Daily Edition: Feb. 27, 2006

February 27, 2006

WJR Auto Report: Geneva Show Bows

The Swiss are known for many things: pristine Alpine mountains, cheese and chocolate. And, of course, cuckoo clocks. But they’re not known for cars, well not any made in the mountain nation. But that’s precisely why the automotive world descends on the lakefront city of Geneva around this time every year. In keeping with traditional Swiss neutrality, the Geneva Motor Show has become a place where no manufacturer dominates. They all get equal treatment, whether German, French, American, or Japanese. The Geneva show used to be a quiet little affair, but no longer. This year, there’ll be a total of 41 separate news conferences on the opening day. Yep, one every 15 minutes for more than ten hours. And there’ll be more the next day. That just goes to show how crowded and competitive the European new car market has become. But some manufacturers use Geneva to showcase products they plant to sell back home. Take Chrysler, which will unveil its new Dodge Hornet. So while it may take some work to get to Geneva, you can be sure, that the convention center will be crowded in the days to come.

2006 Geneva Motor Show Preview, Part I (2/19/2006)
Geneva gets into gear with Aston, Bentley, Ford, and Lotus.

2006 Geneva Show Preview, Part II (2/19/2006)
New VW Concept A, Porsche 911 Turbo, BMW WRC car.

 

Study: Product Development Woes Hobble GM

The shortcomings of General Motors’ product development efforts were exposed yet again last week when the automaker confirmed that it was dropping the Pontiac GTO this summer. GM has rolled out the GTO as kind of an off-the-shelf answer to the complaints that the automaker’s cars weren’t exciting or muscular enough.

The Australian-made GTO, with its 400-horsepower, 6.0-liter V-8 engine could accelerate from 0 to 60 mph in six seconds. But sales, despite some hefty discounts and some heavy-duty personal lobbying of the press by GM Vice Chairman Robert Lutz, never lived up to the hype.

Thus, GM decided to pull the plug on GTO without even bothering to find a replacement for the car. At the same, time GM plans to shut down an assembly plant in Oklahoma City that builds mid-size sport-utility vehicles. GM is ostensibly working on a replacement for the current mid-sized SUVs, which are also being supplanted by a new generation of crossover vehicles. However, GM’s crossover replacements won’t be ready until later this year when the company opens a new assembly plant outside of Lansing, Mich.

The start-up of the new Lansing plant has been pushed back by years as GM has wrestled with decisions on what to build in the new plant. Consequently, the new crossover from Lansing will be rolling out months after competitors have managed to introduce a new generation of crossovers to the public.

Study: Product Woes Hobble GM (2/26/2006)
Despite talk of change, new products aren't swift enough, say analysts.

 

Ballard Focuses On New Business

Vancouver-based Ballard Power Systems sits at the leading edge of the fuel-cell revolution — but judging from the Canadian company’s recent financial report, the revolution is on hold.

Ballard’s partners include automotive heavyweights Ford, DaimlerChrysler, and Honda. And public-relations stunts are in full flower: DaimlerChrysler recently dropped off a fleet of experimental fuel-cell vehicles at Los Angeles International Airport for a long-term test. But overall, the development of fuel-cell vehicles appears to be stuck in the slow lane.

The good news — for Ballard, anyway — is that it managed to reduce its financial losses to $83 million in 2004, which compares favorably with the $175.4 million loss the company posted in 2004. The company’s cash reserves held steady at around $233 million and the company shipped or booked for customers in Japan orders for 221 stationary fuel cells. In addition, the cars and buses equipped with fuel cells logged more than 720,000 test miles last year.

Ballard Focuses On New Business (2/26/2006)
The revolution has stalled, but the maker of fuel cells is still looking for customers.

 

Georgia Gets Kia Nod?

South Korea's second-largest automaker, Kia Motors, is considering building its planned U.S. plant in the state of Georgia, not in Mississippi, a local report from the latter state said.

Since last year, Kia Motors, an affiliate of South Korea's top automaker Hyundai, has been looking for a site in the U.S. to set up a production line. Company officials were quoted that Georgia is the most probable candidate, unless other states offer unprecedented incentives.

Georgia has been a frequent loser in the bidding for new automotive plants. Just last year, DaimlerChrysler officially quashed plans to build a Sprinter plant outside Savannah. Ford had identified a site in MeriwetherCounty on which had intended to build a new plant, only to cancel plans and eventually, announce the closing of its Atlanta plant. Last year, Kia officials were said to have chosen a site in eastern Mississippi for the plant, but that may have been done to encourage other states to sharpen their bids.

