less than the old ’06. And LaNeve emphasized GM will not reduce content levels in order to cut prices.


The new program will involve every model sold by the Chevrolet, Buick and GMC divisions, along with some from Pontiac and Cadillac. Prices were previously realigned at the Hummer, Saab and Saturn brands, LaNeve pointed out, so when those marques are included, GM has slashed prices on 90 percent of its U.S. volume since the beginning of the 2006 model-year.


The program reflects reality, GM officials emphasized. There is a sizable gap between the sticker price and the so-called transaction price, the figure customers actually have to come up with. Part of the difference comes in dealer discounts, but in recent years, GM has had to cover the bulk through some of the largest incentives in industry history.  “Incentive programs won’t go away,” LaNeve acknowledged, but the automaker wants to do away with the fire sale image it has developed lately. Instead, it wants to be perceived as offering extremely good value on its product. “A lot of people will still go to the competition,” he said, “but if they do, we want them to know they’re paying too much.” Value Pricing, he noted, has been a foundation of the Asian import strategy. It has another critical advantage: more accurate retail prices typically lead to higher residuals. That means lower subsidies on leases and higher trade-in values for owners.


“This can’t hurt their image,” said auto analyst Jim Hall, of AutoPacific, Inc., adding “This has potential to work,” as long as GM remains consistent with the Value Pricing strategy, and doesn’t start to sneak prices up again. David Cole, director of the Center for Automotive Research, agreed, but cautioned that the market will have to decide. “The $64 billion question,” he suggested, is whether GM really will be able to cut incentives. If it has to continue to offer big rebates on top of lower prices, he warns, the impact on the automaker’s bottom line could be devastating.—TCC Team



Geely Previews Product Line


Geely CEO

Geely CEO

It couldn’t even find a place on the auto show floor. Yet while little Geely Automobile was relegated to a spot in a far corner of Cobo Hall and one of the last slot’s on the annual auto show’s news conference schedule, it attracted significant attention. For good reason, considering Geely is the first Chinese automaker to appear at the influential North American International Auto Show. One of a small group of independent Chinese brands, Geely doesn’t make much of a dent, even in that country’s emerging auto market. Last year, it sold a mere 140,000 vehicles, less than half what a typical Big Three plant will produce annually. But Geely’s ambitions are large. It’s already tested the waters with exports to Eastern Europe and the Mideast , and now the automaker is aiming its sights on the world’s toughest, but most lucrative market, the U.S.


According to chairman and founder Li Shufu, the goal is to launch sales in Puerto Rico, then move to the 50 States, probably sometime in late-2007 or early 2008. It won’t be easy. The car on display in Cobo Hall falls short of American emissions and safety standards and will have to be redesigned – by Geely’s mostly U.S.-trained engineers. Then it will need to set up a viable dealer distribution network, stressed John Harmer, the new CEO of Geely-USA. Even the anticipated $10,000 price tag won’t ensure success, Harmer acknowledged. Americans expect solid quality and reliability. There are also potential political issues, Harmer recognized. In the face of a fast-growing trade deficit, U.S. officials have been pressing the Chinese to revalue their currency. But that could bump up the projected price of a Geely. Barring such setbacks, Geely is hoping to sell as many as 25,000 cars during its first year in the U.S. , and increase sales to 100,000 annually within five year.


The automaker is just one of several eying the American market. Shortly before Geely’s planned debut, long-time auto entrepreneur Malcolm Bricklin hopes to launch a venture of his own, importing an array of products produced by China ’s Chery Motors.



Mitsu Eclipse Spyder Bows; Concept-CT Too


2007 Mitsubishi Eclipse Spyder

2007 Mitsubishi Eclipse Spyder

The Mitsu Eclipse coupe is being joined by a convertible version that will be sold as a 2007 model. The convertible will offer 2+2 seating and a choice of GS or GT trim levels; four- and six-cylinder engines are expected, and a 650-watt Rockford Fosgate sound system will be an option.





