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Saturn may bite the dust

February 17, 2009 /

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The GM restructuring plan is now expected to be rather bold, and many are predicting that the Saturn brand will not survive.

“I haven’t heard about what is in General Motors’ plan in detail, but it looks like it will be more maximum than minimum. In other words, it will be quite aggressive, and I don’t know whether this will include plant closings or elimination of brands,” said David Cole, head of the Institute for Automotive Research in Ann Arbor, Mich.

Meanwhile, Bob Lutz, who is slated to retire as GM’s vice president of product development, told the Automotive News that Saturn likely would not survive the restructuring plan.

“My personal favorite would be to see Saturn survive and prosper. But frankly, the reality is that that is probably not going to be the outcome,” Mr. Lutz said. Neither he, nor other GM officials could be reached for comment on Saturn’s future.

“We spent a huge bundle of money in giving Saturn an absolutely no-excuses product lineup, top to bottom. They had a better and fresher lineup than any GM division, and the sales just never materialized. So we have to act on that. It’s our duty,” Mr. Lutz told Automotive News.

Working against the idea of axing Saturn is the enormous amount of money that would have to be spent to settle with dealers and the potential lawsuits from them that would probably follow. That happened with Oldsmobile.

Rob Cochran of No. 1 Cochran in Monroeville and Robinson said he held out hope that Saturn would continue as a brand.

“I know that Saturn is … exploring a lot of options. The dealers met last month in New Orleans and there were three or four options on the table,” Mr. Cochran said. “We are waiting to see what those alternatives are.”

He added, “Mr. Lutz is famous — or depending on your viewpoint, infamous — for just winging it. He’s a great product person, but a challenge from a PR standpoint.”

Saab is expected to survive, as the Swedish government will likely invest billions to make sure Saab and Volvo remain viable, though details are not yet clear.

News

GM and UAW negotiations revolve around retiree health care trust

February 16, 2009 /

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This should be a pretty eventful week in the auto industry.

The terms of the federal loans set “targets” for concessions, largely from debt-holders and the United Auto Workers union, but concession talks have made little progress with just a couple of days left before the initial deadline.

Negotiations between GM and the UAW broke off Friday night but resumed Sunday, still focusing on exchanging the company’s cash payments into a union-run retiree health care trust for GM stock, according to a person briefed on the talks who didn’t want to be identified because the bargaining is private.

GM and UAW officials declined comment.

GM and Chrysler do not need to have everything nailed down for Tuesday’s progress reports, but the companies are expected to detail concessions along with plant closures, the potential elimination of brands and thousands of job cuts.

After Tuesday there will be several weeks of intense negotiations ahead of a March 31 deadline for the final versions of the plans.

News

Back to the future

February 15, 2009 /

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For years, the Big Three automakers fought efforts in Congress to increase mileage standards. Now we’re all paying the price.

Given the gas price shock last summer and the current economic crisis, Ford is rediscovering some old techniques to help them improve gas mileage in its vehicles.

As fuel-economy standards get tougher, auto companies are peering into a future where next-generation electric vehicles and advanced hybrids beckon. But these days, Ford Motor executives have one eye on the future and one on the past. Ford is dusting off a host of old ideas for boosting gas mileage and slashing emissions. Some of these concepts were dreamed up decades ago, deployed in lots of small European cars, and vigorously promoted by environmentalists. But in Detroit, the technology has mostly sat on the shelf.

Not anymore. Ford now emphasizes fuel economy across its whole lineup. And for its 2011 Explorer the company is making prominent use of such “retro” green technology as lighter-weight steel body parts and “direct injection” engine technology. This technique, which dates to the 1940s, feeds gas and air straight into the engine cylinder instead of premixing it, resulting in a more efficient fuel burn. Together, the technologies could allow the new Explorer to reach highway fuel economy of 30 miles per gallon, upstaging Toyota’s Highlander hybrid, which gets 25 mpg. “There is a lot we can do to get meaningful fuel-economy improvements without going all the way into electrics,” says Ford’s global product development chief, Derrick Kuzak.

