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Sales Up – Incentives Down For October

Industry scores best month of 2010.

by on Nov.03, 2010

With two months to go, Subaru is within a few 100 units of beating its all-time U.S. sales record.

Auto sales ticked upwards in October even while carmakers generally scaled back on the hefty incentives that have slashed industry earnings – plunging some brands deeply into the red – over the last few years.

Overall  the auto industry enjoyed its best month in two years – discounting the brief impact of last year’s Cash for Clunkers program — and Ford Motor Co., General Motors, Chrysler, Nissan, Honda, Volkswagen, Hyundai and Kia all reported double-digit increases.  Among the major brands, only Toyota suffered a setback, its sales dropping 4%.

(The industry will find it difficult to reach the 17 million peak of years past, reports. Click Here.)

“In October there was more merchandising,” noted Ken Czubay, Ford vice president of sales.  “I was happy to see consumers were responding to merchandising rather than incentives,” he said.

Total sales for the Ford, Lincoln and soon-to-be-discontinued Mercury brands totaled 157,935, up 19% versus year ago. The MKZ hybrid also made solid gains in the market as it succeeded in winning over buyers from other brands, Czubay said.

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The new Fiesta subcompact posted its best sales month ever, particularly on the West Coast, where demand has been particularly brisk – despite that market’s traditional reluctance to embrace domestic products. The 2011 Ford Edge and Lincoln MKX crossovers, with MyFordTouch and MyLincolnTouch technology, also have gotten off to a strong start.

There had been some concern that Ford and Chrysler would fall short of year-earlier numbers, but Chrysler Group LLC also reported, a 37% increase, and October marked the seventh consecutive month of year-over-year sales increases for the troubled maker.


September Car Sales Post Unexpected Surge

Surprisingly strong month suggests recovery in the offing.

by on Oct.01, 2010

Sales of the Ford Transit Connect nearly doubled in September, suggesting a recovery on the small business side of the economy, Ford Marketing Chief Jim Farley said.

What seemed likely to be, at best, a mediocre month has turned out to be an unexpectedly solid sign pointing to a recovery of the struggling U.S. auto market, industry experts and analysts say.

Detroit makers, in particular, reported significant gains for September – Ford sales up 46%, year-over-year, Chrysler up 61% — but, with rare exception, the entire industry seemed to have gained momentum during the final portion of the month, according to those who track dealer activity.

In fact, Audi’s record September volume helped it report an all-time record for the entire third quarter. Japanese maker Subaru also announced it had set an all-time September sales record, gaining 47% compared to the same period a year ago.

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In an exclusive interview at the Paris Motor Show, Ford Global Marketing Director Jim Farley told that he is “encouraged with our performance” in September.  All the more significant, he stressed, was what Ford saw on the light truck side of the business.  Its Transit Connect van, for example, nearly doubled sales, mostly to small businesses.  Echoed by similar numbers at other makers, the executive suggests “that is a sign small business is coming back.”


December Sales Put A Warm Touch on a Cold Year

Automakers wrap up worst year since 1970.

by on Jan.06, 2010

Counting retail sales alone, Toyota was America's number one brand in 2009. The Asian maker hopes to keep that momentum going with products like the newly-remade Sienna minivan.

Sales of new cars and trucks weren’t exactly booming during December but the adjusted annual sales rate was still strong enough to suggest that sales finally bottomed out as the U.S. auto industry wrapped up its worst year in nearly four decades.

Carmakers pegged the estimated sales rate at 11.4 million units, which is still well below the sales levels that prevailed before the recession gripped the industry in 2008, but substantially better than what the industry suffered through for most of the past year.

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For all of 2009,  sales totaled approximately 10.4 million units, which was only slightly better than the expectation in early 2009 when carmakers were talking about sales in the sub-10 million-unit range – and may reflect the brief, mid-year boost the market got from the so-called Cash for Clunkers program.


Hitting the “Reset Button” in the Luxury Market

A 40 mpg Mercedes sedan.

by on Dec.15, 2009

Many luxury buyers are moving down-market, says a senior Mercedes-Benz official, opting for the smaller E-Class instead of the top-line S-Class.

Many luxury buyers are moving down-market, says a senior Mercedes-Benz official, opting for the smaller E-Class instead of the top-line S-Class.

As bad as 2009 has been for the overall U.S. car market, it’s been especially tough for high-line manufacturers, like Mercedes-Benz.

Where past recessions have left luxury brands largely unscathed, most premium brands have suffered hefty double-digit downturns, this year.  And though 2010 looks likely to be a bit better, the luxury market may have gone through some significant and potentially permanent changes, Mercedes officials suggest.

