Industry Report: Feb. 6, 2006

Ford, Chrysler Add Incentives

Though both companies saw their car sales rise in the month of January, both Ford Motor Co. and the Chrysler Group added new incentives to some models in their lineups after releasing sales figures yesterday. Ford, which saw its sales rise about two percent last month, has put $500 more in cash rebates on the Focus sedan, boosting the total incentive on that vehicle for 2006 models to $2500. Chrysler, meanwhile, is offering zero-percent loans on some models for a period of up to five years. Ford's incentives on its fleet averaged $2839 per vehicle last month, while Chrysler's hit $3317 against an industry average of $2391 per vehicle, according to Autodata figures.

Domestics Pose Sales Surprise in Jan. by Joseph Szczesny (2/1/2006)
GM, Ford and Chrysler all up for the month.

Domestics Pose Sales Surprise in Jan.

Hard-pressed General Motors and Ford Motor Co. surprised analysts and posted sales increases in January, halting a four-month-long string of sales declines that had cost both companies market share and had magnified other corporate difficulties.

Strong fleet sales last month, however, helped overcome softness on the retail side during January, GM and Ford officials said. Future prospects for both companies were clouded, however, by a decline in truck sales that suggested consumers are still looking for alternatives to traditional sport-utility vehicles.

Mark LaNeve, pointing to the 53-percent increase in sales of the Chevrolet Tahoe, insisted GM's new full-size SUVs are off to a strong start. "Sales, production, inventory turn rates and dealer orders are all ahead of plan. It's January, it's early, but we're optimistic that these great new products will be successful," LaNeve added.

However, sales of other GM SUVs, pickup trucks and crossovers were weak last month.

Ford also reported a 7-percent decline in truck and SUV sales. The decline at Ford was paced by a 23-percent drop in sales of the Explorer and a 30-percent decline in the sales of the Expedition.

Domestics Pose Sales Surprise in Jan. by Joseph Szczesny (2/1/2006)
GM, Ford and Chrysler all up for the month.

Delphi Lost $1.13B in December

Losses at Delphi Corp. in December ballooned to $1.13 billion as the company continues to battle with its unions to cut costs. The Detroit News reports that the supplier reported the figures as a requirement of its filing with the federal bankruptcy courts. Some 58 percent of the supplier's business came from General Motors, which is locked in negotiations with Delphi and the United Auto Workers over job and pension cuts at the supplier, for which GM may take some financial responsibility. Delphi filed for bankruptcy on Oct. 8 and has asked the union to accept deep cuts in wages and benefits-and has asked the courts to nullify its contracts if the union doesn't agree to cuts by Feb. 17.

GM Asks UAW for More by Joseph Szczesny (1/30/2006)
Company needs more concessions to fix finances.

Toyota Hits 15 Million Mark

Twenty years and $16 billion later, Toyota says that it has built its 15 millionth vehicle in North America. The company didn't specify at which plant the vehicle was built-because at best it's an estimate, since Toyota operates twelve assembly, powertrain and components plants in North America, with two more assembly plants under construction in Ontario and San Antonio, Texas. Ten Toyota models are built in North America: they include the Toyota Avalon, Camry, Corolla, Matrix, Sequoia, Sienna, Solara, Tacoma, Tundra, and Lexus RX330. The Camry Hybrid and RAV4 will be added to that list in the next two years. Toyota says it will have capacity to build 1.83 million cars and trucks, 1.44 million engines, and 600,000 automatic transmissions in North America by 2008.

2007 Toyota Camry by Bengt Halvorson (1/30/2006)
Ready to spoil a new round of frugal family buyers - and keep its best-selling title.

Bush Boosts Ethanol, Hydrogen in State of theUnion

President Bush called on the nation to begin a transition away from oil in his State of the Union address on Tuesday night, an address which he delivered as the price of a barrel of oil hovered near $70 a barrel. "America is addicted to oil which is often imported from unstable parts of the world," the President told a joint session of Congress in which he laid out plans to diversify the nation's energy platform. "The best way to break this addiction is through technology." In the speech, President Bush called for increased federal research into alternative fuels such as ethanol made from weeds or wood chips instead of corn, a new fuel that would be competitive with corn-based ethanol in six years. Other aspects of his proposed $10 billion Advanced Energy Initiative were increased funding for clean coal, nuclear, and wind technology to "change how we power our homes and offices." To "change how we power our automobiles," Bush prescribed increased research on batteries for hybrids and on hydrogen as vehicle fuel, of ethanol competitive in six years. The goal, Bush said, would be to "replace 75 percent of oil imports from the Middle East by 2025…This country can make our dependence on Middle East oil a thing of the past."

Study Boosts Ethanol As Fuel by Joseph Szczesny (1/30/2006)
Emissions study finds it's not "negative" on energy.

Harris In, Kowaleski Out at GM PR

Steve Harris, former head of General Motors' public relations department, is returning to the company as the replacement for Tom Kowaleski, who was Harris' replacement as vice president of global communications. GM said in a release today that the changes are effective tomorrow.

