Daily Edition TCC WJR     TCC'S DAILY EDITION: Feb. 3, 2003 SUBARU SIGNS UP “TOUR DE LANCE”Subaru of Amerca announces today an agreement with cycling champ Lance Armstrong to endorse Subaru vehicles over the next five years. The Japanese automaker, an affiliate partner of General Motors, will pay the four-time Tour de France champ an estimated $12 million over the duration of the deal. The deal calls for Armstrong to appear in TV and print ads, as well as pitch for Subaru at events and wear Subaru logos in his races. For Armstrong, his biggest-ever endorsement deal comes even as two major Hollywood studios are bidding for his life story. Armstrong has survived cancer, and won his last Tour de France after receiving cancer treatment. Subaru sold 180,000 vehicles last year, off 3.2 percent from the year before. The automaker needs some extra marketing punch to keep sales headed north even as it muddles along with a lack of genuine new product. It is currently just selling vehicles on two platforms, the Impreza, which is also the basis of the Forester, and the Legacy. Its newest spinoff, the Baja, an Outback pickup hybrid similar to Subaru's old Brat, went on sale last fall. Subaru has won critical success with its WRX Impreza line, and its all-wheel-drive system continues to be a favorite among outdoor-oriented buyers, as well as those living in snow states. —Jim BurtSpy Shots: 2004 Subaru Legacy   2003 BMW X5BMW RECALLING X5BMW AG is recalling 164,000 X5 sport-utes over a faulty brake hose. The carmaker said on Friday that the brake hose on X5s built from August 1999 to April 2002 could experience a loose brake hose that may cause it to lose all its brake fluid and, potentially, its braking power. Reuters reports BMW has sold about 240,000 X5s worldwide, and that the recalled vehicles include nearly 20,000 units sold in Germany. SPECIAL REPORT: 2003 NADAThe NADA convention is on in San Francisco, bringing dealers to the forefront of an auto industry in transition. Stay with TCC for more from NADA, and to get continuous coverage from the convention, click over to 2003 NEW-VEHICLE SALES TO HIT 16.5 MILLION, SAYS TAYLORNew-vehicle sales in 2003 will remain relatively strong—16.5 million units—because underlying economic factors are in better shape than most realize, said NADA chief economist Paul Taylor during his annual economic forecast presentation. (If the United States goes to war with Iraq, Taylor’s prediction falls to 16.3 million units.)Why Taylor is optimistic about 2003:• The number of vehicles per household continues to grow.• Low mortgage interest rates are spurring homeowners to refinance, freeing up cash for vehicle purchases.• Unemployment is still at "a reasonable rate."• The dealer optimism index—considered a good indicator of new-vehicle sales—is relatively high; likewise consumer confidence levels.• Economic growth is "reasonable."• Net household wealth is growing.Taylor also predicts a continued hot market for used vehicles, particularly certified. Light trucks, which now account for more than half of all new-vehicle sales, will continue to be swept along by the popularity of the smaller crossover utility vehicles (CUVs). And automakers will begin shifting from interest-rate incentives to cash incentives as rates begin to creep back up. —AutoExecMag.comFragmentation: The New Car Order? by TCC Team (1/20/2003) NADA FOUNDATION GIVES $1 MILLION TO SEPTEMBER 11 FAMILIESThe National Automobile Dealers Charitable Foundation (NADCF) today presented a check for $1 million to Scholarship America to aid families of September 11 victims. The money will be distributed to two funds. One is the Families of Freedom Scholarship Fund, which provides scholarships to spouses and children of people killed or permanently disabled in the attacks, and which will pay out the money over the next 25 years. Whereas most of the contributions after September 11 were for immediate needs, the Families fund was designed to help with long-term needs, said Marilyn Rundell, Scholarship America’s vice-president of scholarship management services. The second fund designated for NADCF’s contribution—the Families of Freedom 2: Building Futures Through Education Fund—provides scholarships for families who lost income because their Lower Manhattan businesses were destroyed or impaired. All awards will be based on need.