Or so goes the logic of Brent Snavely and friends over at the Detroit Free Press. Sales down 37.1 percent? The lowest seasonally adjusted annual selling rate(SAAR) since 1982?No way is it going to get worse before it gets better! “This is not real. This is artificially low,” says Jesse Toprak, executive director of industry analysis for Edmunds.com, who goes on to warn that “the industry might not recover without some sort of external stimulus.” Not here, not now! And yet in the midst of all this turmoil, a strained and unconvincing optimism abounds. Well, at the Freep anyway . . .
Automotive News [sub] reports that General Motors pulled tooling from 50 parts makers during its winter shutdown. The pullout took place after GM was awarded $13.4b in TARP bailout money in December. GM spokesman Dan Flores reveals that one such supplier was metal stamping firm SKD, but refused to reveal other names. “Based on SKD’s financial distress and uncertainty, GM had to take action to protect our business interests,” said Flores. Hello? Pot? Kettle? Anyone? Bueller? But it’s all good in the hood. Remember folks, this is 2009. The worse the news, the bigger the bailout.
For the eighth year in a row, the MVP of the Super Bowl has received a free Cadillac of their choice. This year, Pittsburgh Wideout Santonio Holmes picked out Caddy’s priciest SUV, an $85k Escalade Hybrid Platinum. But instead of presenting the ‘llac at an on-field postgame ceremony, the terms of Cadillac’s sponsorship were fulfilled behind closed doors. Why? “Given the current business environment, it was much more appropriate we not do that,” Caddy spokeswoman Joanne Krell tells the New York Daily News. “We made the decision not to actively participate in the Super Bowl. We congratulate the MVP, it is a great achievement. We are very sensitive to the federal assistance loan we have received and we want to carry on our fiduciary responsibility. The Super Bowl was not a place for us to be this year. That is not to say it’s not a great platform.” But GM still gave a man who makes over $2m per year an $85k vehicle after having received $7.4b in government bailouts. From a PR perspective that’s not great, and from Deadspin on down, people are taking notice. And based on the fact that Caddy defends the decision on the basis of the bailout being a loan that will be repaid, it’s obvious that they realize how bad this looks.
Point three of Barack Obama’s ethics pledge to the American people is that “no political appointees in an Obama-Biden administration will be permitted to work on regulations or contracts directly and substantially related to their prior employer for two years. And no political appointee will be able to lobby the executive branch after leaving government service during the remainder of the administration.” Obviously that’s a high standard, and one that seems increasingly important as the lines between government and industry are blurred by rampant bailouts. And clearly not everyone makes the cut. But as Obama assembles a team to “restructure” the auto industry, the spirit (if not the letter) of his ban on revolving door hiring seems to be falling by the wayside.
Forty miles without a single drop of gasoline. That’s been the pitch for Chevrolet’s Volt since it was just a concept. And it’s a claim that GM has been hammering hard on in promotional materials, advertisements and to the media. But it seems that the claim deserves an asterisk. Green Fuel Forecast‘s Sam Abuelsamid recently spoke with folks from GM’s Voltec battery development team. In the discussion of the Volt’s thermal management system, an inconvenient truth raises its misshapen head. “If you’re not plugged in and the battery is not conditioned and we’ve got to deal with the elements, right now we’re thinking 0-10°C we won’t use the battery. The more we can use it the better but we’ve got that area of refinement we’ll have to do as we get more of the engines, more of the vehicles, more of the batteries and tune it all up,” GM director of hybrid energy storage systems, Denise Gray tells GFF.
People who did buy cars last month were clearly shopping for value, and Hyundai/Kia rode its rep to sales increases in a month of market contraction. Hyundai was the biggest winner in the US market last month, with overall sales rising 14 percent, to a sales total of 24,512 units. Hyundai’s press release highlights strengths in the firm’s eastern sales district (reportedly up 20 percent over January 2008), and positive reactions to its Assurance program. On the product front, Sonata sales lead the way, up 85 percent in a month when Accord/Camry/Malibu competitors dropped 30 percent or more. And with BMW selling only 23 7-series in January, Hyundai’s Genesis was a recession-level hit with 1,056 sales. Santa Fe was up 35 percent, and at 5,024 units sold it was Hyundai’s second best-selling nameplate. Kia sales were up 3.5 percent, with Rio (+60 percent), Optima (+75 percent) and Rondo (+90 percent) making up for decreases elsewhere.
Ok, 48.8 percent, actually. Or, as GM’s Mark LaNeve puts it in the company press release, “We’re attacking this unprecedented market as aggressively as possible, while offering more vehicles than ever that provide great value and that Americans enjoy owning. Our retail market share is a bright spot, holding steady above 21 percent for the second month in a row. That’s a full point above the trailing 12-month average. It’s important to realize that we accomplished this retail performance as the overall market ran about 6 million vehicles behind where it was last January (on a seasonally-adjusted annual rate) and every manufacturer was deeply impacted.” And that’s about as positive as it gets, folks.
