[fflint]

Here's an example of why Japanese auto companies will keep winning at the expense of GM and Ford:

Behind Toyota's hybrid revolution
Automaker's successful gamble with Prius fuels its image as a trendsetter

Robert Collier, San Francisco Chronicle Staff Writer
Monday, April 24, 2006

http://sfgate.com/c/pictures/2006/04/24/mn_prius22mar06dpm001.jpg
Workers assemble doors for the Prius at the Toyota Tsutsumi Plant in Toyota City, Japan. Toyota accounts for about 80 percent of U.S. hybrid sales

http://sfgate.com/c/pictures/2006/04/24/mn_prius22mar06dpm.jpg
Satoshi Ogiso, chief designer of the Prius, stands inside the Toyota showroom in Toyota City, about 150 miles southwest of Tokyo

Toyota City, Japan -- Satoshi Ogiso doesn't look or act like a brash automobile executive. With an ill-fitting suit and spiky hairdo, his hands flutter bashfully across his face as he talks of "difficulties," "challenges" and "problems."

The 45-year-old engineer refuses to brag about his accomplishments. But as chief engineer of the hybrid Prius, Ogiso has helped Toyota revolutionize the auto industry.

By making huge long-term investments in gas-saving technologies that U.S. automakers pooh-poohed, Toyota has proved that corporate environmental consciousness can be wildly profitable.

"What has made this revolution possible is that Toyota is a company with a focus on technology, because we think innovation is the future of our company," Ogiso said in an interview. "So we cannot fall behind. We are trying very hard, and it is very difficult."

Ogiso's humility is typical of Toyota. Its world headquarters in Toyota City, a quiet industrial city 150 miles southwest of Tokyo, has a deceptively modest demeanor: The nondescript, 13-story building looks like it might house a midsize insurance firm in any American suburb.

But Toyota is expected to overtake the nearly bankrupt General Motors this year as the world's largest automaker. While GM and Ford are closing factories and losing billions of dollars annually, Toyota is expanding at a red-hot pace around the world.

For years, Toyota recorded solid growth because of its dependable, fuel-efficient cars such as the Camry. Then, in the 1990s, while U.S. automakers were building bigger and bigger SUVs and trucks, Toyota threw itself into hybrid gasoline-electric research, investing more than $1 billion in the then-little-known field.

Executives at GM, Ford and Daimler-Chrysler derided the hybrids as money-losers and lagged in producing their own models. Toyota pressed ahead, and its resulting hybrids -- the Prius, the Highlander SUV and Lexus RX400h, as well as a half-dozen other hybrid models sold only in Japan -- now dominate the market, accounting for about 80 percent of U.S. hybrid sales.

Hybrids make up only 3 percent of Toyota's overall world sales, but the buzz resulting from their success has added to Toyota's public image as a trend leader.

"Toyota is willing to make investments to gain technological capability, not just for guaranteed returns on investment, like the Big Three," said Jeffrey Liker, the author of a recent book, "The Toyota Way."

"Toyota believes that 10 years from now, its hybrid technology will be like the Windows platform is now -- most cars will be a version of hybrid," said Liker, a professor of industrial and operations engineering at the University of Michigan. That gamble is "probably correct," he added.

In many ways, the Prius project appears to be a textbook example of Toyota's much-vaunted, much-imitated internal management system and its mantra of kaizen, or continuous improvement, in which top executives steadily ratchet up performance standards for their employees, while also listening closely to suggestions and emphasizing consensus.

The project was the brainchild of Toyota's chairman at the time, Eiji Toyoda, a member of the company's controlling family, who had an unusual obsession with energy saving. The secretive project, known internally only as G21, was at first not meant to be a hybrid.

Ogiso was one of the original team of about 100 engineers selected by Toyota chiefs in late 1993. "We didn't know much about the idea," he said. "Our only instruction was that it should achieve a fuel-efficiency improvement of 50 percent, and it somehow should be the 'car of the 21st century.' "

The insistence on fuel efficiency was highly unusual. At the time, the price of oil averaged below $15 per barrel, Americans were snapping up ever-bigger SUVs, and saving gasoline seemed like a politically correct anachronism.

But Toyota's chairman convinced his top executives that environmental issues were a long-term threat, said Takehisa Yaegashi, a chief of the Prius project in the mid- and late 1990s who later became chief of all Toyota alternative power-train projects.

"In those years, discussions were going on about the hybrid program, but we thought it was quite clear that global warming was a challenge we would have to take up," said Yaegashi, who now is a semi-retired consultant for the firm.

In September 1994, the G21 team first heard hints from top executives that it should consider hybrid technology, which had been tainted by its association with an earlier, failed project to build an electric car. That December, management came with a thunderbolt -- instead of a 50 percent improvement in fuel efficiency, the new car would need a 100 percent improvement.

The team protested that this would be impossible with a normal internal combustion gasoline engine. Fine, the response came. So you'll have to make it a hybrid.

In August 1995, Toyota's new chairman, Hiroshi Okuda, came with another thunderbolt -- instead of the previous target date of December 1998, the project would have to be completed by December 1997.

The team worked feverishly, canceling all vacations and working through most weekends, and divided into two 12-hour shifts, working around the clock.

They had several crises. At first, the electric motor's battery was very sensitive to high temperatures, and it would malfunction when heated up by the gasoline engine next to it. "For a long time, we couldn't solve that," Ogiso said. "It was very difficult."

After that was fixed, a full-scale prototype vehicle was plagued by malfunctions. "It would hardly go 100 meters," Ogiso recalled.

The tight-knit team of Yaegashi, Ogiso and the others finally succeeded in beating the deadline by two months. The Prius was launched on the Japanese domestic market in October 1997. Three years later, it came to the United States.

Last year, Toyota sold 110,400 Priuses in the United States and Canada and 43,600 in Japan. U.S. and Canadian sales of other Toyota hybrid models totaled 40,300 and Japanese sales were 14,500.

Yaegashi calls hybrid technology "the key to two issues -- the global environment and the development of world energy resources. I do not understand why U.S. manufacturers are not so keenly working on hybrid technology. Are they more optimistic about global warming or the supplies of oil?"

John Cleveland, vice president of IRN Inc., an auto industry consulting firm in Grand Rapids, Mich., said Toyota views environmental concern as simple business logic, not "do-gooderism."

Toyota has been the most explicit automaker "about the environmental challenge facing the auto industry because it has always had such a long-term perspective, ever since the days of Mr. Toyoda, when he started the company with a 50-year business plan," Cleveland said, referring to Kiichiro Toyoda, who founded the company in 1938 as an offshoot of his family's textile loom business.

"Now, they're starting to realize they have an almost $200 billion market (capitalization) based on a carbon energy source that's diminishing, and they're wondering, 'What's our company going to be worth 50 years from now, when oil may be much more scarce?' " said Cleveland, whose company's client list includes several Toyota parts suppliers. "So they're the most aggressive about developing alternate technologies."

By Wall Street's main yardstick -- the company's share price levels -- Toyota is the world's ninth most valuable company, and is now worth more than double the combined value of GM, Ford and DaimlerChrysler.

Japanese analysts agree that even by Japan's standards, Toyota is unique.