— 2003 Hummer SUT ConceptGM ADDING VANS, NEW HUMMERGeneral Motors will update two existing minivan models and add two more for 2005, announced John Middlebrook, the automaker’s vice president and general manager of vehicle brand marketing. Speaking at the annual convention of the National Automobile Dealers Association, Middlebrook said the Chevrolet Venture and Pontiac Montana will be completely updated, while new models will be added, for the first time, to the Buick lineup. An all-new Saturn minivan is also on the way, which GM believes “will help us reach young buyers as well as import-oriented buyers.” The automaker believes the minivan market will stabilize, at about 1 million units annually, but it may also try some unusual design features to overcome resistance in the market to vehicles often derided as “Mom-mobiles.” Meanwhile, Middlebrook told dealers GM has also given the go-ahead to the Hummer H2 SUT. Short for Sport-Utility Truck, it’s a version of the big H2 ute with a short pickup bed on the back that was first shown on the auto show circuit in 2001.Arianna and the SUV Paranoia  “STOP WHINING” AND GET USED TO IT, DECLARES WAGONERGeneral Motors dealers are applauding an announcement by CEO Rick Wagoner that high-level incentives are effectively a permanent part of the automaker’s marketing strategy. “It’s time to stop whining and play the game,” Wagoner declared during a session of the J.D. Power and Associates International Automotive Roundtable. High incentives helped GM gain share for the second year in the row, even while increasing profits, the exec said, adding that since “GM’s strategy is working very well for us…this year, we’re going to keep pushing.” That’s just fine with Glenn Ritchey, a GM dealer from Daytona Beach. “We’ve raised a generation of consumers who’ve gotten used to rebates and incentives. But we’ve also raised a generation of salespeople used to marketing with rebates and incentives.” But other GM officials acknowledged that the cost/value equation could change, the longer the automaker plays the game. “Pure cash on the hood does have diminishing returns,” said John Middlebrook, GM vice president and general manager of vehicle brand marketing. For their part, competitors also seem resigned to GM’s incentive equation. “He’s right,” Ford Chairman and CEO Bill Ford said of Wagoner, “You have no choice but compete.” The big challenge, though, will be to ensure that the number two automaker can offer matching levels of incentives and maintain the necessary spending levels on product, Ford stressed “all at the same time.”GM Rekindles Incentive Fires  SAN FRANCISCO’S WINTER OF LOVEMore than a third of a century after the City by the Bay’s original Summer of Love, there’s something of another love-fest going on, and it pairs two unlikely partners: automakers and dealers. While both sides had a few contentious issues to discuss during the annual convention of the National Automobile Dealers Association, there was nowhere near the contentiousness of past years. “From where we were three years ago to where we are today is a tremendous turnaround,” suggested William Bradshaw, a GM dealer in Greer, S.C., General Motors is, in particular, now averaging a bit above average in the NADA dealer attitude survey, but there’s been a general improvement in relations between manufacturers and retailers, according to industry insiders. Of course, it helps that dealers are, on the whole, reporting earnings at or near record levels. But there’s also a recognition that carmakers can’t go it alone, said Bill Ford, noting his company’s ill-fated attempt to get into the retail side of the car business. “In the ‘90s, some of us manufacturers thought we could do a better job selling vehicles ourselves,” he said. “We found out we couldn’t and that we’d do better when we cooperate, rather than compete.” After years of antagonizing dealers, Ford said the industry is now improving relations, but cautioned, “It’s a long grind.” KUDOS FROM COMPETITORSImports and domestics typically mix like oil and water, or perhaps cats and dogs. But Toyota’s top American executive, Jim Press, had some nice words for General Motors, crediting his Big Three rival with “saving the American economy after 9/11.” Accepting a Distinguished Service Citation from the Automotive Hall of Fame, Press added that “I don’t think General Motors got the recognition it deserves.” But the AHF’s annual event, timed to coincide with the NADA convention, did provide some recognition for GM CEO Rick Wagoner, who was named Industry Leader of the Year. Wagoner seemed to take in