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Archive for January, 2011

Honda Profits Tumble 40%

Maker blames strong yen – but seafood subsidiary’s problems also hurt.

by on Jan.31, 2011

The Honda CR-Z - hurt by a strong dollar and the end of Japanese green car incentives.

Honda saw profits tumble by nearly 40% for the maker’s third quarter, largely due to problems with the weak U.S. dollar, but while sales are down, it upgraded its profit forecast for the full fiscal year, which ends on March 31.

Earnings for the October-December quarter slipped to 81.1 billion yen ($989 million), down from 134.6 billion yen a year earlier.  Quarterly sales of 2.11 trillion yen ($25.7 billion) were off 6%.

The maker has been hammered by a variety of factors, including the shift in exchange rates.  The rising yen has crimped sales in dollar-delineated markets, like the U.S., forcing the maker to either raise prices – and risk losing sales – increase incentives – or hold the line on prices and watch margins tumble.

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But there have been other problems, including a decline in home market sales triggered by the end of Japanese green car incentives.  And Honda’s net took a hit from a fluke problem with a seafood subsidiary that engaged in questionable business practices, last week triggering an apology from senior managers who warned of the impact on third-quarter earnings.  (Click Here for the full story on the seafood subsidiary’s problems.)

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GM’s Reuss Puts New Products Through the “Knothole”

“Good enough” isn’t good enough anymore.

by on Jan.31, 2011

GM President Mark Reuss: squeezing new products through a knothole to banish mediocrity.

“Good enough” isn’t good enough if General Motors hopes to win back sales and market share, says Mark Reuss, president of the maker’s core North American operations.

So, he says, every new car, truck or crossover will have to pass through a rigid evaluation procedure Reuss has created dubbed the “Knothole Process” — even if that means some models will wind up being yanked from the line-up.

“We’re not going to put cars into our portfolio if they are just competitive,” said the long-time engineer, during an exclusive interview with TheDetroitBureau.com.  Why, he asks, would a loyal Toyota or Honda customer even consider a GM vehicle if the U.S. maker can’t offer something significantly better?

The Knothole Process has already resulted in a number of GM products being delayed or killed off entirely, Reuss revealed.  It was the primary reason why the launch of the U.S. version of the Chevrolet Cruze was delayed – though GM’s bankruptcy also was a factor, said Reuss – and led to the maker deciding not to sell the Chevy Orlando crossover in the North American market.

In its original form, said Reuss, Cruze “wasn’t something anybody would be proud of.”

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At least two other products have been scrubbed because they failed to pass muster, Reuss hinted, declining to name the models.  Others have also been delayed.

The Knothole Process was inspired by former GM “car czar” Bob Lutz, who spent his decade with the giant maker struggling to refocus its product development operations.  One of the steps Lutz took was to bring in a handful of former automotive journalists, such as one-time Motor Trend Editor Jack Keebler, to give the company a less biased view of how General Motors products compare to key competitors.

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Chrysler Reduces Net Loss, Posts Operating Profit for Q4

Declaring turnaround firmly underway, maker plans bonuses for both hourly and salaried workers.

by on Jan.31, 2011

"It would have been inexcusable" not to reward workers, said CEO Sergio Marchionne.

Showing further signs of a comeback from its 2009 bankruptcy, Chrysler significantly narrowed its net loss for the fourth quarter of 2010 while posting an operating profit for the final three months of the year.

The maker, meanwhile, said it expects to have its bottom line firmly back in the black for all of 2011 – with projected earnings of somewhere between $200 million and $500 million.  Strong earnings will be essential for the maker’s plan to stage an initial public offering sometime during the second half of the year.

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The good news will be shared with company workers, CEO Sergio Marchionne alerting workers in a company-wide e-mail that both salaried and hourly staff will receive “performance award payments.”

“I want to express my gratitude to everyone for their hard work,” said the chief executive’s note.  “You are the authors of this success.  I want to thank you for your dedication, your creativity and your willingness to embrace change without which these results would not have been achieved.”