"Toyota is a model company in the field of environmental management and resource productivity," said Ryoichi Yamamoto, a professor of environmental materials design at the Institute of Industrial Science of the University of Tokyo.

Yamamoto cited Toyota's steps to improve the recyclability of its cars, its reduction of waste and pollution in its manufacturing plants, and its focus on fuel efficiency. "Other companies are trying to imitate it, but they have not yet reached the same level," he said.

Some environmentalists disagree.

"Toyota is two-faced," said Yurika Ayukawa, director of the climate change program at the World Wildlife Fund of Japan. "It wants to be seen as an eco-company, as environmentally committed, but it's really just business as usual."

Ayukawa noted that Toyota has joined with U.S. automakers in filing lawsuits in state and federal court seeking to block California's landmark 2004 rule ordering all automakers to reduce the greenhouse gas emissions of the cars they sell.

Masayuki Sasanouchi, general manager of Toyota's environmental affairs division, defended the company's attack on the California rules.

"We understand climate change is a federal issue, so we don't think California has a right to legislate it," he said. "We don't believe carbon dioxide is the same as a pollutant, and for this reason it's not covered under the Clean Air Act," he said, referring to the 1977 law, amended in 1990, that gives California the right to set air-quality standards different from the federal government's rules.

In fact, Toyota probably would benefit if the new California rule goes into effect in 2009 as scheduled, because its cars produce less emissions than its competitors' cars. But some analysts said Toyota seems to have bowed to larger political concerns, calculating that by allying with the politically powerful Detroit automakers on the anti-environment lawsuits, it could defuse pressure in Congress for anti-Japanese tariffs.

"Toyota is hypersensitive to the potential for protectionist backlash," Jeffrey Liker said, pointing out that Toyota's exports from Japan to North America are growing fast, reaching 940,000 cars in 2005, up 16 percent from 2004.

Environmentalists also have criticized Toyota for using hybrid technology to boost the horsepower and acceleration, rather than fuel efficiency, of its new Lexus RX 400h and Highlander hybrid models.

And under U.S. fuel-efficiency rules, the high mileage of the Prius helps Toyota comply with fleet averages even as it launches gas guzzlers like a larger, beefed-up version of the Tundra, its big pickup.

For Toyota, whose U.S. sales are soaring while American automakers' sales are slumping, there is never time for bragging.

A hybrid version of the best-selling Camry will be released this autumn. Ogiso said his team of engineers is working on a new version of the Prius and other hybrid projects.

"We need to continue working hard," Ogiso said. "We need to be making drastic improvements."

[James Bond Agent 007]

Here's an example of why Japanese auto companies will keep winning at the expense of GM and Ford:

Behind Toyota's hybrid revolution
Automaker's successful gamble with Prius fuels its image as a trendsetter

. . .
And here's why that "successful gamble" could very well be just a lot of hype.

http://today.reuters.com/business/newsarticle.aspx?type=ousiv&storyID=2006-04-24T203917Z_01_N24388311_RTRIDST_0_BUSINESSPRO-AUTOS-HYBRIDS-DC.XML

US hybrid sales mostly slack despite gasoline hike
Mon Apr 24, 2006 4:38 PM ET
By Poornima Gupta

DETROIT (Reuters) - U.S. gas prices have risen nearly a third over the past year without touching off a boom in sales of fuel-efficient hybrid vehicles, some of which are sitting on dealer lots for as long as three months.

Many U.S. consumers are concluding that what they save in gasoline and on tax credits from driving a hybrid does not justify the roughly $3,000 premium they face at the dealership, even with high and volatile fuel prices, analysts said.

That poses a problem for car makers including Honda Motor Co. Ltd. (7267.T: Quote, Profile, Research), Ford Motor Co. (F.N: Quote, Profile, Research) and Toyota Motor Corp. (7203.T: Quote, Profile, Research), that have bet on broadening popularity for hybrids, including more powerful six-cylinder models and sport utility vehicles.

"What it comes down to is whether you want to pay for that premium right up front... or pay for it incrementally in the form of a different vehicle that gets a slightly lower fuel economy," CSM Worldwide analyst Mike Jackson said.

Gasoline prices across United States are nearing $3 a gallon, up from $2.23 a year ago, driven by a surge in oil prices to record highs.

Hybrid vehicles, which use both gasoline and electric power to achieve better mileage, have been touted as a way to reduce consumption of oil and to reduce exhaust emissions.

Some hybrids qualify for special car pool lanes in some states, a key benefit in traffic-clogged areas. Many also carry federal and state tax incentives.

But for most U.S. consumers, the economics still favor traditional gasoline-powered cars.

An April report by Consumer Reports concluded only two hybrids in the U.S. market offer savings over five years and 75,000 miles -- the Honda Civic and the Toyota Prius. Even then, the savings are small: $400 and $300 respectively.

Other models actually cost between $1,900 and $5,500 more to own and operate, the magazine published by Consumers Union reported. It assumed gasoline prices of $3 per gallon, rising to $4 per gallon over the five years.

'DO THE MATH'

"For there to be a major shift in the industry, prices have to go well above $3 a gallon and remain there consistently," said Tom Libby, senior director of industry analysis at Power Information Network. "If you do the math it's still going to take many, many years to recoup your extra price through gas savings."

Honda has said it may cut production of its Accord hybrid after weaker-than-expected sales in its first four months on the market.

The Accord hybrid sat 90 days on average on dealer lots last month, while Ford's Escape hybrid took 61 days to sell on average. Toyota Highlander and Lexus RX400h hybrids sat on the lot for over a month, according to Power Information Network.

The two hot-selling hybrids have been the Prius, selling on average in 8 days, and the Civic hybrid, selling in 12 days, on average.

Jackson and other analysts said the Prius has been a hit because its distinctive styling immediately identifies it as a hybrid -- conferring a kind of halo effect for its drivers.

The lack of broader sales momentum has prompted some automakers to offer discounts on hybrids.

Ford is offering interest-free loans, and has underwritten a national ad campaign, featuring Kermit the Frog singing: "It is easy being green."

Ford and other automakers have a lot of investment riding on the hybrid market. Ford is planning to increase production of the gasoline-electric vehicles tenfold to 250,000 by 2010.

Toyota is targeting sales of 400,000 hybrids this year. General Motors Corp.(GM.N: Quote, Profile, Research), Nissan Motor Co.(7201.T: Quote, Profile, Research) and others all plan to introduce hybrid models in coming years.

Hybrids currently account for only about 1 percent of all U.S. light vehicle sales, a share expected to grow to only 4 percent in the next six years, according to J.D. Power.

The automakers are watching the hybrid market very closely and trying to project its longer-term growth said David Cole, chairman of research firm Center for Automotive Research.

"A fairly realistic market is beginning to emerge here," Cole said, referring to the slower sales of some hybrid models. "Some of the luster is wearing off."

[fflint]

And here's why that "successful gamble" could very well be just a lot of hype.
It's still working out for Toyota, though--

The two hot-selling hybrids have been the Prius, selling on average in 8 days . . . Toyota is targeting sales of 400,000 hybrids this year.

Hybrids make up only 3 percent of Toyota's overall world sales, but the buzz resulting from their success has added to Toyota's public image as a trend leader . . . Toyota is expected to overtake the nearly bankrupt General Motors this year as the world's largest automaker. While GM and Ford are closing factories and losing billions of dollars annually, Toyota is expanding at a red-hot pace around the world.

