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Archive for June, 2009

First Look: Aston Martin Cygnet

Can a commuter car also be a luxury car?

by on Jun.29, 2009

Most folks would say that luxury cars and commuter cars are mutually exclusive.  Not Aston Martin, which is developing the Cygnet concept in partnership with Toyota.

Most folks would say that luxury cars and commuter cars are mutually exclusive. Not Aston Martin, which is developing the Cygnet concept in partnership with Toyota, and using the Japanese maker's iQ as a base.

Say the name, Aston Martin, and it invariably brings up images of the most exclusive automotive products, like the DB9 or Vanquish, vehicles that can push into the $250,000 territory.

So what is Aston doing with the Cygnet, which it is billing as an “innovative commuter car concept”?  There’s a lot of interest in basic, around-town transportation, these days, but most offerings are rather basic affairs, like the Smart fortwo or the Think City electric vehicle.  Has the British maker found a way to make the terms, luxury and commuter car, synonymous rather than mutually exclusive?

It should help that Aston has turned for help to Toyota, maker of the Yaris, Venza and other forms of basic, around-town transportation.  While the British marque isn’t offering many details, it does confirm that the Cygnet concept is based on the Japanese maker’s pint-sized iQ, a 3-door hatchback that was first introduced at the 2007 Frankfurt Motor Show.  Measuring just 117.5 inches, nose-to-tail, iQ went on sale in Japan in late 2008, and in the U.K., this past January.

“Now is the right time for Aston Martin to take this first bold step to embark on this special project,” said Aston CEO Ulrich Bez, in a prepared release, adding “Much work is still required, but I am confident that this project could become reality in the not too distant future. This concept – akin to an exclusive tender to a luxury yacht – will allow us to apply Aston Martin design language, craftsmanship and brand values to a completely new segment of the market.”

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GM Agrees to Take on Product Liability Claims

Chrysler walked from liability under Chapter 11.

by on Jun.29, 2009

While Chrysler used bankruptcy laws to walk away from product liability claims, GM officials -- CEO Fritz Henderson shown here -- will remain liable after emerging from Chapter 11.

While Chrysler used bankruptcy laws to walk away from product liability claims, GM officials -- CEO Fritz Henderson shown here -- say it will remain liable after emerging from Chapter 11.

General Motors Corp. and the Obama administration Auto Task Force have agreed that the new GM will cover all product liability and lemon law claims after it emerges from behind protection of an expedited bankruptcy.

The decision to accept the product claims, which was filed over the weekend with the federal bankruptcy court, represents a departure from the Chrysler bankruptcy but also removes one of the most contentious objections to GM’s sales of assets designed to release GM from Chapter 11.

Nevertheless, the bankruptcy court has still received 750 written objections to the plan to sell the automaker’s best assets to the new company, which would be financed by billions in government loans. GM responded the objections in an “omnibus” answer that dealt not only with the product liability issue but objections by salaried retirees and unsecured creditors.

GM’s lawyer’s dismissed the claims of the unsecured creditors by citing a long list of cases, including the Chrysler bankruptcy, which went all the way to the U.S. Supreme Court before being decided in the smaller maker’s favor. GM’s brief also dismissed claims that the union VEBA had gotten a better deal than creditors.

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CARS Not Quite Ready for Implementation at DOT

The Department of Transpiration claims it will put safer, cleaner, more fuel efficient vehicles on road.

by on Jun.29, 2009

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Go to http://www.cars.gov/ for CARS.

U.S. Transportation Secretary Ray LaHood said his department stands ready to implement a new buyer incentive program signed into law last week by President Obama that will help consumers pay for new, more fuel efficient vehicles when they trade-in a less fuel efficient car or truck. 

While the Car Allowance Rebate System (CARS) Act makes transactions on and after July 1 potentially eligible for credits under the CARS program, dealers and potential customers may want to wait until all of the detailed issues that must be addressed in the implementing regulations are resolved and the final rule is issued. Issuance will occur around July 23. Click here to sign up for e-mail updates

“At this important time for the industry, we will help to boost automobile and truck sales while putting vehicles on the road that are safer, pollute less and get more miles to the gallon,” said Secretary LaHood.  

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Under CARS, buyers can receive up to $4,500 toward the purchase or lease of a new car or truck that meets the necessary criteria.    

To get a rebate, the new car must be priced at $45,000 or less, and, to receive the maximum rebate of $4,500, the new car must have a fuel economy rating of at least 10 miles-per-gallon greater than the car to be traded. To receive an incentive of $3,500, the same car would be traded for one that gets at least four miles-per-gallon better gas mileage.

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A Tiny B-Sized Vehicle Will Be Built In Michigan

GM claims its flexible manufacturing operations and UAW concessions make a competitive, small car built in U.S. possible. All other U.S. B-cars are currently imports.

by on Jun.26, 2009

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The Chevrolet Aveo and G3 Pontiac are currently imported for sale in the U.S., as are all other B-cars.