If Georgia does win the battle of state incentives, it will be out of keen economic need. The state is faced with the loss of about 5000 jobs in the next two years as Ford closes the Hapeville plant that builds the Taurus and the Doraville plant that builds GM minivans. Both plants are in the metro Atlanta area, while the site of the new Kia plant would likely be a Greenfield location on the I-85 corridor linking Atlanta and Montgomery, Ala., the site of Kia sister  company Hyundai's new assembly plant. Georgia is also facing the bankruptcy of Delta Airlines and the loss of a huge military base within the city, FortMcPherson. -Peter Chang and Marty Padgett

 

Tower Appears in Bankruptcy Court

Tower Automotive Corp. of Novi, Mich., is scheduled to appear in court today to ask a federal bankruptcy judge for relief from its contracts with three different labor unions. Sharon Wenzl, Tower spokeswoman, said the company has made other proposals to the union. “We are going ahead with the court hearing but that doesn’t preclude us from negotiating,” added Wenzl, who said Tower’s management is still hoping to resolve a dispute with unions representing more than 3000 employees, who belong to the United Auto Workers, United Steel Workers of America, and International Union of Electrical Workers-Communication Workers of America. Tower’s non-union employees have already accepted pay cuts and other changes in compensation, she said. “There has been some progress,” added Wenzl, who also said the discussions are continuing. “We’re certainly hopeful we can negotiate,” she added. Following the hearing, the bankruptcy judge has ten additional days to issue a ruling. During the period, the company is free to negotiate with its unions.

Tower, which is a major supplier of metal parts for carmakers such as General Motors, Ford Motor Co., DaimlerChrysler, and Nissan, is under substantial pressure to reach an accommodation with the unions, which are threatening to strike if the court imposes a settlement on them. Union members endorsed a strike against Tower earlier this month and union officials said they have offered a comprehensive settlement that would meet the needs of both the company and 3000 union members employed by Tower.

In their statement, the unions also said they were disappointed that Tower’s executives had not been more receptive to their proposals. One of the main objectives of the union coalition is to get the company to invest more money in plants where they represent workers rather than overseas. —Joe Szczesny

 

XM, Sirius Struggle Despite Popularity

 

The struggle to get more motorists to subscribe to satellite radio networks is putting serious strains on both Sirius and XM Radio after both reported wider losses in the fourth quarter. Both companies get rave reviews from consumers but their finances have drawn criticism on Wall Street. Sirius’ losses grew to $311.4 million as it reported that its losses for acquiring subscribers more than doubled to $145.2 million, even though more cars than ever before are now equipped with satellite radio receivers. Sirius, however, said it expected to be profitable next year and predicted it revenues will reach $3 billion by 2010. Sirius ended the year with 3.3 million subscribers while XM currently has about six million subscribers. XM reported a loss of $268.3 million, which was substantially larger than the loss of $188.2 million it reported in the same period a year ago. XM’s revenue doubled in the fourth quarter to $177 million but one of its directors, Pierce Roberts, quit the company’s board of directors to protest what he described as the company’s overspending on programming. Roberts also warned that there was a “significant chance of a crisis on the horizon at XM.” Earlier this month, XM inked a new deal with Oprah Winfrey for a weekly 30-minute show that was valued at $55 million over the next three years.

 

Both Sirius and XM have spent freely to build up their programming. Sirius offered Howard Stern $500 million over five years to do a new morning show. Executives from both networks, however, have insisted that the money for star attractions is money well spent because it helps build brand loyalty among the motorists stuck in traffic. However, Roberts’ resignation is likely to spur a re-evaluation by the financial backers of both companies and could lead to slowdowns in the signings by both companies. —Joe Szczesny

Asbury Revenues Rise, Girds for Bankruptcy Blow

Asbury Automotive Group combined an upbeat financial report on 2005 full-year and fourth-quarter results with disclosure that it has held an internal management meeting on the potential impact of a domestic-automaker bankruptcy filing on its 89 U.S. dealerships.  Kenneth B. Gilman, president and CEO of the New York City-based Asbury dealership group, told a conference-call questioner that an automaker’s Chapter 11 petition could result in suspension of payments to dealers for warranty claims, “holdback funds” owed to dealers: and floorplan assistance incentives. In addition, resale values of new and used vehicle brands could be impaired.

Gilman said Asbury has completed a regional reorganization of its eight dealership platforms and is seeking a leadership role among the “public” megadealers. “We have outperformed our peer competitors, because we are better situated with growth brands among luxury and import vehicles,” he said. Asbury dealers are concentrated in the Southeast and Southwest.