[bmorescottamanda]

It's still working out for Toyota, though--
But know American people is finding out that a hybrid does not save them money for years. Most likely hybrid sales will go down not up. Unless car companies lowers their prices on hybrids and I don’t see Toyota doing that. Maybe Ford or GM or even Honda but not Toyota.

[James Bond Agent 007]

Here's an example of why Japanese auto companies will keep winning at the expense of GM and Ford:
It's still working out for Toyota, though--
Just Toyota, not the others.

The Accord hybrid sat 90 days on average on dealer lots last month, while Ford's Escape hybrid took 61 days to sell on average. Toyota Highlander and Lexus RX400h hybrids sat on the lot for over a month, according to Power Information Network.
It's pretty obvious to me the Prius is basically a cult car. If it weren't for its unique design, they'd probably be doing about as well as those Accord hybrids.

[fflint]

What is a "cult car," and why would it matter if a hot-selling car was a "cult car" or not?

[austin356]

But know American people is finding out that a hybrid does not save them money for years. Most likely hybrid sales will go down not up. Unless car companies lowers their prices on hybrids and I don’t see Toyota doing that. Maybe Ford or GM or even Honda but not Toyota.


Not anymore. It IS economically a good choice to buy a hybrid now. It will pay for it self in no time if you buy the right hybrid.

Ex. The 2007 Camry is only $500 more than the same model (XLE), with same features. They are exactly the same car, but one has a 150 hp gas engine and 50 hp electric engine = 200 hp. And the XLE is a 248 hp gas engine. Every thing else is exactly the same.

So the question is for roughly the same price, would you want a camry that gets a combo of 40 mph. with 200 hp. or camry with 248 hp that gets a combo of 25-26 mph.

Even if it is not economically a good choice now, that doesnt mean it wont be a great choice later, when crude continues to spike do to geopolitical tension.

So if you have $4.00 gasoline, and drive 20k per year, (your gas cost would be 2k a year compared to 2.5k a year)
YOU WOULD EFFECTIVELY PAY FOR THE DIFFERENCE OF BUYING A CAMRY HYBRID, EXCLUDING TAX BREAKS, AFTER 1 YEAR!!!!

The one downside is that they only have one camry model available, and that one comes with a good bit of options, ex. 440 watt sound system. This hurts consumers who would have otherwise wanted a "stripped down" cost effect hybrid.z

[James Bond Agent 007]

What is a "cult car," and why would it matter if a hot-selling car was a "cult car" or not?
"Cult cars" are cars like the late-80's Miata or the late-90's new Beetle which sell a lot of cars for a few years, and then typically sales start to fall off, often dramatically. While they're selling well, people will pay premiums just to get one. Basically, they're a fad. They usually have some sort of unique or quirky design, which is a major reason why they become a fad or cult.

The Prius may or may not eventually become a fad, but IMO right now it looks like a fad, smells like a fad, and tastes like a fad, so it probably is a fad. Time will tell.

Hybrids in general could certainly become mainstream, but the Prius itself looks like a typical fad.

[fflint]

...sell a lot of cars for a few years, and then typically sales start to fall off, often dramatically. While they're selling well, people will pay premiums just to get one. Basically, they're a fad. They usually have some sort of unique or quirky design, which is a major reason why they become a fad or cult.
Ah, like the new retro Ford Mustang. Gotcha.

Only time will tell if Toyota's Prius sales start to fall off, let alone fall off dramatically. With reports today that Bush has urged lawmakers to "expand tax breaks for the purchase of fuel-efficient hybrid automobiles, a politically popular measure that's also supported by environmentalists," the Prius may actually become more affordable--which would seem to be good news for sales.

http://news.yahoo.com/s/ap/20060426/ap_on_go_pr_wh/bush

[James Bond Agent 007]

Ah, like the new retro Ford Mustang. Gotcha.
Could very well be.


Only time will tell if Toyota's Prius sales start to fall off, let alone fall off dramatically. With reports today that Bush has urged lawmakers to "expand tax breaks for the purchase of fuel-efficient hybrid automobiles, a politically popular measure that's also supported by environmentalists," the Prius may actually become more affordable--which would seem to be good news for sales.

http://news.yahoo.com/s/ap/20060426/ap_on_go_pr_wh/bush
If in fact hybrids do become mainstream and become more affordable, the irony is that it will probably kill the Prius. With tons of other hybrids to choose from, the odd design of the Prius would probably wear thin after a while and people will increasingly choose some of the other, more "normal"-looking hybrid models.

[bmorescottamanda]

Ah, like the new retro Ford Mustang. Gotcha.

Only time will tell if Toyota's Prius sales start to fall off, let alone fall off dramatically. With reports today that Bush has urged lawmakers to "expand tax breaks for the purchase of fuel-efficient hybrid automobiles, a politically popular measure that's also supported by environmentalists," the Prius may actually become more affordable--which would seem to be good news for sales.

http://news.yahoo.com/s/ap/20060426/ap_on_go_pr_wh/bush
Maybe but GM and ford will most likely bring out hybird cars in the next two years that will sell just as good as the Toyota Prius.

[fflint]

If in fact hybrids do become mainstream and become more affordable, the irony is that it will probably kill the Prius. With tons of other hybrids to choose from, the odd design of the Prius would probably wear thin after a while and people will increasingly choose some of the other, more "normal"-looking hybrid models.
You seem to assume the continued availability of similar-priced hybrids that look no different from ordinary gas-guzzlers will matter more to buyers in the future than now. If that is your thinking, then why? Nobody who dislikes the Prius' styling need buy one to enjoy a hybrid--yet it's the top seller. Maybe that is because buyers like the styling? I know I do.

You think the Prius looks "odd"--is that kind of like "refined?"--and furthermore, you seem to assume they'll always look "odd," that either the design won't mainstream along with hybrid technology itself, or alternatively, that somehow people will never be able to get used to today's design over the coming years. If that is your thinking, then why? I'd be willing to bet money Toyota will change the Prius' design annually, and especially so if the market's tastes change. All car companies do that for all models.

[James Bond Agent 007]

You seem to assume the continued availability of similar-priced hybrids that look no different from ordinary gas-guzzlers will matter more to buyers in the future than now. If that is your thinking, then why? Nobody who dislikes the Prius' styling need buy one to enjoy a hybrid--yet it's the top seller. Maybe that is because buyers like the styling? I know I do.
The Prius sells well now because the combination of its distinctive styling and the fact that it's a hybrid has a very strong appeal to a very specific demographic (which can also afford the higher initial cost of the car). This is the same kind of thing as when the new Beetle first came out, as well as the Miata, the new Mustang, etc.

However, that specific demographic is . . . well, it's very . . . specific. Mass-market vehicles such as the Accord, Camry, Focus, Impala, Sentra, etc etc tend to be much more conservatively designed. If the folks at Toyota want to sell a hybrid that also appeals to a larger audience, they'll have to come up with a more conservative design and lower the initial price.

I read recently that they plan on selling a hybrid Camry within the next year or two. We'll see if this does better than Honda's hybrid Accord. I suspect that much will depend on the pricing.


