Check Your Mirrors

Odds and Ends about Cars and the Car Business

By Brendan Moore

06.17.2008

Sirius and XM are getting closer to the merger initiated last year as an important federal regulator signaled that he was agreeable to the proposed merger. FCC Chairman Kevin Martin confirmed that he would support the deal and stock prices at both companies rose accordingly. Antitrust regulators at the Justice Department have already approved the merger in March of this year, saying that they believe there is no antitrust concern since satellite radio has plenty of competition in the marketplace from iPods, MP3 players, traditional and HD radio, audio on mobile phones, etc. The approval from Martin was contingent on some conditions laid down by the FTC; those conditions would require a pledge to make 24 radio channels available for noncommercial and minority programming, an agreement to cap prices, provide interoperable radios and offer programming on an “a la carte” basis. XM has about 9.3 million subscribers, versus 8.6 million for Sirius.

Auto dealers are in crisis mode concerning inventories of small fuel-efficient cars. Almost every dealer is sold out of new cars that fit that description, and the pressure to keep the used car lot stocked with late-model cars that possess good fuel economy is intense. This has led to bidding wars at the wholesale auctions, and fat trade-in values for consumers when they’re trading in a small car. Conversely, the big iron like SUVs and pickups goes unwanted and unloved on the new car lots as consumers continue to react to $4.00 a gallon gasoline. The wholesale auctions present an even more damning arena for the formerly high-flying SUV and pickup segment, with used car managers from every dealership making the sign of the cross and hurrying away when an SUV or pickup truck comes across the block.

GM says (June 16th) they’re feeling pretty confident about the Chevrolet Volt meeting all of its performance goals and its promised 2010 launch. Bob Lutz says they are also close to naming the battery supplier for the EV that will carry the green flag for GM in the near future. “I would say there’s almost no reasonable doubt in our minds anymore that this is going to work,” said Lutz, who heads vehicle development for GM. Lutz stated that the Volt prototypes are routinely exceeding the desired battery performance parameters, and under some adverse conditions in terms of speed, load, etc.

Skoda says that despite all the rumors of their new SUV being introduced at the London Auto Show next month, the Skoda Yeti will be introduced next year. According to an article in Automotive News, “the SUV will be built at Skoda’s Kvasiny site alongside the large Superb and the Roomster medium minivan. The two Kvasiny assembly lines have a total production capacity of 200,000 units. Skoda will target central Europe with its Yeti and is expected to sell around 50,000 units annually. “It will be positioned to fill the gap of both SUV and MPV (minivan) that are not part of the Skoda product line-up,” said Walt Madeira, manager of European vehicle sales forecasts at the UK office of CSM Worldwide. “Skoda must try to get a piece of the pie as SUV sales are very lucrative.” Eckhard Scholz, Skoda board member in charge of technical development, said in March the car will come in four-wheel drive and front-wheel drive-only variants: “I expect most customers will have the four-wheel drive variant.” I would say that is a pretty safe bet, Eckhard. For those of you that are unfamiliar with Skoda’s recent successes in the marketplace, suffice it to say that they have not put a foot down wrong the last few years, and are transforming themselves into quite a European powerhouse. Skoda is an important part of parent company VW’s plan for world domination by 2020.

Toyota is actively considering converting some truck plants in the U.S. to car production, which should not be a surprise to anyone after the last month of news coverage concerning changing consumer tastes regarding small cars. Mighty Toyota is not immune to those market forces; sales of the full-size Toyota Tundra fell 31.5% in last month compared to sales in May 2007. “Because of the declining sales of the Tundra and SUVs and the resulting decrease in the rate of operation of the lines producing those vehicles in the United States, we may consider a change in structure to enhance the rate of operation,” stated Toyota Executive Vice President Takeshi Uchiyamada. May also saw two Toyota cars, the Corolla and the Camry (along with two Hondas), post some gaudy sales numbers and dislodge the Ford F-150 pickup truck from its usual perch as best-selling vehicle every month, a spot the Ford pickup has held every month since 1991.