The last of the six publiclyowned megadealers to report its 2005 financials, Asbury said its full-year revenues advanced 11.4 percent to $5.54 billion and net profit rose 22 percent to $61.1 million. The fourth-quarter brought in a revenue gain from the prior year to $1.3 billion and net income of $20.5 million, up from $12.8 million. For the full year, the sextet of “public” megadealers sold over one million new vehicles for the first time, reaching a total of 1,002,247, compared to 967,883 in 2004. AutoNation led the group with 388,748 sales, followed by UnitedAuto, 178,157; Sonic Automotive, 143,757; Group 1 Automotive, 126,108; Asbury Automotive, 105,521; and Lithia Motors, 59,956. As of January 1, 2005, the segment had 858 dealers out of a U.S. total of about 21,500. —Mac Gordon




  

From TCConfidential

The Week in Reverse

Corgi iCar

Corgi iCar

It rocks, it rolls, it turns your iPod’s music into a lowrider simulator. Doesn’t it make the perfect Christmas gift for William F. Buckley?

 

First we learned of the only guy to saw an Enzo in half and then not try to stitch it back together. Then, possibly, he was intoxicated. And potentially broke too. Only in Hollywood (okay, Malibu) would the backstory be more interesting than the final product.

 

So, did you hear how the Suzuki Swift is on the list for World Car of the Year along with the new Miata and the 3-Series? Yep. Exactly. Oh, we totally agree.

 

Toyota is one of America’s most-admired companies, so says Fortune magazine. And they didn’t even have to wear tight jeans to win the nod.

 

Our Street Signs contest made a buzz on the AP wire, spurring some late readers to send in even more names like Divorce Court. Hang on to them for next year, when we may be giving away our office assistant’s sanity should we choose to repeat the contest.

 

Pontiac’s GTO is dead in the water — precisely, that would be somewhere east of Tonga, if our nautical map is correct.

 

Younger buyers are a red herring in car sales, a new study says. TCC has already taken note and ordered our company Five Hundred with the Depends seats option.

 

And finally this week, TCC had the gall once again to go to Hawaii to drive a new car and report on it, this time the Lexus GS450h. Somewhere in Rhode Island, a writer’s head is exploding.




 

FROM THE SOURCE headlines from the latest press releases

PRNewswire

Porsche’s new 2007 911 GT3 will make its public debut at the Geneva Motor Show on February 28, 2006. The latest race-bred 911 sports coupe features a 415-horsepower naturally aspirated engine with an 8400-rpm redline, an active suspension setup tuned for the track, and a mechanical limited-slip differential.




 

Name Symbol Last Change
Autobytel, Inc. ABTL 4.65 -0.10 (-2.11%)
Autoliv Inc. ALV 53.20 0.00 (0.00%)
AutoNation Inc. AN 21.35 -0.05 (-0.23%)
ArvinMeritor Inc. ARM 15.60 -0.65 (-4.00%)
American Axle & Mfr. Holdings Inc. AXL 16.77 -0.24 (-1.41%)
Ballard Power Systems Inc. BLDP 6.35 +0.25 (+4.10%)
BorgWarner Inc. BWA 56.15 -1.04 (-1.82%)
Cummins Inc. CMI 107.54 +0.78 (+0.73%)
Dana Corporation DCN 1.51 -1.64 (-52.06%)
DaimlerChrysler AG (ADR) DCX 55.86 +0.09 (+0.16%)
Dura Automotive Systems DRRA 2.36 -0.01 (-0.42%)
Eaton Corporation ETN 70.79 +0.44 (+0.63%)
Ford Motor Company F 8.10 -0.07 (-0.86%)
General Motors Corporation GM 19.99 -0.60 (-2.91%)
Gentex Corporation GNTX 16.82 +0.01 (+0.06%)
Goodyear Tire & Rubber GT 14.55 -0.04 (-0.27%)
Honda Motor Co. Ltd. (ADR) HMC 29.54 -0.28 (-0.94%)
Johnson Controls Inc. JCI 69.00 -0.15 (-0.22%)
Lear Corporation LEA 21.05 -0.87 (-3.97%)
Magna International Inc. MGA 73.60 -0.01 (-0.01%)
Motorola Inc. MOT 21.69 -0.13 (-0.60%)
Nissan Motor Co. Ltd. (ADR) NSANY 23.32 -0.10 (-0.43%)
Sonic Automotive Inc. SAH 26.58 +0.10 (+0.38%)
Siemens AG SI 92.87 -0.73 (-0.78%)
Sirius Satellite Radio SIRI 5.18 -0.04 (-0.77%)
Toyota Motor Corporation (ADR) TM 108.70 +0.94 (+0.87%)
TRW Automotive Holdings TRW 26.38 -1.42 (-5.11%)
Tower Automotive Inc. TWRAQ.PK 0.069 0.00 (0.00%)
United Auto Group Inc. UAG 44.13 +0.30 (+0.68%)
Visteon Corporation VC 4.73 -0.26 (-5.21%)
XM Satellite Radio Hold. XMSR 22.14 -0.10 (-0.45%)
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