You think the Prius looks "odd"--is that kind of like "refined?"--

No, if anything it's the opposite of "refined." It's more like . . . quirky.


and furthermore, you seem to assume they'll always look "odd," that either the design won't mainstream along with hybrid technology itself, or alternatively, that somehow people will never be able to get used to today's design over the coming years. If that is your thinking, then why? I'd be willing to bet money Toyota will change the Prius' design annually, and especially so if the market's tastes change. All car companies do that for all models.
You are right, as I suggested above, if Toyota can make the Prius design more mainstream, and/or if they come out with other hybrid models with a more mainstream design, it's possible they can make hybrids themselves much more "mainstream." Provided, again, that they can reduce the initial premium cost somewhat. I suspect that the main reason why hybrid Accords don't sell too well is simply because of the too-high initial cost. An extra, say, $900 might be OK. But an extra $3000 is probably too much since most people aren't sure how long they'll own a car when they buy it, nor are they sure what the price of gas will be over the time period they think they might own the car.

[bmorescottamanda]

Ah, like the new retro Ford Mustang. Gotcha.

Only time will tell if Toyota's Prius sales start to fall off, let alone fall off dramatically. With reports today that Bush has urged lawmakers to "expand tax breaks for the purchase of fuel-efficient hybrid automobiles, a politically popular measure that's also supported by environmentalists," the Prius may actually become more affordable--which would seem to be good news for sales.

http://news.yahoo.com/s/ap/20060426/ap_on_go_pr_wh/bush

I don't think you should compare the Toyota Prius to a Ford Mustang that has been around for 40+ years.

[Baltimore21213]

Ford is the only brand car I would buy.

[SSLL]

From: http://www.nytimes.com/2006/05/11/business/11detroit.html?_r=1&oref=slogin&pagewanted=all
__________________________
Detroit Grapples With a New Era: The Not-So-Big 3

By MICHELINE MAYNARD
Published: May 11, 2006
DETROIT, May 10 — Fans of the Detroit Red Wings hockey team have booed plenty of opposing teams over the years at Joe Louis Arena, but last month they let loose at another traditional Detroit opponent: Toyota. What set them off was a new Toyota FJ sport utility vehicle that circled the ice during the second intermission of an April 11 game between Detroit and Edmonton.

The outburst showed how the Motor City is still having trouble adjusting to a new reality here: the Asian car companies that Detroit once vowed to vanquish have moved squarely into the front yard of the capital of American automotive dominance.

Toyota and Nissan and Hyundai of South Korea have opened gleaming technology centers and are hiring some of Detroit's most talented engineers and designers. They are also becoming more a part of the city's social fabric by supporting local charities, sponsoring teams like the Red Wings, and lending a distinctly Asian flavor to previously homogeneous suburban neighborhoods.

There are signs the city is making progress adjusting to the transition. Gone are the days when fans of the Big Three companies angrily vented their frustrations, as they did 25 years ago, by taking sledgehammers to foreign cars at special events. Nor does anyone still talk seriously, as Henry Ford II did in the 1970's, about pushing Toyota and Honda "back to the shores" of Japan.

Still, old attitudes die hard, and it does not take much for them to flare up. In a town where the United Automobile Workers union has long banned foreign cars from its lots, union members at Ford's local plants decided last winter to kick everything but Ford vehicles out of the choicest spots. Now, "non-Ford-family" cars and trucks are relegated to far-off parking spaces.

Workers at Ford, as well as G.M., have been badly shaken by their companies' slumps. The two automakers collectively plan to cut 60,000 jobs and close more than two dozen plants over the next few years. They have lost billions of dollars in North America in recent years, and their share of the market has dipped to its lowest point ever because of gains by Japanese and Korean automakers.

Just last week, for the first time, Toyota beat DaimlerChrysler in monthly car sales. It has already overtaken Ford in worldwide sales and, if current trends hold, it will overtake G.M. in the not too distant future. On Wednesday, Toyota reported a net profit of $12.1 billion for the fiscal year ended March 31, making it the most profitable manufacturing company in the world.

That may be why no less than Ford's chief executive, William Clay Ford Jr., great-grandson of the company's founder, is now warning that blind patriotism to Detroit's old ways is dangerous.

"If we are invested in that even 1 percent, we are going to lose," Mr. Ford said in an interview late last month. But he also acknowledged the difficulty in changing those attitudes.

"This is an insular industry and an insular town," he said.

Indeed, there are still signs that Detroit is trying to circle the wagons. The troubles at G.M., which lost $10.6 billion last year, have generated enormous sympathy here for the company and its embattled chief executive, Rick Wagoner, who has become something of a symbol of Detroit's fight against outside forces.

Those include the billionaire Kirk Kerkorian, the company's biggest shareholder, whose representative, Jerome B. York, has publicly pushed for change at G.M. and recently joined the company's board.

"We Almost Lost Rick!" read the headline on a story last month in Automotive News, the trade publication that covers the global industry. In it, the paper detailed how Mr. Wagoner threatened to quit if his board did not back him in the face of a media storm that declared his job to be in jeopardy. (The board did issue a statement of support.)

But statewide, the support for the homegrown companies is beginning to wane in one essential way, if ever so slightly. Five years ago, Detroit's Big Three took 90.8 percent of auto sales in Michigan, according to J. D. Power. Lately, that has slipped to 88.3 percent — compared with about 55 percent nationwide.

One reason is that the makeup of the state and especially its wealthiest areas has simply changed. Though still a fraction of the whites in the suburbs and the blacks in Detroit, the number of Asians living in the four counties surrounding Detroit has more than doubled since 1990, to over 120,000. Nearly half live in upscale Oakland County, helping to further diversify an area that includes a sizable Arab population, centered in Dearborn, where Ford has its headquarters.

The public school that Mr. Ford's son attends in Ann Arbor, home to the Toyota Technical Center, is more than 40 percent Asian, he said. Hiller's Markets, a six-store chain of upscale grocery stores across the metropolitan area, features entire refrigerator and frozen-food cases with a selection of products that rivals a Tokyo shop, including pickled plums, Japanese brands of energy drinks and fermented soybeans.

In suburbs like Novi, about 35 miles northwest of Detroit, some real estate agents do 90 percent of their business with Japanese customers. Spots in the city's English as a Second Language program, offered twice a year, fill up as soon as classes are made available.

"In an hour and a half, we're done," said Bob Steeh, director of community education for the Novi Public Schools.

One popular class features field trips to Home Depot, a funeral home and a local hospital, meant to show newcomers how life is lived differently from back home. But others stick to what they know best.

Yoko Watanabe, 50, who moved to Novi 10 years ago to join her husband, Yasue, an interpreter, edits a local Japanese business newsletter and teaches Japanese to schoolchildren and businessmen.

"My husband sometimes reprimands me for not trying to blend enough or know Americans more," she said, speaking through her husband, who interpreted for her.

The new environment traps Detroit between its traditional identity and whatever new role it may play in a global automotive world, said William Pelfrey, a former G.M. speechwriter and the author of the book, "Billy, Alfred and General Motors," about two former G.M. leaders: William C. Durant and Alfred P. Sloan.

"Clearly the old Detroit as the Motor City is history," Mr. Pelfrey said. "But the jury is still out on what Detroit is going to become."