It’s about time.

Classic Cars, Green, New Cars, News

Lithium-ion car batteries

February 15, 2009 /

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With the potential emergence of plug-in hybrids and electric cars, many expect them to be powered by lithium-ion cells, and it will be interesting to see if American producers can compete with Asian companies.

Should Uncle Sam provide billions in loans and grants to a promising but unproven business? Or should the government wait for the market to sort things out before it backs a U.S. company? The risk is that by then another major industry could go the way of memory chips, digital displays, the first solar panels, and the original lithium-ion batteries used in notebook PCs and cell phones. American scientists, funded by federal dollars, were at the forefront of each of those. Yet the industries—and the high-paying manufacturing jobs that go with them—quickly ended up in Asia. U.S. labor costs and taxes drove many operations abroad, but often industries fled simply because Asian governments, banks, and companies were more willing than Americans to risk big capital investments.

This time federal help could be on the way. Battery makers are expected to get some of the $25 billion set aside last year under Washington’s Advanced Technology Vehicle Manufacturing Program to speed the commercialization of green cars. EnerDel, a subsidiary of Ener1, has applied for a loan to build a plant capable of making 600,000 batteries a year. Rival A123 of Watertown, Mass., wants $1.8 billion to build a car-battery factory in Michigan. Under the $790 billion stimulus package under debate in Congress, U.S. lithium-ion makers also could compete for $2 billion in grants to fund research and development and manufacturing.

The Obama administration is determined to assist the development of next-generation cars in the United States, and Obama has said he wants to see them built here. The new stimulus package and the programs referred to above will be just the beginning. We can expect significant government support as many view plug-in vehicles and electric cars as critical to our future economic security. It lessens our dependence on foreign oil and can help to save domestic manufacturing.

Green, New Cars, News

Hyundai gets agressive in the U.S.

February 15, 2009 /

hyundai-elantra-2009

Hyundai has begun a major marketing push in the United States with increased sales and the weakening Korean won.

U.S. car sales plunged to a 27-year low in January, dragging down Detroit’s Shrunken Three and even mighty Toyota Motor (TM). But one automaker has bucked the trend: Hyundai Motor. The Korean company, whose name was once synonymous with cheap, logged a 14% sales gain in what was a dismal month for almost every other carmaker.

It’s too soon to say whether that marks the start of a trend that could see Hyundai emerge from the shadow of its larger Japanese rivals, Toyota and Honda Motor (HMC). For one thing, the jump owes much to Hyundai’s 22% drop in sales in January 2008. And the company has piled on the discounts. Incentives on its Sonata sedan, Santa Fe SUV, and other models average $2,611 per vehicle—about triple those of a year ago. Faced with bloated inventory at its single U.S. factory in Montgomery, Ala., Hyundai has scaled back production there and is unloading cars on rental-car agencies: Nearly 30% of the 24,500 vehicles it sold in January went to such fleet buyers at virtually no profit.

Hyundai can afford to sell its cars on the cheap, at least for a while. Its balance sheet is far healthier than those of its Detroit peers. And it’s getting a big lift from the weak won. The Korean currency has dropped by nearly a third against the dollar in the past year, so Hyundai pockets more cash from each car it sells in the U.S. Toyota and Honda, on the other hand, are seeing their earnings wiped out by a yen that is hovering at a 13-year high. Brokerage Korea Investment & Securities figures more than half of Hyundai’s projected $1.5 billion profit in 2009 will come from the favorable exchange rate. “The currency swing has been a godsend for Hyundai,” says Park Kyung Min, chief executive of Seoul fund manager Hangaram Investment Management.

As the other auto companies have reigned in advertising, Hyundai is devoting ore resources to marketing, evn buying ads during the Super Bowl and the Academy Awards.

New Cars, News

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