2006 Mitsubishi Concept-CT

2006 Mitsubishi Concept-CT

Alongside the Eclipse Spyder on the Detroit show floor was the Concept-CT. A B-car concept conceived as a city vehicle with green technology, the vehicle will sport a hybrid powertrain that uses electric motors at each wheel to deliver all-wheel drive. The concept was penned at the company's Cypress , Calif. , design studio.











Mazda CX-7 Starts from $23,750


Shown last week at the Los Angeles auto show in showroom-ready form, the Mazda CX-7 has been officially priced at the Detroit auto show this week. The new crossover vehicle will start from $23,750, Mazda officials said in a release, for the front-wheel-drive Sport model. The five-seat crossover vehicle is based on the Mazda6 sedan platform and will be offered in three trims levels—Sport, Touring and Grand Touring—all powered by a 244-hp, 2.3-liter turbo four-cylinder engine. Mazda says standard equipment includes air conditioning, power windows/locks/mirrors, cruise control, and dual front and side airbags. Anti-lock brakes, stability and traction control are also found on each CX-7. The new crossover vehicle goes on sale in the spring as a 2007 model.



Scion Releases xB 3.0


2006 Scion xB Release Series 3.0

2006 Scion xB Release Series 3.0

Toyota’s Scion division is planning another special edition based on its popular xB five-door wagon. The boxy xB gets tweaked into becoming the Release Series 3.0 with a batch of cosmetic changes including Envy Green exterior paint, a rear spoiler and a new Aero Speedgrille, which subtly alters the xB’s blocky front-end appearance. Inside the 3.0 sports a DVD audio/video receiver with better speakers and an input jack for MP3 players, as well as standard XM satellite radio. A dual rear-seat entertainment system is mounted in the headrests, with wireless headphones supplied. The xB Release Series 3.0 also comes with a security system, all for a base price of $16,340. Scion says only 2200 copies will be offered for sale, starting next month.


BMW 1-Series Destined for U.S.


Tom Purves, BMW North America president and CEO, says the German luxury carmaker is planning to bring a version of its 1-Series to the United States. However, it won't reach the U.S. market for another three years, which is when BMW has scheduled a re-do of the vehicle. The problem with bringing the current version to the U.S. sooner is that BMW isn't convinced that Americans really like hatchbacks. Thus the company has decided to wait until other versions of the 1-Series are available for export to the U.S. Purves also said in the interview that BMW is still hurting from the fluctuations in the exchange rate. "The problem with hedging strategies is that you don't get the full benefit when things turn around (in your favor),” he said. “There is a time lag," he added.—Joe Szczesny

2006 Detroit Auto Show, Part I by TCC Team (1/8/2006)
Car and Truck of the year, Lexus LS has eight speeds, Enclave concept..

2006 Detroit Auto Show, Part II by TCC Team (1/8/2006)
Shelby GT500, Ford Reflex, predictions for 2006 and Lutz on GM financials.

2006 Detroit Auto Show, Part III by TCC Team (1/8/2006)
Hyundai HCD-9 Talus, Santa Fe, and the death of the five-day car.

2006 Detroit Auto Show, Part IV (1/8/2006)
Nissan's next steps, Benz GL-Class, GM hybrids.

2006 Detroit Auto Show, Part V by Bengt Halvorson (1/8/2006)
Honda Fit, Ford Edge, and more from Bill Ford.

2006 Detroit Show, Part VI by TCC Team (1/9/2006)
The new face of Lincoln, Mazda Kabura, Infiniti G35 and MINI Clubman.

2006 Detroit Show, Part VII by TCC Team (1/9/2006)
GM planning big price cuts, Aston Rapide, Volvo C30, XK pricing.

2006 Detroit Auto Show, Part VIII by Bengt Halvorson (1/9/2006)
Jeep Compass, Toyota Camry, Nissan Sentra and Urge.

2006 Detroit Auto Show, Part IX by TCC Team (1/10/2006)
Camaro by the numbers, Acura RDX, Jaguar gets Ford help.

2006 Detroit Auto Show, Part X (1/10/2006)
Audi Roadjet becomes Q5, Subaru concept and Maserati.

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