Michigan's governor, Jennifer M. Granholm, is trying to provide one answer. Facing the loss of thousands of traditional auto jobs, and with a tough re-election race looming this fall, she is zealously competing for an engine plant that Toyota has indicated it wants to build in a Midwestern state.

Ms. Granholm, who has already visited Japan once to lobby for the factory, plans another trip soon— as does Indiana's governor, Mitch Daniels, who wants the plant for his state.

The changing complexion of the city is one reason a Detroit radio personality, Paul W. Smith, now regularly interviews executives like Carlos Ghosn of Nissan and James Press of Toyota on his morning show, long a platform for the city's auto figures.

"Anybody who is paying attention and who is making a difference is not booing Toyota and Nissan," said Mr. Smith, who has a show on the Detroit radio station WJR and occasionally sits in for Rush Limbaugh on his national show.

At his invitation, Toyota has become a sponsor of Mr. Smith's annual golf tournament benefiting Detroit's Police Athletic League — something that would have been "impossible" a decade ago, he said. Mr. Smith said he believed that the region would come through the industry's crisis, but not without some re-examination. "Things are not going to be the way they were," Mr. Smith said.

For his part, Mr. Ford does not think everything about the old Detroit needs to be discarded. Despite recent efforts by Toyota and other foreign companies, Detroit automakers still lead in backing the city's vast array of charities, he said.

What he wants to see, both for his city and for his employees, is a more realistic attitude about their place in a global industry. "I see what's happening to this world — how it's shrinking, how immigration is changing, and I think it's fascinating and invigorating," Mr. Ford said.

Instead of booing the Japanese competition, Detroiters may want to recall the counsel of Mr. Ford's great-grandfather, the original Henry Ford, who once said: "Don't find fault — find a remedy. Anybody can complain."

[SSLL]

From: http://www.cleveland.com/business/plaindealer/index.ssf?/base/business/1147423004244900.xml&coll=2
____________
What went wrong at Saturn?
What was right?
Friday, May 12, 2006
Christopher Jensen
Plain Dealer Auto Editor
Healdsburg, Calif.- Creating Saturn in 1983 - a clean-sheet car company with which to fight the imports - was a bold and innovative idea from General Motors Corp.

New dealers would be hand-picked for their customer satisfaction ratings and eagerness to try something different.

There would be new ideas, such as no-haggling prices.

Innovative vehicles would offer unusual features such as polymer composite body panels that shrugged off dings.

There was no subtlety in the choice of the Saturn name, which was inspired by the Saturn rocket used to send Americans to the moon.

The Saturn car company would blast free of the bureaucracy, customs and legal limitations of old General Motors. Its goal was conquest, attracting import-oriented customers who otherwise wouldn't consider a GM vehicle.

The Saturn dealers were selected by a team headed by Jill Lajdziak, who joined GM in 1980. Their work turned out to be brilliant. Saturn dealers routinely did a great job of pleasing their customers in studies conducted by J.D. Power and Associates, often rivaling luxury automakers.

But someplace along the line, GM's rocket science went awry.

In an appallingly bad series of decisions, the automaker failed to give Saturn the new, world-class vehicles it needed to thrive.

Soon Saturn's vehicles were not nearly as distinguished as its dealers, a fact top executives no longer bother to dispute.

"Saturn has only lacked a couple of things: product and more product," GM Vice President Mark LaNeve said in a speech in 2005.

Nevertheless, despite the debilitated lineup, boosted by loyal customers, the division managed to sell almost 214,000 vehicles last year, up 8 percent over 2004.

Now GM's wandering focus has returned to Saturn, and four new vehicles will be introduced this year. They are the Sky, a convertible two-seater; the Aura near-luxury sedan; the Vue Green Line hybrid and the Outlook, an eight-passenger sport utility.

One vehicle consumers won't be seeing soon is a new Ion, which the automaker was expected to build in Lordstown as early as next year. It was canceled, without any meaningful public explanation.

The person in charge of this revitalization is dealer-picker Lajdziak, who joined Saturn in 1986. Now Saturn's general manager, she appears enthusiastic about it finally fulfilling its promise.

She says Saturn will continue its core strategy of dealing honestly and fairly with customers while growing by offering exciting new vehicles.

Many of those will be designed by GM's European subsidiary Opel. They will have a unique European flair and driving dynamics that are designed to appeal to import buyers.

But with GM struggling to cut costs and the competition within the industry merciless, she is aware of the challenge.

"We are an underdog. We won America's heart in the early 1990's. We are going to win it again," she said.

[SSLL]

From: http://www.chicagotribune.com/business/chi-0605210021may21,1,1981.story?coll=chi-business-hed
_________________________
Can you see USA in car?
Supporting domestic companies and jobs with buying choices not as clear-cut as it was

By Jim Mateja and Rick Popely
Tribune staff reporters
Published May 21, 2006

Buying a domestic car instead of an import used to be as simple as choosing vanilla over chocolate.

"Domestic" meant going to a Ford or Chevrolet dealer, while "import" buyers headed to Toyota or Honda showrooms.

But in the age of globalization, when parts and vehicles can come from anywhere, a Toyota Camry can be more American than a Ford Mustang, and a Honda Pilot can have more U.S.-made components than a Chevrolet Suburban.

Nevertheless, a group called the Level Field Institute is trying to revive "Buy American" sentiment through an advertising campaign that claims buying Japanese-brand vehicles built in the U.S. will cost American jobs because domestic automakers will further retrench.

"Made in America matters," said Jim Doyle, president of the institute, a group of retired workers from domestic manufacturers funded by Ford Motor Co. "If Americans think all cars are the same, we are more likely to lose more jobs in the U.S."

Foreign-based manufacturers like Toyota can identify models like the Camry as "domestic" cars because they meet the government yardstick of having 75 percent or more of their parts made in the U.S. or Canada.

But the Automobile Trade Policy Council, a lobbying group funded by GM, Ford and DaimlerChrysler AG, says the domestic content of all Toyota vehicles sold in the U.S.--including imported models--is 48 percent. Honda's is 59 percent and Nissan's 45 percent.

For GM and Ford, the domestic parts content is 73 percent, and for DaimlerChrysler, it's 72.

Dennis Cuneo, executive vice president of Toyota North America, says that argument ignores the fact that Japanese manufacturers built more than 3.7 million vehicles in North America last year.

"Ten years ago the debate was imports versus domestics, and now the debate is the domestic content of the vehicles," Cuneo counters. "Their idea of a level playing field is for us to make fewer cars."

While manufacturers and interest groups exchange verbal volleys over domestic content, Art Spinella, president of automotive research firm CNW Marketing Research, says consumers aren't paying attention.

Price stickers on new vehicles have been required to show the domestic parts content since 1994, and Spinella says "only about 2 percent of consumers even look at it."

To most car shoppers, a Toyota Camry built in Georgetown, Ky., is as American as a Ford Five Hundred built in Chicago. Indeed, using the government's standards, both have 80 percent domestic parts.

Sid Dechter of Hanover Park believed he was buying American when he bought his daughter, Kristine, a 2006 Toyota Camry as a graduation present.

"It's made in Kentucky so while it may have some Japanese parts, it's made in America and providing jobs in America," he said.