Troy Clarke, president of General Motors North America confirmed this afternoon that its assembly plant in Orion Township and stamping facility in Pontiac, both in Michigan, will build its future small sub-compact B-car and another larger C-size car, of roughly the size of the Toyota Corolla.  

The volume car in the plant, at about 100,000 units annually will be B-sized, a class that includes the current Chevrolet Aveo and G3 Pontiac, which are currently imported for sale here. Other B-size cars in the U.S. include the Honda Fit and Nissan Versa, on sale for years now, as well as the upcoming Ford Fiesta, which is belatedly due next year.

This is one of the toughest most competitive segments in the world, and one that is dominated by offshore brands that have government protectionist policies, and high fuel and car registration taxes to support them.

GM is part of this global trend  that has clearly hurt the U.S. economy. GM Daewoo Auto & Technology (GM Daewoo) in May sold domestically in Korea 8,155 vehicles and exported 35,823 vehicles. Established in 2002, GM Daewoo now produces vehicles and kits for Chevrolet, Buick, Opel, Vauxhall, Pontiac, Holden and Suzuki that are offered in more than 150 markets on six continents.

Conventional wisdom has long held that American manufacturers cannot make money on small cars, especially if they are built in the U.S., where labor rates and productivity have been non-competitive with foreign, and especially Asian manufacturers. But the numerous concessions made by the union, in recent years, and recent givebacks meant to turn around the domestic industry, have changed the equation.

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Chevrolets’ Avea is currently selling in the U.S. at about 40,000 units annually, a mere footnote in sales charts, and Clarke frankly admitted that GM is banking on rising fuel prices to increase demand and make the car profitable. He also said the attributes of the new — as yet unnamed B-car — would also help sales of the car, which is said to be an upgrade on the current B-size platform that is based on a Korean design from Daewoo. The new B, like its predecessors, will be built globally at “several plants.”

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First Drive: 2010 Subaru Legacy Sedan

Pushing more mainstream?

by on Jun.26, 2009

With Subaru's all-new, 2010 Legacy sedan, the company aims to step up its presence in the mainstream midsize market.

With Subaru's all-new, 2010 Legacy sedan, the company aims to step up its presence in the mainstream midsize market.

To many folks, the voice of the small import automaker, Subaru, carries with it an Australian accent.  That’s courtesy of actor Paul Hogan, aka Crocodile Dundee, who became synonymous with Subaru and its line-up of sport-utility vehicles, dubbed Outback, when they were launched a couple decades back.  The utes – and the memorable ad campaign – helped revive the then-foundering brand, but also shifted Subaru’s focus from mainstream sedans and coupes to SUVs and ute-like crossovers.

With the launch of the 2010 Subaru Legacy a midsize four-door, the Japanese-based maker is circling back on itself.  It’s by no means walking away from the truck-like products that have proved its salvation – indeed, helped it maintain nearly flat sales in a market where even Toyota is down, for the year, by more than 30%.  But with its market share at record levels, and brand awareness booming, as well, Subaru is betting a better-equipped and more stylish sedan can gain traction against more mainstream marques, like Nissan and Volkswagen.

TheDetroitBureau.com headed for the Pacific Northwest to get some stick time in the 2010 Legacy, which had made a semi-official first appearance as a “concept” car, at the Detroit Auto Show, last January, and then reappeared in full production trim at February’s Chicago Auto Show.

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General Motors Bankruptcy Proceeding Apace

Once again, critics are confounded, as the judge moves ahead.

by on Jun.26, 2009

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Judge Robert E. Gerber of the U.S. Bankruptcy Court for the Southern District of New York has granted GM’s motions for debtor in possession (DIP) financing from the U.S. Treasury and the Canadian and Ontario governments.

The final ruling, one of several issued late yesterday, follows a preliminary one on June 1st when GM declared bankruptcy, which authorized GM up to use up to $15 billion from the estate. Now GM can spend as much as $33.3 billion in DIP financing.

The money, of course, is coming from the U.S. Treasury and the Canadian Federal, as well as the Ontario provincial governments.The money will be used for, among other things, GM’s normal liquidity requirements, including employee wages, health care benefits, supplier payments, and other general operating expenses.

While not necessary indicative of how the rest of the case will proceed, the rulings are the latest indication that, like Chrysler, GM will move out of bankruptcy protection at lightning speed compared to the usual glacially-slow lawyer-fee-driven process.

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GM needs to emerge as a new GM as quickly as possible to remove the insolvent stigma, and get back to the business of selling cars and trucks. Year-to-date through May, GM’s sales are off 44%, compared to an industry drop of 37%.

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Car Sales Down across Eastern Europe

Report says the East has stopped emerging.

by on Jun.26, 2009

A new report based on information collected by the European Union indicates that cars sales are holding up better in Western Europe, where incentives are in place, than in new emerging markets in Eastern Europe that automakers had been counting on for new growth.

