Industry Report: Feb. 13, 2006 Page 3

February 12, 2006

Bush Takes Ethanol Message on Road by Joseph Szczesny (2/6/2006)
Follow-ups to State of the Union press for break from oil "addiction."

Press: Fuel-Economy Numbers "Misleading"

Press's skepticism could also reflect the fact that Toyota has been betting its environmental reputation on its growing lineup of hybrid-electric vehicles - products that have generated some controversy of their own. The EPA is proposing changes in mileage tests, and some observers estimate products like the Toyota Prius could see their own fuel economy ratings dip by 20 to 30 percent. Press said he supported the new rules because, "the advertising (of current mileage estimates) is misleading." Toyota is investing $7 billion a year on the development of higher-mileage and alternative fuel vehicles, Press added. Ultimately, he suggested, there is likely to be a "matrix" of different powertrains - gasoline, ethanol, hybrid, diesel and even hydrogen - filling the varied needs of American motorists.

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.

New Tundra Has MichiganRoots

The hubbub over Toyota's new Tundra pickup truck has been building for months, with the Japanese automaker nearly done with a new plant in San Antonio, Texas, where it will produce the truck. It turns out, though, that the first "production" truck ready for public viewing at the Chicago Auto Show was built not in Texas but by a team of technicians in a secretive pilot plant near Ann Arbor, Mich., in a part of the ToyotaTechnicalCenter. The new San Antonio-built truck will reach the public in about 11 months and Toyota is targeting sales of 200,000 units in 2007, according to Jim Press, Toyota Motor Sales, chief operating officer. The San Antonio plant simply wasn't ready to produce the pilot version in time for its official introduction in Chicago, Press said.-Joe Szczesny

Spy Shots: '07 Toyota Tundra by Hans Lehmann/Hidden Image (1/30/2006)
The first pictures, ahead of Chicago's launch.

GMT900 Ahead of Schedule

With the bad news piling up, General Motors is basically betting the company on the success of the GMT 900. Gary White, the vehicle line executive responsible for the trucks and sport-utility vehicles in the 900 family, said the program is ahead of plan. "We're ahead of schedule," he said in Chicago when TheCarConnection caught up with him after watching rival Ford roll out the makeover of the 2007 Lincoln Navigator at the Chicago Auto Show.  White said GM's assembly plant in Arlington, Texas, is already building the Chevrolet Tahoe and Yukon and two weeks ago added the 2007 Cadillac Escalade to the mix. GM's assembly plant in Janesville, Wisc., also began building the Tahoe and Yukon last month and GM is soon planning to move ahead with the long-wheelbase versions of the new SUVs and then add the Avalanche to the mix in March, he said. The success of the various GMT900 models is considered critical to GM's hopes of regaining profitability, analysts have said. An accelerated production schedule also enhances GM's cash flow and relieves more of the financial pressures faced by the company.-Joe Szczesny



Ford Keeps Part of "Way Forward" Secret

Ford Motor Co. isn't prepared to offer any more details about its "Way Forward" restructuring plan, said Anne Stevens, Ford executive vice president and one of the chief architects behind the effort to revive Ford's struggling automotive business. Stevens also said the company was still evaluating specifics such as what additional plants it will closes as part of the restructuring. Ford assembly plants in Wixom, Mich., Atlanta and St. Louis are preparing to close as part of the effort to reduce the company's assembly capacity. Ford also is discussing closing two additional assembly plants to further reduce capacity. Stevens, however, noted that Ford also wants to retain some flexibility as it moves ahead with the plan. In 2002, Ford outlined most of the details of the plan right from the start but wound up painting itself into a corner, she said. As circumstances change, Ford found it was difficult to alter the plan because of its earlier public statements. Ford would like to avoid repeating the mistakes of 2002, she said. Other Ford officials also said the company is still wrestling with what to do with the Lincoln Town Car and the platform on which it rides.  So far, Ford hasn't found a home for the Town Car, which will be evicted next year from its long-time home in Wixom. Ford is still looking at various scenarios for moving and/or enhancing the Town Car, Ford officials said in advance of the Chicago Auto Show. The final decision isn't far off but it has not been made yet. Stevens also declined to say whether in the wake of the planned cuts spelled out in the restructuring plan, the company's automotive business will return to profitability in 2006. "We're not saying anything in connection with 2006," she said.-Joe Szczesny



York Gets GM Board Seat

Jerry York, Kirk Kerkorian's car guy, was named to General Motors Corp.'s board but the giant automaker held up in announcing any major changes to its dividend policy in the wake of the monthly meeting of the GM's directors.

GM saidYork will officially become a director February 7 and he will serve on the board's public policy and investment funds committees. The announcement also heads off what could have become a potentially divisive proxy fight with Kerkorian, who now controls about 9.9 percent of GM's stock and who said last year he wanted a representative on the board.

"Jerry brings years of business experience and knowledge of the automotive industry to the GM Board," noted Rick Wagoner, GM chairman and chief executive officer. "We are pleased to welcome him to our Board," Wagoner said.

York has been a consultant to Kerkorian's Tracinda Corp. for more than a decade and in 1998, he played a pivotal role in the Chrysler Corp.'s decision to accept the offer from Daimler-Benz that created DaimlerChrysler.

Last month, York served up a blistering critique of GM's management in which he warned that GM had only about 1000 days of cash reserves left on hand and needed to change and change dramatically, even before GM posted a $8.6-billion loss for 2005. He also called for a cut in the company's dividend, reductions in executive salaries, and the elimination of brands such HUMMER and Saab.

Wagoner also disclosed that Stanley O'Neal, the chairman of the Merrill Lynch, had quit GM's board. In submitting his resignation, O'Neal cited increased time demands resulting from the expanded schedule of GM board meetings which were difficult to accommodate given his responsibilities at Merrill Lynch, as well as limits on his ability to act as a GM director because of potential conflicts with matters in which Merrill Lynch is involved, GM said.

GM is currently trying to sell part of GMAC, its financial services subsidiary, and Merrill Lynch, as one of the world's largest financial services companies, is likely to be involved in any potential deal. -Joe Szczesny

York: GM Should Drop Saab, HUMMER by Joseph Szczesny (1/10/2006)
Company has 1000 days of cash left, Kerkorian's wingman says.

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