Chrysler LLC is probably going to get their upcoming Hornet from Nissan. Nissan will use the Nissan Versa platform to build the sub-compact in Oppama, Japan. The Hornet will be built in 2009 and retail as a 2010 model. Chrysler hopes the Hornet will compete with cars like the Versa, Honda Fit, MINI, VW Rabbit, etc. Chrysler is desperate for some presence in the segment, since the company is extremely weighted towards large trucks and SUVs, and many of their best selling cars are also fairly thirsty. The Hornet concept was originally shown in 2006, caused a stir, and has been waiting for someone to wave a magic wand over it since. It appears that events have now pushed production of the car onto the fast track.

SAIC Motor plans to start production again at its British plant in August making MG-brand sports cars, its president, Chen Hong, said recently. The plant is located in Longbridge and has been idle since last year, when the limited production was pinched off to nothing. Nanjing, the original buyer of MG, was itself acquired by SAIC, another Chinese car company, and as little as three months ago, SAIC was dropping broad hints that they would abandon the Longbridge production site. When Nanjing originally announced the reopening of the famous Longbridge plant, hopes were high that the Chinese company would employ a considerable amount of the former workers, but those hopes were quickly dashed after Nanjing stated that only the MG TF would be produced there. Now SAIC is circling around to the original Nanjing plan. Strangely enough, Nanjing had also planned to produce the MG TF in the small town of Ardmore, Oklahoma in the United States. That early announcement, made quickly after their purchase of MG Rover, was met with head-scratching on both sides of the Atlantic. And after that early announcement, nothing much was ever heard about Ardmore, Oklahoma again, even though Nanjing said they had to make MGs in the United States since they were going to sell so many of them in the United States after the triumphant return of the MG octagon to these shores. SAIC will retail the British-made MG TF sports cars in the UK through approximately 40 dealers, starting at the end of August or in early September, Hong said at a shareholders’ meeting. We shall just have to wait and see if they are able to make that timeline. I have my doubts.



COPYRIGHT Autosavant.net – All Rights Reserved

Author: Brendan Moore

Brendan Moore is a Principal Consultant with Cedar Point Consulting , a management consulting practice based in the Washington, DC area. He also manages Autosavant Consulting, a separate practice within Cedar Point Consulting. where he advises businesses connected to the auto industry. Cedar Point Consulting can be found at http://www.cedarpointconsulting.com.

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7 Comments

  1. Chrysler gets their first small car two years from now?

    Ouch!

  2. Right on about used car values. We can’t touch the prices at the auctions – we’d have to sell the cars for the same price as new ones, but when people come in with SUVs and trucks, they are shocked at how little we can offer them.

  3. px sarge, it’ll arrive at the time when the new-gen Fit arrive and the new upcoming Ford Fiesta (and possible Mazda 2 coming to Canada and the US will arrive at the same time. And I didn’t mentionned the rumor of the arrival of the Fiat 500 for this side of the pond.

    And by tying up with Nissan seems to be (to my eyes ^^:) a more better alternative then Chery.

  4. We are telling people at your dealership to just keep their SUV’s. I hate to put an ACV on any truck because you get the customer really mad and they just walk. It just doesn’t work out for you as the dealer unless you’re the fourth or fifth place they visit. After they hear the low price for the fifth time in a row, they stop thinking you’re trying to steal the trade. And then maybe you can do the deal, even though they’re still mad.

  5. Just ACV’d an 04 Chevy Tahoe with 87k on it: $5700!!!! KBB and NADA haven’t caught up, got the guy thinking it was worth $13k. Needless to say we were too far apart…

  6. For those of you not in the car business, ACV is short for Actual Cash Value and that is the number the used car manager puts on a trade-in after he appraises it. It’s what the car is actually worth in wholesale value. It will never change although the trade-in amount shown on paper to get the deal done will go up and down.

  7. In all of three days last week, I watched one of the area’s largest Ford dealerships remove ALL of their enormous trucks with lift-kits that had been a proud fixture on the forecourt for years and years, and quickly replaced the empty space with Focuses, Tauruses, Fusions and Mustangs.

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