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Chrysler & Fiat Planning Major Roll-Out in Geneva

Makers set to underscore breadth of trans-Atlantic partnership.

by on Jan.31, 2011

With a Lancia badge on the grille, the new Chrysler 300 will take another bow at the 2011 Geneva Motor Show.

While there are dozens of new product roll-outs scheduled for the upcoming Geneva Motor Show, Chrysler and its Italian ally Fiat hope to steal much of the thunder with an assortment of new offerings set to underscore the breadth of their fast-growing, trans-Atlantic partnership.

Perhaps the most significant of the pair’s previews will be the debut of the Lancia Thema, an all-new flagship for the Fiat subsidiary, and a replacement for a top-line model that has been missing from the Lancia line-up for some time, said Olivier Francois, brand manager for both the Lancia and Chrysler brands, during an interview with TheDetroitBureau.com.

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While the executive hinted there will be other offerings coming, he acknowledged that the Geneva event also will see the debut of a new version of the Chrysler Voyager, the European version of the American Town & Country minivan, as well as the new Chrysler 200 and the Lancia Ypsilon, the first model for that brand based on the popular Fiat 500 microcar.

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BMW Returns to Four-cylinder Roots

Automaker plans to reintroduce four cylinder in U.S. market.

by on Jan.31, 2011

BMW is introducing a new four cylinder engine to the U.S. later this year. Could it go into the 1-Series.

Back in ’60s, BMW essentially created the modern sports sedan by slipping a 2.0-liter four cylinder under the hood of a car designed with a 1.6-liter.

Long before BMW became synonymous with silky smooth inline sixes – and later ever-more powerful V-8s and V-12s – the German automaker was known for exceptionally smooth four cylinders.

Now, after a 13-year absence, BMW has decided the time is right to bring back the four-pot engine for the U.S. market.

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BMW announced that it will introduce a new turbocharged 2.0-liter turbo four producing 240 horsepower and 260 lb.-ft. of torque. The new engine will be avilable later this year, presumably in the 1-Series, but possibly in other models as well. BMW said it would announce availability and models later.

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First Drive: Fiat 500

Good things do come in small packages.

by on Jan.28, 2011

The Fiat 500 finally arrives in the States.

Who says good things come in small packages?  Probably anyone who gets the chance to drive the new, U.S. version of the Fiat 500.

The Italian microcar has won a procession of awards back on the home continent, including the much-coveted World Car of the Year.  But the question is whether American motorists will give the U.S. version of the Fiat 500 a similarly warm reception.

This is a Costco nation that lives by the motto, “bigger is better,” and nowhere is that more apparent than in the automotive industry – though there are some telling hints of a shifting mindset.  While demand for the struggling Smart fortwo is rapidly drying up, that seems to be more the result of product flaws than an inherent market resistance to small cars.  The continuing success of the British-made Mini is certainly more compelling – at least for Fiat planners.

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Laura Soaves, who is overseeing the U.S. launch of the Fiat brand, projects that by 2014 small car sales in the U.S. will double, to nearly 1 million – a trend other experts echo.  Oh, and make that “re-launch” the Fiat brand, which poses a separate challenge.  The Italian maker abandoned the American market in haste, a quarter-century ago, driven out by quality problems that led to plunging sales.

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New Fiat 500 Helping Chrysler Ramp Up Exports

Jeeps by the boatload bound for China.

by on Jan.28, 2011

Laura Soave, head of the Fiat brand in North America, stands with the new 500 minicar.

In a move that underscores the complexity of the global auto industry,  the new Fiat 500 being launched in North America will also debut on a wider, global stage as the Chrysler Group assembly plant in Toluca, Mexico ramps up production later this year.

The facility will help Chrysler’s Italian affiliate, Fiat, deliver on its promise of boosting worldwide exports which, in turn, will allow Fiat to gain a larger stake in the U.S. maker.

