Industry Report: May 1, 2006

April 30, 2006

President Proposes Raising Car CAFE

President Bush said on Thursday that he would push for an increase in the Corporate Average Fuel Economy (CAFE) standard for passenger cars. The Bush administration recently upped the fuel economy required for trucks and added some large SUVs to the fuel standards, but had left passenger cars untouched by the changes until now. The President said that he would ask that the National Highway Traffic Safety Administration (NHTSA) set different fuel-economy levels for different sizes of cars, and would seek a boost of about 10 percent in fuel economy. The changes could take effect as soon as the 2008-2011 time frame. The current fleet average for passenger cars is 27.5 mpg.

President Wants Hybrid Cap Lifted

This week's White House initiative to lower gas prices could have a side benefit for hybrid vehicles. The Detroit News reports that President Bush wants the tax-credit cap lifted from hybrid vehicles. Currently, tax credits for the purchase of hybrids are only offered so long as no more than 60,000 hybrids per manufacturer are sold. The credits are worth up to $3400, and would initially benefit Toyota , which sells the most hybrids. The tax credits also apply to clean diesels. Hybrid sales are expected to top 750,000 by 2012.

DC Earns $363 Million in Q1

DaimlerChrysler reported the Mercedes-Benz Group finished deep in the red during the first quarter because of the ongoing problems at smart, while Chrysler Group earnings dropped by more than 50 percent as it struggled with intense competition inNorth America. In all, DaimlerChrysler posted net income of $363 million or 35 cents per share on revenues of $45.1 billion. That figure was up slightly from the $350 million or 34 cents per share the company earned during the same period in 2005 on sales of $38.3 billion.

Get more on DaimlerChrysler's earnings

Ford Says 2800 Take Buyouts

Ford has convinced about 2800 workers at the company and at Visteon Corp. to take buyouts planned as a part of Ford's "Way Forward" plan. The Detroit Free Press says that the buyouts, announced earlier this year, have attracted mostly workers interested in early retirement; some 1750 employees have chosen that option. The remaining 1039 employees have either chosen a lump sum of up to $100,000 or up to four years of $15,000 in school tuition.

Nissan Says Less Than Half Relocate

The final figures are in, and 42 percent of Nissan North America employees will move with the company to Tennessee this summer - or 45 percent, if clerical workers aren't included in the total, notes Brad Bradshaw, vice president and general manager of the Nissan Division, soon to be senior VP of sales and marketing for NNA. Bradshaw said that the portion making the move includes almost 60 percent of product planning and support, and the relocation reportedly won't affect the product-launch timeframe, which includes an aggressive rollout this year of the Versa hatchback, a new Altima, revised versions of the Quest minivan and Maxima sedan, and a new Sentra that. NNA has already extended about 200 job offers for positions in Tennessee, according to Bradshaw. But by some estimates, the automaker will hire an additional 500 by the time the move is complete. The automaker shouldn't have any problem filling its headcount with the brightest, though; the company has received about 26,000 applications, ranging from recent college grads to management veterans wanting to escape Detroit. Nissan will move the company beginning in the summer into the former Bellsouth building in downtown Nashville, pending completion of a new headquarters facility in suburban Franklin, Tenn. Some Nissan employees will be moving, but to the company's technical center in Michigan or in a few cases, the company's financial offices near Dallas. -Bengt Halvorson

V-8s Still Popular Despite Gas Prices

American car buyers are choosing powerful engines in the same proportions even in these days of $3 a gallon gas, the analysts at J.D. Power report. The Power Information Network (PIN) says in the first quarter of the year, about 25 percent of all vehicles purchased in the U.S. were powered by eight-cylinder engines, roughly in line with the figures from the third quarter of 2005. At the same time, sales of six-cylinder engines have stayed steady at 40 to 42 percent of all sales, and four-cylinders have continued to account for 30 to 33 percent of all vehicle sales. "Gas prices are certainly becoming a popular dinner and water-cooler discussion topic, but consumers appear to be conditioned to prices at current levels," said Jeff Schuster, executive director of global forecasting at J.D. Power Automotive Forecasting.

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