But on the jobs issue, Doyle still sees a major distinction between a Ford and a Toyota. Even after cutting thousands of jobs this year, Ford will employ 110,000 in the U.S., while Toyota will have around 32,000.

"So would you rather buy a Toyota built in Kentucky by a company with 32,000 jobs or a Mustang with parts made in another country, but from a company that supports 110,000 jobs in the U.S.?" Doyle asked.

Toyota's Cuneo says such thinking is misguided. He points out that Toyota, Honda and Nissan are net creators of jobs as they add manufacturing capacity in the U.S.

Honda just last week announced plans to add an assembly plant and some 1,500 jobs in the Midwest. The Big Three, on the other hand, are reducing capacity and jobs in the U.S.

"The reason for fewer workers is that we are more productive, which is good for the U.S. economy," Cuneo said. "Having people in a jobs bank getting paid for not producing isn't good for the health of any enterprise."

The "jobs bank" is a holding tank for United Auto Workers union members on long-term layoff who receive full pay and benefits for not working or for doing volunteer work.

"It drives the UAW crazy, but the fact they [foreign-owned assembly plants] can build more vehicles with fewer workers means they are much more efficient and the domestics more inefficient," said Dave Healy, an analyst with Burnham Securities.

"They say the more transplants built here, the more UAW workers lose jobs. Amen. According to GM's 10K report, their cost per hour in wages and benefits for UAW workers last year was $83 an hour. They can't live with that."

Healy also questioned the name of the group pursuing the jobs angle.

"Level field, that's a term that means some domestic company is trying to protect the field from fair competition," Healy said, alluding to Ford's support.

One aspect of the debate that is seldom analyzed is the significance of where each car company is based, and therefore where the profits go. Some would argue that the biggest difference between cars from Honda and GM is that the profit on an Accord--even one manufactured in Ohio--still goes back to Japan.

"I'm a union worker, so I stick with American vehicles," said Tom Wolfgram, an operating engineer from Lake Villa, who recently bought a Chevrolet TrailBlazer. "I want the money to stay here and be spent here so it creates even more jobs."

Cuneo, however, says the bulk of Toyota's profit stays in the U.S. to invest in new plant and equipment. He would not provide specifics.

Some analysts say as much as 60 percent of Toyota's overall operating profit and 70 percent of Honda's are derived from North America sales. Healy agrees on Honda's but believes for Toyota it's less than half.

Healy estimates that $30 billion of Toyota's $68 billion in North American sales last year were from U.S.- and Canadian-made vehicles. Moreover, as a "rough estimate," he says Toyota earned a profit of $2.4 billion in North America last year and spent the same amount on new plants, products and other investments.

"When they say they're an American company, they aren't lying," he said.

Additionally, the logic of buying a Ford or GM product because its profits stay in the U.S. isn't necessarily accurate. Because both are global companies, at any one point profits made from domestic sales could be invested in plants abroad.

As for Chrysler Group, it's based in Auburn Hills, Mich., but its DaimlerChrysler parent is based in Stuttgart, Germany, further complicating labels.

"The domestic content issue is grasping at straws. This isn't the Big Three any more. It's the Big Six," Cuneo said, referring to the growth of Toyota, Honda and Nissan in the U.S.

"All are global companies that source (parts and vehicles) in Asia, Europe, Canada or Mexico and build in the U.S."

And regardless, Spinella says, where a product is made and by whom matters little to most shoppers.

"Country of origin doesn't register with consumers," he said. "It's not that they are pro-Japanese as much as they are pro-bargain and value."

Domestic automakers pushed the legislation requiring domestic content labels as a way to inform consumers, but sometimes the information muddies the water about whether a vehicle is a domestic.

A major imported component such as an engine, transmission or drive axle can significantly lower a vehicle's domestic parts content.

For example, a seemingly red, white and blue vehicle such as the Ford Mustang has 65 percent domestic content, and the Chevy Suburban 67 percent. The Mitsubishi Eclipse is built in Normal, Ill., but the engine is made in Japan and it has 47 percent domestic parts.

That leaves some buyers, like Joe Stetina of Riverside, to make their own rules. Stetina traded a 1997 Chrysler Concorde (made in Canada) for a Toyota Matrix (also built in Canada).

His reasoning: He didn't want to buy an import.

- - -

Answers

Ford Escape Hybrid

Not domestic, 40 percent of content from North America

Chrysler 300

Not domestic, 72 percent

Toyota Camry

Domestic, 75 percent

Honda Ridgeline

Domestic, 75 percent

Dodge Caliber

Not domestic, 70 percent

Ford Mustang

Not domestic, 65 percent

Chevy Tahoe

Not domestic, 67 percent

Mitsubishi Eclipse

Not domestic, 47 percent

[HuskyMD3417]

I think it doesn't matter but I still won't buy anything other than a Ford or GM.

[SSLL]

From: http://www.sacbee.com/content/business/story/14261213p-15074841c.html
____________________
Cheap imports outweigh 'Made in USA'
By Jon Ortiz -- Bee Staff Writer
Published 12:01 am PDT Saturday, May 27, 2006
Story appeared on Page A1 of The Bee

As America's perennial Red, White and Blue season kicks off this Memorial Day weekend, ailing U.S. manufacturers have a problem: "Made in the USA" doesn't have the patriotic marketing punch with consumers that it once did.
There are several reasons: Price is king, even with many shoppers who associate American goods with quality. Young adults and educated households in the global economic age have become more comfortable with imports and aren't inclined to search for U.S. products first. And the Internet has demystified foreign goods by making information about them more accessible.

Ann Khan sees it every year between Memorial Day and the Fourth of July, when shoppers come into her Old Sacramento store to purchase American flags. Her shop, Old City Kites, has Old Glory in dozens of sizes, but all are made outside the United States. Just a handful of flag manufacturers still operate here, Khan said, but their products cost up to twice the price of comparable Chinese imports.

"People care about U.S. made until they see the price tag," she said. "We can order them, but when we quote the price to a customer they always change their mind and go with the flags we have in the store."

Marketing experts say that many consumers don't have a strong emotional connection to "Made in America," so it's not surprising that shoppers are defecting to cheaper foreign products. Most don't tie their spending to lost U.S. jobs or poor labor conditions in other countries -- they're just trying to find a good deal.

"How many of us, in our own circle of connections, actually know someone who has worked in an apparel sweatshop? Or made plastic toys?" said Don Delzell, a partner at Retail Advantage, a consultant in Southern California. "(Made in America) is an obvious merchandising ploy, but it has never worked for an appreciable length of time."

U.S. consumers still tend to think highly of American-made brands, according to a survey by Synovate Global Omnibus Group, a worldwide polling firm, but those warm feelings often don't translate into cold cash purchases.

A Synovate survey of American consumers revealed that 72 percent said they "always seek out products made in the United States." The survey also gave high marks to Detroit for domestic car quality, placing U.S. cars on par with foreign brands.

"But when it comes to buying American, stated vs. actual behavior are two different things," said Thomas Mularz, a Synovate senior vice president. "People will say they value buying domestic products, then they'll go to a Toyota dealer and buy a car."

Earlier this year, Ford Motor Corp. unveiled its "Red, White and Bold" campaign, emphasizing "innovation that is formed right here in America."