During a conversation in San Diego, this week, Chrysler officials confirmed the Mexican made Fiat will not only be sold in North America but also exported to a range of markets as far-flung as Brazil and China by the end of 2011.

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The Brazil-bound 500 will be equipped with a special engine that can run on 100% ethanol or ethanol –gasoline blends, according to a senior Chrysler engineer.  Chrysler officials have until recently been reluctant to discuss the wider plans for the 500, which is scheduled to go on sale next month, as the Fiat brand returns to the U.S. for the first time in nearly 30 years.

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Nissan Surges Past Honda

New world order in the auto business.

by on Jan.28, 2011

Nissan CEO Carlos Ghosn with a prototype Nissan Leaf.

In a stunning upset, Nissan Motor Co. surged past rival Honda Motor Co. to become the second-largest Japanese automaker – and join the Top Five car manufacturers worldwide.

The switch in status was driven, to a significant degree, by Nissan’s success in tapping the emerging Chinese automotive market.  Nissan sales there surged by 36% in 2010, and at 1.02 million units, sales in China accounted for a full 25% of the Japanese maker’s global 4.08 million total.

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Worldwide, Nissan saw a 22% increase in volume, last year, compared to 5% for Honda, which reported global volume of 3.56 million.  However, the two makers combined still fell short of the 8.42 million cars, trucks and crossovers sold by the world’s automotive leader, Toyota, and its various subsidiaries.

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Ford Posts $6.6 bil Profit for 2010

Workers to share in upturn with $5,00 profit-sharing checks.

by on Jan.28, 2011

Big profits still fall short of analyst expectations.

Ford Motor Co. has posted its biggest profit since 1999 – although the numbers fell more than a billion dollars short of what many had anticipated the automaker would announce.

Ford officials said they earned $6.6 billion in 2010, which will trigger profit-sharing checks for 40,600 U.S. hourly workers of $5,000, more than union members have taken home since 2001, when profit sharing generated payments of $6,700.

“We’ve always said that all our stakeholders will benefit from the growth of the company and improving profitability, and I think this is a specific reflection of that,” said Ford Chief Financial Officer Lewis Booth. “It’s a delight to be paying profit sharing.”

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One reason the maker fell short of analyst expectations was the one-time, $960 million charge it took to cover the cost of paying down debt.  The maker took the prescient step of lining up extensive financing sources as the nation fell into recession.  But it is now racing to pay down those loans and trim its operating costs.  CEO Alan Mulally, in November, authorized paying down another $1.9 billion in outstanding debt.

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Marty’s Marketing Minutia

Kia says, "G'day," at Australian Open.

by on Jan.28, 2011

How much is this image worth? Rafael Nidal delivers a slam for Australian Open sponsor Kia.

Let’s face it, advertisers love sports – perhaps none more than in the auto industry.

Last year’s FIFA World Cup was the biggest worldwide televised sports event in history, next in total number of viewers is expected to be next weeks Super Bowl XLV, with commercials costing from $2.8 to $3.0 million for each :30-second spot.

But here in the ‘land down under,’ Kia Motors has set an incredibly high benchmark for sponsorship of a single, important athletic event, the first of the four Grand Slam tennis majors, the Australian Open.  Kia is the major sponsor of the entire 14-day event for men and women.  Not just a single event at a Slam Event ala Mercedes, which last year took over sponsorship of the men’s singles at the U.S. Open, which was preceded by Lexus, which took over from Lincoln.

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In all due respect this is not an inexpensive sponsorship, but if getting the proverbial bang for the buck – aka ROI — is the measure of success then Kia, Korea’s oldest car manufacturer Is the winner in straight sets similar to how Kia’s brand ambassador, Rafel Nadal, got slammed on Wednesday night and Roger Federer did, too, a day later — both in straight sets.  The winner however is Kia: Game, Set and Match.

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