the spirit of the moment when he acknowledged that members of the auto industry “focus too much on splitting up the pie and getting our own piece, rather than working together.” “We’d all be better off” taking a more cooperative approach, Wagoner suggested. That apparently did not refer to GM’s “aggressive” approach to incentives and market share. CAN YOU SAY “EXOGENOUS”?That’s the $5 word one heard a lot over the weekend at the NADA convention. The real danger to the auto industry is “an exogenous shock,” or one from outside that carmakers can’t control, warned Ford Chairman Bill Ford. The big concern underlying this year’s dealer gathering is the likelihood of war with Iraq. “Outwardly, dealers are happy, but inside, they’re a nervous wreck,” said consultant J Ferron, head of the automotive practice at consulting firm PriceWaterhouse Coopers. Until the crisis in the Persian Gulf is resolved, industry officials added, it will be tough to make any real forecasts for the coming year, and even to do any serious planning. “If we’ve been in overdrive the last few years,” said Ferron, right now, “we’re in-between gears.” DAILY IN DEPTH Satellite Radio in 100 VehiclesSatellite radio is off and running as a new-vehicle option, despite costly marketing launches for both providers, Sirius and XM. Nearly all automakers have added “satellite” to their factory-installed or aftermarket equipment lists for 2003, and an industry survey by USA Today finds that by the end of this year more than 100 new models will offer the audio system.Featuring as many as 100 channels that can be dialed in from coast to coast without fadeouts, Sirius and XM are attempting to cover a wide spectrum of news and entertainment choices. Adults can listen to opera, kids to talking bears and teenagers can hear rap and advice about dating.Getting started has proved a cash drain for Sirius and XM, both of which are publicly owned. But this past fall, satellite pioneer GM raised its list of vehicles on the availability list from 25 to 44. To stay afloat, each satellite radio provider has been compelled to arrange refinancing recently, Sirius to the tune of $1.2 billion and XM, $475 million. Each lost money in the third quarter -- Sirius, $119 million and XM, $110 million.The cost of a factory-installed satellite radio can range up to $400, but a stand-alone plug-in model is available for about $200. A ‘nominal’ subscription fee is assessed satellite radio purchasers, $9.99 a month by XM and $12.95 by Sirius, but collections have already proved a problem and some automakers and dealers are offering to pick up the tab for up to six months or more to increase sales.By far the larger of the providers, XM claims 360,000 subscribers and forecasts reaching 1 million by year-end. Sirius counts only 30,000 subscribers and expects 300,000 by the beginning of 2004. Sirius says it has more commercial-free channel choices than XM, as a justification for its higher subscription fee. —Mac GordonSatellite Radio Aims for Higher Orbit  FROM THE SOURCEPRNewswireFederal-Mogul Corporation today announced it has reached an agreement in principle with its major U.S. creditor constituencies to the terms of a consensual plan of reorganization.  The Official Committee of Unsecured Creditors, the Official Committee of Asbestos Claimants, the Steering Committee of Pre-Petition Lenders, Icahn Associates (holder of a significant portion of the company's debt securities) and the Futures Representative have all agreed to the principal terms of a plan to reorganize the Company and emerge from Chapter 11 free of asbestos liabilities, with a de-leveraged balance sheet and a much stronger company.  The agreement in principle is subject to Bankruptcy Court approval and certain other terms and conditions. THE TICKER  

Name Symbol Last Chg
AUTOLIV ALV 21.76 +0.46
AMER AXLE & MANU AXL 25.17 +0.33
BORG WARNER BWA 53.55 +1.23
CUMMINS INC CUM 24.70 +0.31
DANA CORP DCN 10.77 +0.29
DELPHI CORP DPH 8.52 +0.10
EATON CORP ETN 71.08 +1.15
FORD MOTOR CO F 9.11 +0.10
GENTEX CORP GNTX 29.451 +0.122
HONDA MOTOR CO HMC 16.70 +0.30
LEAR CORP LEA 40.30 +0.95
MAGNA INTL MGA 57.00 +0.90
TOWER AUTO TWR 3.49 -0.05
TOYOTA MOTOR TM 47.80 +0.10
UNIT AUTO GRP UAG 12.01 +0.64
VISTEON CORP VC 6.87 -0.02

  Brought to you by and WJR-AM 760    

The Car Connection Daily Headlines
I agree to receive emails from the site. I can withdraw my consent at any time by unsubscribing.
Thank you! Please check your email for confirmation.