“If anything, 2009 was a reset year,” said Steve Cannon, the German maker’s U.S. marketing chief, during a visit to Detroit.

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For one thing, it’s forced manufacturers like Mercedes to rethink the way they pitch potential buyers.  Over the last several decades, the luxury segment has increasingly turned to incentives and, in particular, subsidized leasing, to attract buyers who really didn’t belong in the luxury segment, said Cannon, who admits the cost has been “too high.”


Delphi Finally Out of Bankruptcy – But Now What?

Giant supplier hopes to rebuild but obstacles remain.

by on Oct.06, 2009

Despite a successful record as a turnaround specialist, it's taken Delphi Corp. CEO Steve Miller four years to get the auto parts company out of Chapter 11.

Despite a successful record as a turnaround specialist, it's taken Delphi Corp. CEO Steve Miller four years to get the auto parts company out of Chapter 11.

When both General Motors and Chrysler blasted through the courts in mere weeks, it might have seen like the bankruptcy process was being completely transformed to help the auto industry rebuild.

But if so, somebody forgot to alert Delphi Corp., the giant supplier and former partsmaking arm of GM that is today wrapping up its court-protected reorganization – but only after a grueling process that has dragged on for almost four years to the day.

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Plenty has changed since Delphi first filed for Chapter 11.  The company has closed or sold off an assortment of operations, giving the heave-ho to thousands of workers, while most of those still on the payroll will be making significantly less than they did before.


RenCen Looking More and More Like a Ghost Town

Cost-cutting by automaker could cripple Detroit.

by on Sep.23, 2009

Even if GM stays put, the Renaissance Center is starting to look a little empty.

Even if GM stays put, the Renaissance Center is starting to look a little empty.

When it was first built, three decades ago, Detroit’s Renaissance Center was intended to signify Motown’s long-awaited turnaround.  Instead, it could soon signal the economic collapse of the troubled city.

Rumors that General Motors might abandon the headquarters building it acquired in 1996 have been circulating ever since the automaker started considering bankruptcy, early this year, and senior officials refused to rule out such an option after emerging from court protection, in July.  Such a move might save hundreds of millions of dollars in operating costs, never mind the higher taxes GM employees pay to work within Detroit city limits.

The most likely alternative, corporate insiders suggest, would be to pack up and leave the 7-building complex, along the Detroit River, and relocate to the now under-utilized GM Technical Center, a dozen miles to the north, in the suburb of Warren.  Local officials have been actively campaigning to convince the automaker to make such a move.

But even if the heart of General Motors stays put, it appears the RenCen is slowly being emptied out, several sources confirm for  As part of its reorganization plan, GM agreed to abandon four of its North American brands.  That, alone, means a lot of empty space in the corporate complex.

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Pontiac is being closed, and substantial cuts have already being made to the once popular division’s staff – along with the broader cuts made in GM’s white-collar workforce, much of it once based in downtown Detroit.


GM Adding Shifts, Restoring 2,400 Jobs

Automaker boosting production at three Midwest plants.

by on Sep.22, 2009

GM plans to add third shifts at three Midwest plants, including one in Fairfax, Kansas, that will become the sole source of the popular Chevrolet Malibu.

GM plans to add third shifts at three plants, including Fairfax, Kansas, which will become the sole source of the Chevrolet Malibu.

Though the Cash-for-Clunkers program may have provided only a temporary boost to the overall automotive market, there are some encouraging signs of life, notably with General Motors announcing plans to boost production at three Midwest plants, a move that will restore 2,400 jobs as it is in the process of c;osing at least three others.

The move comes barely a month after GM announced another minor job increase, in part, to rebuild inventories after the Clunkers program.

As part of this latest move, the long-troubled U.S. maker will be adding third shifts at three of its plants:

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The Fairfax, Kansas line will now be the exclusive production source for the popular Chevrolet Malibu sedan.  The facility also produces the all-new, 2010 Buick LaCrosse, as well as the Aura, the mid-size sedan being produced by GM’s Saturn division.  Plans call for Saturn’s sale to automotive mega-entrepreneur Roger Penske;


Honda to Export Some Civics from Indiana

Civic sedans en route to Latin American and Caribbean nations.

by on Sep.21, 2009


The Civic GX is the only dedicated natural gas vehicle from a major automaker in America.

The first Civics destined for export were shipped last week from the new Honda Manufacturing of Indiana plant (HMIN).The 2010 model Honda Civic Sedans will go on sale in Mexico, as well as 22 Latin American and Caribbean nations and U.S. territories of Puerto Rico, Guam and Saipan.

HMIN is Honda’s seventh auto assembly plant in North America and one of 16 major Honda manufacturing facilities in North America, including two under construction in North Carolina.

