Industry Report: Mar. 6, 2006

March 6, 2006


Feb. Sales: Chrysler, Japanese Strong

Japanese manufacturers continued to gain ground in February auto sales, despite a relatively strong showing by the Chrysler Group, which saw sales increase in what was basically a flat market.

General Motors and Ford reported another decline for February whileToyota, Honda and Nissan posted modest sales increases. GM said its sales dropped 2.5 percent, while Ford's fell 4 percent. Toyota, the largest Japanese automaker, reported a 2.4-percent sales increase. Nissan boosted its sales by 2.2 percent and Honda's sales rose by 8.7 percent as they continue to gain market share.

"First quarter economic growth is proving quite robust," said Jim Press, Toyota Motor Sales president. "With showrooms awash in new products and the spring selling season upon us, the industry should be going strong in March."

Even smaller Japanese brands such as Suzuki, Mitsubishi, Mazda and Subaru watched sales rise in February. Korean automakers, however, reported essentially flat sales while European brands such as Audi, BMW, Mercedes-Benz and Porsche all posted modest increases.

Feb. Sales: Chrysler, Japanese Strong by Joseph Szczesny (3/2/2006)
GM and Ford slip slightly as sales stay flat. 


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 Meriwether County 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, Fort McPherson.-Peter Chang and Marty Padgett


GM, Toyota Extend Partnership

The research consortium between GM and Toyota that was written off as dead in some reports last month is still very much alive. The world's two leading automakers have agreed to extend their cooperation on research and development projects in key areas for another two years, both companies said Thursday. The research, however, will no longer focus on fuel-cell technology. Instead, the two auto giants plan to focus on what was described as safety and congestion-related technologies.

Scott Fosgard, GM spokesman, said the change indicates that both companies are satisfied they can move from research into proprietary development of fuel cells that could be used in automobiles. One of the major advantages of fuel cells, which create electricity from a chemical reaction, is that they could help eliminate pollution from private automobiles, advocates of the technology suggest. GM is not backing away from its objective of producing by 2010 a commercially viable fuel cell that could be used in future vehicles, Fosgard added.  GM's fuel-cell projects continue to make substantial progress on critical issues such as durability, energy density, and cost, he added.

GM and Toyota have collaborated on basic research since 1999 and the new agreement now extends until 2008. Neither company has ever disclosed how much they spend on the joint research program. -Joe Szczesny

Feb. Sales: Chrysler, Japanese Strong by Joseph Szczesny (3/2/2006)

TH!NK Files for Bankruptcy

TH!NK Nordic AS, which was literally wheeled onto the world stage by former Ford boss Jac Nasser, has now filed for bankruptcy and under the tough bankruptcy laws that prevail in Western Europe faces almost certain dissolution. Ford brought almost 300 TH!NK-built electric cars to the U.S. but the experiment, which never made much sense, soon foundered. Ford ultimately sold the company in late 2002 and about 300 TH!NKs that Ford had leased to consumers were returned to Norway in 2004 for refurbishing. In all, TH!NK produced about 1000 vehicles during its relatively short life as an environmentally friendly car company. -Joe Szczesny

For Rethinks TH!NK Scrapping by Joseph Szczesny (9/20/2004)
Vehicles will return to Norway rather than be crushed.

Ford Expects More Losses

Ford expects its basic automotive business to lose money again in 2006 as it struggles to trim costs. Ford disclosed the anticipated loss in a 10K report it filed with the U.S. Securities Exchange Commission. Ford also said the losses in the automotive business would not extend beyond 2008. In another passage of the report, Ford cautioned that the bankruptcy of a major competitor could create problems for Ford. Bankruptcy would give the unnamed competitor an unfair cost advantage if its labor contracts were wiped out by the bankruptcy judge. The cryptic comments were dropped into the middle of the report and indicated Ford executives are concerned about the possible consequences of a bankruptcy filing by General Motors Corp.  However, Rick Wagoner, GM's chief executive, has said several times that bankruptcy is not an option for GM.
Ford also disclosed that it is considering a $1 billion charge in connection with "The Way Forward" restructuring plan, which calls for eliminating 30,000 jobs and closing 14 facilities by 2012 under the plan outlined in January. As part of the restructuring, Ford plans to close assembly three assembly plants in Atlanta, St. Louis, and Wixom, Mich., by the end of 2007. -Joe Szczesny

Special Report: Ford's Way Forward by TCC Team (1/30/2006) ord slip slightly as sales stay flat.


Stern, Sirius Sued by CBS

Satellite radio's battles over talent heated up this week as CBS Radio  announced that it has filed suit against Howard Stern, his company One Twelve, Inc., his agent Don Buchwald, his agent's firm Don Buchwald & Associates, Inc. and Sirius Satellite Radio, Inc. CBS says it wants compensatory and punitive damages to cover Stern's multiple breaches of contract, fraud, unjust enrichment, and misappropriation of CBS Radio's broadcast time. It further seeks damages from Sirius Satellite Radio, Inc. for unfair competition and tortious interference with Stern's CBS contract. CBS' complaint argues that Stern improperly used his old morning show on the CBS network to tout the fact he was planning to defect to Sirius. What apparently really incensed CBS is that Sirius actually paid Stern a bonus in the form of 34 million shares of stock valued at approximately $220 million, according to the complaint, after Sirius exceeded certain subscription targets set initially when they signed Howard. "All of Stern's actions for which he received this expedited compensation occurred during the time that Stern was under exclusive contract with CBS Radio, when the Sirius payment terms to Stern were kept secret," the complaint said. Didn't CBS brass notice that Stern was promoting his move to Sirius during his old morning show?-Joe Szczesny

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