Eurofund issued a “Report on Recent Restructuring Trends and Policies in the Automotive Sector” and it found that during the first four months of 2009, new car registrations dropped by 15.1% in Western Europe, and by 21.4% in the 10 new E.U. Member States.

The market contracted by 4.8% in France, 16.3% in Italy, 28.5% in the UK, and 43.7 % in Spain. Germany was the only market in the former EU15 Member States where the number of new registrations actually increased — growing by 18.4% thanks to the success of programs for scraping older vehicles.

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Scrappage programs in Western Europe have led to 500,000 additional passenger vehicles sold in the region from January through May 2009, according to recent analysis by R. L. Polk & Company.

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Michigan GM Plant Wins Small-Car Face Off

Orion Township beats plants in Wisconsin and Tennessee.

by on Jun.26, 2009

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Orion will not only build a tiny subcompact car, but also will be equipped to build larger models.

The state of Michigan has won out over Tennessee and Wisconsin in a battle over when GM will build a new small car. As many as 1,400 jobs were at stake.

The General Motors  plant in Orion Township beat out GM plants in Wisconsin and Tennessee where the old Saturn plant in Spring Hill, Tennessee now appears headed for sale with the assets of the old GM that will linger on in a bankruptcy liquidation after the ‘new” GM emerges.

A consultant familiar with the competition between the three states said officials from Wisconsin had offered $70 million in tax credits. It appears Michigan’s offer was larger and “that might tip the scales,” the consultant said privately. Michigan has not released details of Michigan’s offer, pending GM’s announcement.

GM CEO Fritz Henderson had said last week the decision would be reviewed by the Obama administration. Secretary of Commerce Gary Locke  said during a visit to a solar panel plant in Auburn Hills, Michigan this week that the administration plans to do all it can to help the economy in Michigan where unemployment is at record levels with no improvement in sight. GM had announced plants to close seven plants across the state as part of bankruptcy-driven restructuring, including Orion.

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Henderson said last week the chosen plant would be re-equipped not only to build a new small subcompact GM was planning to import from China, but another vehicle as well, starting in late 2011 or early 2012. The new plant will not only build a small subcompact car, but also will be equipped to build other models, he said. A nearby stamping plant is also expected to remain open as part of the deal.

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For Subaru, Flat is the New Up

How is Japanese maker defying gravity in a weak market?

by on Jun.26, 2009

Defying gravity, Subaru is gaining share in a down market and could actually get sales in the black with the launch of its all-new, 2010 Legacy sedan.

Defying gravity, Subaru is gaining share in a down market and could actually get sales in the black with the launch of its all-new, 2010 Legacy sedan.

“Flat is the new up,” declared a Subaru of America official, earlier this year.  And while the automaker has since discovered it can’t entirely escape the laws of gravity in a viciously weak market, Subaru is one of the only car brands that has actually been able to make the recession work in its favor.

Until the economy went into a complete nose-drive, last autumn, the small Japanese automaker was actually heading for an all-time sales record, notes SoA senior vice president of sales, Tim Colbeck.  And while that goal is off the table in the current climate, the launch of new products, like last year’s updated Forester and the all-new, 2010 Legacy sedan, are helping it avoid the fate of even the strongest industry powerhouses, like Toyota.

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“We’re in a race with ourselves,” says Colbeck, who has been in Seattle, this week, for the first media drive of the new Legacy, which is now celebrating its 20th year on the market.  “Our objective, with this car, is to get Subaru sedans on the map,” he continues, adding that for the maker to grow, it has to tap into not only new product segments but also expand its position beyond its long-standing core markets.

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A “Scion” Takes Over as Toyota Motor Corporation Faces Another Record Loss as Global Sales Plummet

"We are setting sail during a storm," said the new president, and founding family member, Akio Toyoda.

by on Jun.25, 2009

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"We expect our losses to deepen this fiscal year," said Akio Toyoda, third from left.

Akio Toyoda officially debuted as president of Toyota Motor Corporation today and said the company faces “two more difficult years. Toyota is now facing a record loss off ¥550 billion ($5.7 billion) this fiscal year, according to Toyoda, a member of the company’s founding family, who took over as president two days ago.

The latest projected loss follows a record ¥437 billion loss in the previous fiscal year, which ended on March 31st. It was the first time a Toyoda has led the company in more than a decade, and Toyota’s widening losses, and plummeting share price prompted the change.

“We expect our losses to deepen this fiscal year, and so all of us in the new management team at Toyota feel like we are setting sail during a storm,” Toyoda said at his first press conference. He said he would do his best to stop the losses after this year.

“The way forward is clear,” according to Toyoda, who, at 53, is unusually young for a Japanese company president.

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“Yes, the going will still be tough for the next few years, but if all Toyota companies around the world come together and reaffirm Toyota’s mission, Toyota will bounce back. My immediate goal is to work from this low point in our business upward so we can return to profitability as soon as possible,” Toyoda said.

He outlined two areas where changes would be made — building better cars, and meeting the needs of regional markets.

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