Yet marketing experts think consumer loyalty to U.S. car brands is eroding in part because savvy buyers are becoming aware that globalization is blurring the line between U.S. and foreign brands.

General Motors Corp.'s cars and trucks for the U.S. market last year were made with 80 percent of the parts coming from U.S. and Canadian plants, down from 92 percent in 1997, according to the National Highway Traffic Safety Administration.

About 35 percent of the parts in Ford's 2005 Mustang came from outside North America.

German-based DaimlerChrysler AG, with longtime American car roots, built its vehicles for the U.S. market last year with 75 percent of the parts from U.S. and Canadian factories, down about 4 percent from 1997.

Some Japanese cars are headed the other direction: 70 percent of the parts in Toyota Motor Corp. vehicles made in U.S. plants came from the United States or Canada, up from 52 percent in 1997.

" 'Made in America' is an integral part of the continued existence of U.S. carmakers," Delzell said. "But what are we being asked to identify with?"

The American appetite for foreign products seems insatiable. U.S. imports of goods totaled $1.67 trillion in 2005, according to federal statistics. In 1975, the last year America logged a trade surplus, the country imported just $98 billion worth of goods.

Synovate's survey found that young adults, a group entering their prime purchasing years, and educated households -- an affluent segment of the population -- generally don't look for U.S. products.

"These are consumers who are more sophisticated," Mularz said. "They're more open to buying foreign products, from electronics to cars. And they're in tune with Internet shopping, where global comparisons are just a click away."

Mularz could have been describing 21-year-olds Curtis Cherry and Anthony Varner, students at California State University, Sacramento, who were recently taking a lunch break from shopping at Westfield Galleria at Roseville.

"I already assume that just about everything comes from China or someplace else," Varner said.

"I'd be lying if I said that I look at the tag before I buy a shirt or whatever," Cherry said.

Both use the Internet to help make shopping decisions because, Cherry said, "You can get tons of information -- quick."

On the other side of the Galleria food court and two generations removed, Loomis resident Leonard Swedensky also was eating lunch.

"If I had my way, nothing would be imported, including oil," said Swedensky, an 80-year-old World War II veteran and a PG&E retiree. "This country is all screwed up."

Swedensky's generation, the baby boomers' parents who vividly remember World War II and the postwar economy, are the "strongest pocket of pro-American consumers," said Synovate's Mularz. "But they're dying off."

Ann Khan said she'll get a few of those folks in her store asking about American-made flags.

"But really, hardly anyone asks," she said. "It's not an issue for people."

[edluva]

While Toyota and others waste their energy on hybrids, American innovation continues...

GM Hopes $1.99-a-Gallon Gas Offer Moves Its Fuel Guzzlers
By John O'Dell, Times Staff Writer
May 29, 2006

Here's a way to boost fuel economy: Buy one of General Motors Corp.'s gas guzzlers and fuel will cost only $1.99 a gallon for the next year.

On Wednesday the automaker unveiled the promotion for California residents in hopes of moving some of the vehicles off dealers' lots. Four of the 11 eligible models are passenger cars; the rest are big trucks.

With California's gasoline prices the highest of any state except Hawaii, GM is betting the promotion will catch on.

The automaker will issue monthly prepaid debit cards to reimburse eligible customers the difference between $1.99 a gallon and the average price of premium gasoline in California — determined by AAA's monthly survey — even if they use cheaper regular.

The program covers purchases and leases through July 5 and is being offered on top of any other incentives and rebates on the selected vehicles.

There are no limits on mileage or gasoline price, and customers can use the debit cards for anything they want, said Susan Docherty, GM's Western regional manager. "We think we're going to sell some cars with this," she said, citing early reports of increased showroom traffic.

For a Hummer H2 driven 15,000 miles a year, a buyer would receive an estimated refund of $2,270 over the 12 months, according to a GM website, at http://www.fuelprotection.com .

GM offers a similar program in Florida, but only for cars.

Eligible vehicles in California include the 2006 and '07 models of the Chevrolet Tahoe and GMC Yukon and the half-ton-capacity Chevy Suburban and GMC Yukon XL, all rated at 14 mpg and 20 mpg. Also on the list: 2006 models of the Hummer H2 and H3 and the Cadillac SRX crossover wagon.

Before the promotion, it took Hummer dealers an average of 145 days to sell an H2, which has a $53,000 sticker price; the smaller H3 models lasted an average of 136 days and the GMC Yukon XL took 111 days.

The only eligible GM cars are the '06 Chevrolet Monte Carlo coupe and the Chevy Impala, Pontiac Grand Prix and Buick Lucerne sedans. For a V-6 Lucerne, rated at 20 mpg city and 30 mpg highway, GM's website said Sunday that the potential rebate over 12 months would total $1,314.

Buyers have to take vehicles equipped with GM's OnStar communications system and a special remote diagnostic program for computing use.

[SSLL]

From: http://www.nytimes.com/2006/06/03/business/worldbusiness/03chevy.html?_r=1&oref=slogin&pagewanted=all
_______________
On Route of Chevrolet Impala, Signposts to Detroit's Decline

By MICHELINE MAYNARD
Published: June 3, 2006
DETROIT, June 2 — To understand why Detroit is having so much trouble competing against Asian car companies, look no further than the Chevrolet Impala.

In the 1960's, the Impala was king of the road. General Motors sold more than a million of them in 1965. Now the Impala is still the best-selling American car, but it is selling less than a third of that total.

The Impala also lags behind four Japanese offerings — the Toyota Camry and Corolla, and the Honda Accord and Civic — in the annual race to be the best-selling car in America.

But Chevrolet, by its own admission, has no plans to try to win back the bragging rights anytime soon.

The reason is that G.M. prefers to stick with its decades-old approach of breadth over depth, buckshot over a silver bullet. So rather than placing an all-or-nothing bet on a single car at one division, it sells family cars through a variety of brands, including Chevrolet, Buick, Pontiac and Saturn.

"We're able to get at more people because we've got locations that sell all these vehicles," said Chevrolet's general manager, Edward J. Peper Jr.

That idea served G.M. well when it sold more than half of all new cars and trucks back in the 1960's. But now G.M. controls less than a quarter of American sales.

And in today's ruthlessly competitive market, that strategy means that no single G.M. car will get the same amount of resources — engineering, design and marketing — as Toyota and Honda devote to their best sellers.

The Impala "comes across as the best that the American companies can do," said Brian Moody, a road test editor at Edmunds. com, a Web site that offers buying advice to consumers. "In a vacuum, it's hard to find anything wrong with it. And then you drive the Camry and the Accord."

The strength of those two cars is a reason Asian auto companies took a record 40 percent of the American market in May, when Detroit's market share fell to its second-lowest level in history, less than 53 percent.

To be sure, G.M. and Ford vastly outsell their Japanese competitors in pickup trucks and sport utility vehicles: the two markets where they have put most of their resources for the last decade and a half.

Moreover, G.M. executives say they are thrilled with the newest version of the Impala, which went on sale last year to good reviews and initially high quality ratings. And while sales at G.M. have dropped 8 percent this year, Impala sales are up 6.4 percent this year over 2005.