Harris returns to GM after a stint with a communications firm in metro Detroit.

Kowaleski will stay on through the month to assist in the transition, according to the company. "I've been doing a lot of thinking over the last months about what gives me the most satisfaction, and provides the highest value to those I work for and with," Kowaleski wrote in the official release. "I've also been presented with some excellent opportunities, and I've concluded that now is the best time to take advantage of them, to get closer to the kind of work I most enjoy."

Kowaleski came to GM from Chrysler's European operations and prior to that, the company's headquarters in Auburn Hills. Harris, 60, was a GM PR person before leaving for American Motors in 1979 and continuing with Chrysler until joining GM in the late 1990s.

PR Survey Puts Chrysler, Volvo Top by Gary Witzenburg (10/3/2005)
Which automakers are most, and least, adept players in the media relations game?

Witz: How GM Should Fix Itself by Gary Witzenburg (11/21/2005)
There's no quick and easy solution, but perceptions could help greatly.

GM Cuts Pontiac G6 Production

The Oprah touch apparently hasn't lifted the Pontiac G6 to the stellar sales heights reached by, say, A Million Little Pieces. Pontiac will cut production of the mid-size sedan and coupe range by ten percent, the Detroit News reports, and will lay off some 250 to 400 workers as a result. The G6 went on sale last year after a stunning publicity coup on the Oprah show, in which 276 studio audience members were given a new G6. The News cites competition in the mid-size segment, which includes the Honda Accord and the upcoming new Toyota Camry, both offered in hybrid models. Pontiac is set to launch a new hardtop convertible version of the G6 priced at less than $29,000 this spring. A GM spokesman told the paper that G6 sales were up in the fourth quarter, and that the cuts would bring production to sustainable levels.

Chrysler Revamps Marketing Dept.

Chrysler Group on Monday restructured its marketing department in a way that more clearly separates brand marketing from product planning, and is designed to elevate how consumers view the Chrysler, Dodge, and Jeep brands relative to the competition, especially Asian rivals.

Stephen Bartoli was named vice president of global product planning and marketing earlier this month. Newly assigned executives overseeing product planning and marketing for front-wheel-drive vehicles, body-on-frame-vehicles, and rear-drive vehicles will report to Bartoli. Meanwhile, executives named to branding positions will report to George Murphy, Chrysler group senior vice president of global marketing.

"These appointments will keep our focus laser sharp on the brands as we support the record number of product launches in the works for the Chrysler, Jeep, and Dodge brands," said Murphy.

Ann Fandozzi, 34, is director of front-wheel-drive product planning and marketing. Joseph Veltri, 47, was named director of body-on-frame product planning and marketing. And John Sloan, 50, was named director of rear-wheel-drive product planning and marketing. They report to Bartoli.

Thomas Loveless, 45, former director of sales operations, was named director of Dodge marketing and global communications. David Rooney, 50, was named director of Chrysler marketing and global communications, a similar post he already held. John Plecha, 40, was named director of Jeep marketing and global communications, following a stint as director of Jeep marketing and rear-drive product planning. And Christine MacKenzie, 51, was named executive director of multi-brand events and agency relations. She had been executive director of corporate research and reporting. Those four report to Murphy.

Chrysler has been enjoying a good run of profits and market share gains, especially when compared with GM and Ford. But research done internally, and by outside firms such as Strategic Vision, shows that Chrysler, Dodge, and Jeep brands are still held in comparatively low esteem relative to domestic brands such as Ford, Chevy, and Buick, and well behind Asian brands likeToyota and Honda. With new designs such as Chrysler 300 garnering praise and positive momentum, Chrysler is trying to engineer comebacks for the images of its brands as well. The shakeup and reorganization of the marketing ranks follows the departure of Chrysler's high-profile director of marketing communications Julie Roehm, who directed a lot of the company's recent advertising efforts, including the successful campaign around the HEMI V-8 engine. -Jim Burt

Bush Nixes Aid for GM, Ford

President George W. Bush has finally said out loud what most believed he had been thinking - that the current administration isn't interested in trying to bail out the domestic automobile industry.

"I think it's very important for the market to function," he said in an interview in Thursday editions of The Wall Street Journal.

He added companies need to manufacture "a product that's relevant" and that his administration has discussed new fuel technologies with the nation's top two automakers.
"As these automobile manufacturers compete for market share and use technology to try to get consumers to buy their product, they also will be helpingAmerica become less dependent on foreign sources of oil," Bush said.

Asked whether he had talked with the chairmen of Ford Motor Co. and General Motors Corp., the president said, "Not about their balance sheets. And I haven't been asked by any automobile manufacturer about a bailout," the President added.

"I have been very reluctant," Bush said, cutting off his sentence. "I'm mindful of the past where at one point in time, a predecessor of mine was faced with that same dilemma. I would hope I wouldn't be asked to make that decision."

Bush Nixes Aid for GM, Ford (1/30/2006)
Automakers respond: we didn't ask.