North Dakota’s House of Representatives has voted down a measure which would have exempted the sale or lease of a Detroit-branded vehicle from the state’s five percent excise sales tax. The Chicago Tribune reports that the measure, which would have cost the state $25.9m, was defeated by a convincing 64-29 vote. “If we do anything as far as tax exemptions, we should have a greater good in mind,” says Rep. Jon Nelson, R-Rugby. “The passage of this bill . . . we don’t expect anything from (the Detroit auto companies), except that they’re going to sell more of the same old, same old. . . . Every technology in the world has grown, doubled or tripled or quadrupled, in the last 20 years, but the pickup I drive gets the same mileage as one 30 years ago,” he said. “Things like that . . . they haven’t progressed, and that is the reason that U.S. auto makers are in . . . the shape they’re in.”
Toyota sold 117,287 vehicles this January, falling 34.4 percent compared to January 2008. Losses were split relatively evenly between the Toyota/Scion division (down 34.9 percent) and Lexus brand (down 30.3 percent). Toyota doesn’t break out Scion brand sales for its press release, but all of its models are down between 41.8 percent (xD) and 59.5 percent (tC). Corolla (down 10.8 percent), Lexus RX (down 7.2 percent) and FJ Cruiser (down 18.7 percent) were the best performers in the ToMoCo lineup. Elswhere, sales drops by model were as bad as 67.2 Percent (Land Cruiser), 61.6 percent (Lexus SC) and 63.6 percent (Lexus GX). Hybrid sales hit 11,876 in January.
Automotive News [sub] reports that US-market sales of Ford, Lincoln and Mercury-branded vehicles fell 39 percent in January, to 90,131. “Retail demand appears to have stabilized,” Ford sales analyst George Pipas told AN before those numbers were announced “Regrettably, but understandably, it stabilized at a low rate. But before you can begin to improve, things have to bottom out.” And have they ever. Ford’s press release is a roiling sea of not good, with Volvo down 64 percent, Mercury down 44 percent, Lincoln Down 23.7 percent and the Ford brand 39.5 percent versus January 2008. Fusion was the only significant seller that dropped less than 20 percent (Volvo V50 was down only 16.6 percent with a big 136 models sold, and the Towncar is up 147 percent at 510 units sold).
Despite looking at a half-sized Q1 production plan, GM says it will bump truck production in the month of March. Production will be restored and escalated in March at GM’s Flint and Arlington truck plants, meaning there will be more Silverado, Sierra, Tahoe, Yukon and Escalade models. So, uh, why? “As far as our 2008 and 2009 mix goes, we’re significantly down on 2008 models, where most of our competitors have a lot of 2008 to get rid of. So anticipating a spring selling season, we’d like to increase our 2009 inventory,” GM’s Pete Ternes tells Automotive News [sub]. GM’s truck inventory has dropped noticeably, from a 122-day supply on December 1. But with 90 days of light truck supply, there’s still no real reason to increase production. Most industry-watchers consider a 60-day supply ideal. So what’s up?
The UAW has approved terms of a possible deal that would send GM’s Flint, MI, medium-duty commercial truck business to Isuzu. The deal, though not completed, would keep the assembly line’s UAW workforce building GMC TopKick and Chevrolet Kodiak trucks until 2014. UAW Local 598 Shop Chairman Mark Hawkins tells MLive that a GM-Isuzu deal would be best for workers considering GM’s financial struggles and its desire to shed the commercial truck business. “We got [sic] close to 500 people who work on that product line,” says Hawkins. “This keeps that work in Flint for the next six years.” GM had previously planned to sell the business to Navistar, which would have moved production to its Springfield, OH, plant. According to UAW officials, the Navistar deal fell through because GM no longer wanted to move ahead with production of a super-heavy-duty pickup product at Flint Truck. GM is currently “assessing various strategic options for the business” saying, “no decisions have been reached and there are no details to share at this time.” While UAW members are sweating out news about the future of their jobs, may I suggest they take a moment to reflect on how much worse things could be?
Rumors of GM channel-stuffing became reality when we heard that the General was forcing dealers to take on unwanted inventory to qualify for incentive cash. And while the smaller dealers are stuck between a rock and a hard place, big boys like AutoNation at least have enough clout to make a choice. And CNN reports that AutoNation has told GM where it can stick its overstock. GM and Chrysler “have implemented wholesale incentive programs where they basically say to get the incentives for the inventory you want, you have to buy more inventory,” AutoNation CEO Mike Jackson said Thursday with his trademark subtlety. “The channel is full, and they are trying to stuff more in. I think this is the wrong thing to do. We are not playing that game.” Meanwhile, GM and Chrysler are exhorting their dealers to take more unwanted inventory. While on a sales drum-up dealership tour last week, Chrysler Vice Chairman Jim Press said the automaker needs dealers to begin ordering vehicles because the “downside could be a lot worse” if orders don’t increase. For the OEMs, anyway. AutoNation’s fourth quarter sales dropped 34 percent, although $200 million in cuts and $750 million in debt paydown last year have helped keep the retailer afloat. “We do believe that there’s the possibility of an improvement in March if credit really begins to thaw, but we are taking a wait-and-see attitude,” Jackson said. “We want to see it before we’ll stop at that level.”
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