Industry Report: Mar. 27, 2006

March 25, 2006

 

Power: New-Vehicle Sales Slide 13 Percent So Far

J.D. Power and Associates' mid-month report on new-vehicle sales finds the industry numbers slipping in early March. The Power Information Network (PIN), which assembles sales data, says sales have dropped 13 percent in the first 12 days of the month, not including fleet sales. The PIN notes that GM's market share sat at 21.3 percent during its survey period, down from 23 percent in the year prior; Toyota held 16.8 percent, up from 16 percent; Ford fell from 17.6 percent to 16.3 percent; and Honda rose from 10 percent to 11.6 percent. Power reports that all three light truck segments - SUVs, pickups and vans - saw double-digit sales declines and lost market share in the first half of March.

Nissan Plans New York Debut for New Altima

The New York auto show will be the first public display of the new 2007 Nissan Altima, the company confirmed on Wednesday. A new body style arrives in 2007 on a new "D" platform, promising better body rigidity and a newly penned suspension. Nissan's Xtronic CVT will be standard on all models, while the 3.5-liter V-6 and 2.5-liter four-cylinder engines will remain on the roster. On sale in the fall of 2006, the Altima, Nissan says, will be one of the best-performing front-drive sedans on the market.

Scion's tC Release Series 2.0 Coming to N.Y., Too

Scion's latest Release Series 2.0 will show off its goods at the New York show, too - but this time the special edition is based on the brand's two-door tC coupe. On sale in mid-April, the tC 2.0 gets Blue Blitz paint, 17-inch wheels, side and curtain airbags, and a new stainless-steel grille. A Pioneer sound system is outfitted, too, and comes with three months of standard XM service, along with an iPod jack. Scion says only 2600 copies will be built, to be sold for $18,260 each.

 

 

Smart Sale Sidelined

2004 Smart city coupe

2004 Smart city coupe

Shareholders are pressing DaimlerChrysler AG's top management about the company's plans for its money-losing small-car unit Smart, and its Maybach superluxury brand. A resolution calling for a full accounting of the company's spending on smart and Maybach could be presented at company's annual shareholders' meeting in Berlin. Meanwhile, the German press is reporting that DaimlerChrysler has terminated its contract with the investment banking firm of Goldman Sachs, which was supposed to screen proposals for smart's assets from outside bidders. Earlier this month, Dieter Zetsche, DaimlerChrysler chief executive officer, said a number of potential bidders had emerged. The Financial Times of London also reported that DaimlerChrysler's plans for selling smart have been put on hold, probably indefinitely. Bodo Uebber, DaimlerChrysler's chief financial officer, said during one appearance this week that as long as smart meets its interim objectives, which include narrowing its losses this year and reaching break-even in 2007, the German automaker will remain committed to restructuring the brand. The restructuring launched last spring has eliminated about 40 percent of smart's employees and delayed indefinitely any plans to bring the smart minicar to the U.S.-Joe Szczesny

 

Deal for Part of GMAC Done

General Motors Corp. said it has sold a majority interest in GMAC's commercial mortgage division in a deal valued at $9 billion, including $1.5 billion in cash. Another $7.3 billion in loans that the commercial mortgage unit owed GM were repaid at the closing.

The deal restores the commercial mortgage group's investment grade credit rating and could help GM's lagging efforts to sell off a majority interest in GMAC's remaining units, analysts suggested. The sale has been pending since August. Apparently the new buyers, which included private investors Kohlberg Kravis Roberts & Co., Five Mile Capital Partners, and Goldman Sachs Capital Partners, have been satisfied that regulators and creditors won't come hunting for them if GM is ever forced to file for court protection under Chapter 11 of the Federal Bankruptcy Code. As part of the deal, GMAC Commercial Holding also announced it has changed its name to Capmark Financial Group Inc. The new company was immediately assigned an investment-grade rating by Fitch Investment Services.

GMAC's credit rating lost its investment-grade status last year on the heels of continuing losses at GM. GM hopes selling a 51-percent stake in GMAC will both raise cash and boost the unit's credit rating back to investment grade. Analysts also said the deal was another step in the restructuring of GM, which got a boost this week when it got the green light from the United Auto Workers to offer buyouts to 126,000 union members employed by GM and Delphi. -Joe Szczesny

GM Keeps GMAC On The Block by Joseph Szczesny (3/20/2006)
Accounting issues dragging down company's Wall Street cred.

 

Chrysler Turns Tables on Litigators

In a classic turnaround, DaimlerChrysler has demanded disbarment of a Texas lawyer whose reported misconduct included diddling a Dodge Neon supposedly to show its steering system was defective - in support of a bogus $2 billion product liability action.

According to DaimlerChrysler lawyer Steven B. Hantler, "Our company was the victim of one of the most outrageous examples of lawyer misconduct in Texas history. This lawyer prosecuted a lawsuit that he knew was based on fabricated evidence."

In 1998, three San Antonio lawyers sued DC and others in a case involving a Neon which rolled after the driver fell asleep, killing four passengers. Just before trial, Chrysler learned the Neon's steering system had been tampered with after the crash to make it appear it was defective. The plaintiff lawyers refused to provide "before" photographs to the court, and their investigator tried to bribe witnesses to lie that the driver had not fallen asleep.

When the fraud was revealed the judge dismissed the case and fined the lawyers nearly $1 million which, according to DaimlerChrysler, still remains unpaid. The trial judge referred the matter to the Texas Bar for disciplinary action, which resulted in one of the trio being disbarred after he fled the country, while the other two received less sanctioning than DC attorneys felt was justified. 

Accordingly, they have intervened with the Bar for further review of the remaining lawyers' status.

This is not the first time an auto company has fought back against misconduct by plaintiff attorneys or their allies. Several years ago, a contract trial lawyer defending General Motors sued the Center for Auto Safety for defamation by the CAS in post-trial statements concerning GM's defense of its trucks. The Center's insurance carrier settled for the full amount of the liability coverage held by CAS, $500,000. -Mike Davis

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