The Greensburg plant was dedicated in November 2008 just as the global Great Recession was taking hold after the collapse of Lehman brothers. Cutbacks at Honda production facilities ensued.

In its last quarterly report ending this past June, Honda’s global automobile sales totaled 766,000, a decrease of 20% from the same period last year. In Japan, unit sales amounted to 128,000 thousand units, the same level compared to the same period last year due mainly to favorable sales of Insight and Freed despite weak demand in the market. Vehicle sales outside of Japan decreased 24% to 638,000 from the corresponding period last year, due mainly to decreased vehicle  sales in North America.

To cope with the drops  in the U.S., Honda scheduled downtime, mostly Fridays off, late last year and into the summer this year. Inventories are now lower, partly as the result of Cash for Clunkers, which spurred small car sales and helped Civic and Accord models. Honda is now beginning to schedule some overtime production on Saturdays at its plants in Ohio and Alabama.

Unlike other manufactures, Honda did not eliminate any shifts or close plants during the past year. In fact, Honda has never laid off a full-time person in North America since it was the first Japanese maker to begin manufacturing operations here (of motorcycles) in September 1979. Car production followed three years later.

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In general, Honda hourly associates during the Great Recession were given the choice of coming to work on non-production days and be paid for training and/or doing maintenance work; or they could use a vacation day and get paid; or they could stay home and not get paid.


Ford Debt Rating Raised, But Still Junk

More good news for Dearborn maker.

by on Sep.08, 2009

Ford's turnaround program has won the endorsement of Moody's, which has increased its ratings on the automaker's still substantial debt.

Ford's turnaround program has won the endorsement of Moody's, which has increased its ratings on the automaker's still substantial debt.

Ford Motor Co. got some good news last week as Moody’s Investor Service raised its rating of the company’s corporate debt for the first time in 14 years.

However, Moody’s continues to rate Ford as junk, or below investment grade, but changed the “Corporate Family Rating of Ford to Caa1 from Caa3. Moody’s also raised the company’s Speculative Grade Liquidity (SGL) rating to SGL-3 from SGL-4.

Moreover, Ford’s rating outlook was changed to stable from negative. In a related action, Moody’s placed the Caa1 senior unsecured rating of Ford Motor Credit Company LLC on review for a possible upgrade.

It was of course the rating agencies that said mortgage backed securities and other derivatives were AAA rated or virtually risk free, which was at the heart of the collapse of the global financial markets that led to the Great Recession, which is ongoing. With U.S. unemployment growing to almost 10% in August, the economy continues to shed workers, as businesses return to profitability by eliminating middle class jobs or moving them offshore.

“The rating actions reflect Moody’s belief that after a period of intensive restructuring of its operations and balance sheet, Ford’s business viability has significantly improved. The positioning of the CFR rating at Caa1 balances the substantial achievements the company has made in restructuring its operations and rebuilding competitiveness against the expectation that even with these improvements meaningful earnings and cash flow generation will not be evident before 2011,” said Moodys in a statement.

Translation: more red ink until two years from now.

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“Moody’s believes that Ford has adequate liquidity to bridge itself until 2011 as reflected in the upgrade of the SGL rating to SGL-3.”

Ford has been receiving some good news, lately, but there had been some concern about the fact that the company, by not going into bankruptcy, like General Motors and Chrysler, remained saddled with a significant amount of debt.  But while Ford does continues to carry substantial debt on its balance sheet, the upgrade reduces the automaker’s borrowing costs, freeing up cash for other uses such as product development.


Now What? Industry Needs to Keep Clunkers Momentum Going

Dealers frantic to get claims in before CARS wraps up.

by on Aug.25, 2009

It's all over but the payback.  While dealers wait for their money from the government, industry analysts try to figure what impact the CARS program will have on sales during the months to come.

It's all over but the payback. While dealers wait for their money from the government, industry analysts try to figure what impact the CARS program will have on sales during the months to come.

By noon today, U.S. auto retailers will have to submit the final paperwork for their last Cash-for-Clunkers deals or forfeit the refunds they expect from the federal government.

The Cash Allowance Rebate System, or CARS, as it’s more formally known, has come to a close, barely one month and $3 billion after it began. As of midday Monday, dealers had already submitted claims covering 625,000 vehicles, which would generate at least $2.6 billion in voucher payments for dealers.

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A sizable number of claims have yet to be submitted, however, and dealers were working frantically into the night trying to get the last paperwork completed, despite the decision to extend the deadline until midday Wednesday. In fact, that extension was largely due to the repeated crashes of the government’s own computer system, on Monday.