Impala can go head to head with Japanese cars in several ways, and price is among them. Like them, Impala sells for about $20,000 to $27,000. The Accord, Camry and Impala are on the list of recommended vehicles of Consumer Reports. And the Impala, like the Camry and Accord, has loyal buyers: some 45 percent of its buyers come back for a second one, according to Chevrolet.

The similarities largely end there, however, and the differences among the cars are marked. The main one is Impala's place in the G.M. lineup. It is part of a flock of family sedans at the automaker. In fact, it is not even the only family car at Chevrolet, which also sells the Malibu.

By contrast, Camry is Toyota's brightest star. Camry is "the center of the target," said James Press, who was recently named president of Toyota Motor North America.

Getting the latest Camry ready for its introduction this April was akin to a space launching for Toyota, which is building Camrys in eight markets around the world, including China, where production began last week.

It corralled engineers from the United States and Japan, and manufacturing experts from all the places it builds Camrys. They worked on ways to improve the car up to the time it started rolling off the assembly line.

The last American company to focus that kind of effort on a family car was Ford, which famously put together a team in the 1980's to develop the Taurus. Even back then, the goal was to beat the Accord and the Camry, and they did so, taking the best-selling title for a number of years until 1997, when Camry captured it. It has ceded the title only once since, to Accord.

Toyota's win coincided with Ford's shift of resources to focus on pickups and S.U.V.'s. Even though Ford now has its own flock of family cars, including the Ford Fusion, it does not plan to build enough of any one model to fight Camry and Accord.

Nor does Chevrolet. In 2006, it expects to make about 275,000 Impalas at a plant in Oshawa, Ontario, the only one where the Impala is built.

That leaves it well shy of Toyota, which sold more than 400,000 Camrys in 2005. For the American market, Toyota builds Camrys in Georgetown, Ky., and it imports more from Japan and soon will be able to build another 100,000 a year when it begins production in 2007 at Subaru's plant in Lafayette, Ind. Toyota holds a stake in Subaru's parent company.

With more than two million Camrys on the road, the name "has become almost a household word," said Tom Libby, an industry analyst with J. D. Power & Associates.

Yet, the Impala was an even bigger household name back when Toyota was barely a blip on the radar. Since 1958, the year after Toyota first sold cars here, Chevrolet has sold more than 14 million Impalas, making it one of the most recognizable cars in automotive history.

But unlike Camry, which has been sold continuously in the United States since 1982, always aimed at the family market, G.M. stopped selling the Impala for two stretches in the 1980's and 1990's. From its roots as a fast, chrome-laden car with six taillights, the Impala grew in size, then shrank and, in the eyes of critics, became generic.

Like many other G.M. models, it is sold to rental car companies, government agencies and corporations, markets where Toyota generally does much less business. The Impala is also a police car, bought by, among others, the New York Police Department. About 20 percent of the Impalas go to so-called fleet sales, down from almost half last year (about 10 percent of Camrys are sold to fleets).

Chevrolet is trying to veer away from the bulk sales and sell more to consumers. One goal with the new Impala, said its marketing manager, Mark A. Clawson, is to put features on the car that Toyota does not offer.

For example, the top-of-the-line SS version can go from 0 to 60 miles per hour in 5.7 seconds, thanks to a zippy V-8 engine with 303 horsepower.

Camry does not offer a V-8, but it has options Impala does not — namely, a manual transmission and four-cylinder engine, both available on its basic and midlevel cars. With gas prices staying high, both those features increasingly are in demand as buyers switch from bigger vehicles, especially S.U.V.'s, to cars.

But buyers who like the roominess of an S.U.V. may be pleased with another Impala feature. Inside the Impala SS, there are fold-flat rear seats, like those in minivans and S.U.V.'s, creating a vast storage space that most sedans cannot match. There are other options, too, like a jack for an MP3 player, a Bose stereo system and satellite radio.

On the outside, Impala looks conservative — a criticism that used to be leveled at Camry before its latest redesign, which created a curvy car with a light, nimble feel.

Unlike Toyota, which was aiming this time out for a more eye-catching car, Chevrolet deliberately tried not to make a style statement with Impala, Mr. Clawson said.

"We weren't looking for a vehicle that would turn heads, but we weren't looking for one that would turn heads away either," Mr. Clawson said. "We were looking for a balance," a car that was "nicely styled but not ostentatious."

That approach, Mr. Moody of Edmunds.com said, seemed reasonable given the relatively bland appearance of the previous Camry and Accord models. But it now seems unwise given what Toyota has done with the latest Camry, which "so far exceeds the previous car that it almost seems like it's not a Camry," he said, but rather a Lexus luxury car. The Accord, already more eye-catching, gets another face-lift this fall.

Chevrolet has put more emphasis this year on marketing its new S.U.V.'s, especially the Chevrolet Tahoe, and its new line of pickup trucks. It is only now beginning to promote cars like the Impala that it maintains get better fuel economy than its Japanese rivals.

"The American companies spent so much time focusing on trucks and S.U.V.'s that they neglected their cars," Mr. Moody said. "Now they're just playing catch-up."

Even so, Chevrolet dealers, for their part, seem happy with the Impala. Sales of the latest version are up 20 percent at Genoa Chevrolet outside Toledo, Ohio, said Mike Pauley, the dealership's executive manager.

In past years, many of Mr. Pauley's customers chose the Impala largely because of G.M.'s deep discounts, or because they wanted an American-made sedan. But the new version, which carries a modest $500 rebate, has attracted buyers more on its own merits, he said.

One recent customer was Gary McKeel, a retired salesman from Perrysburg, Ohio, who switched to the Impala after owning Buicks for the last 17 years. "It's spacious and it rides very nice," Mr. McKeel said.

But down the road, Impala may not be such a great deal. According to Edmunds.com, a typical Impala owner will spend 11.3 percent more, or about $4,300, on the car over five years than the owner of a typical Camry, mainly because the car loses its value faster and has higher repair costs. That figure takes into account the $500 rebate that Chevrolet is offering on Impala versus none on the Camry.

Mr. Libby of J. D. Power said he did not rule out Detroit's taking the car crown again. This Impala will not be the one, however, he said. Impala "has not had the strength, it has not had the equity of the Camry," he said.

Getting the title back will require another companywide effort like Ford made 20 years ago — the kind that Toyota and Honda routinely make when they introduce new versions of their bread-and-butter cars.

"To me, it's a step-by-step process," Mr. Libby said. "There are no shortcuts."

[SSLL]

From: http://www.buffalonews.com/editorial/20060602/1051415.asp
____________________
U.S. automakers narrow productivity gap with Japanese

GM engine plant, Ford stamping plant here both improve, annual study finds

By SARAH KARUSH
Associated Press
6/2/2006

DETROIT - U.S. automakers continued to narrow the productivity gap between them and Japanese manufacturers last year, with DaimlerChrysler AG's Chrysler Group making the biggest strides, the authors of a closely watched study said Thursday.
The Harbour Report, first published in 1989, measures productivity at assembly, stamping and engine and transmission plants. It calculates the number of hours worked by salaried and hourly employees at a plant and divides that by the number of units produced.

It said that General Motors Corp.'s Town of Tonawanda engine plant improved, averaging 3.42 hours to make an engine in 2005 versus 3.51 hours the year before.

Ford Motor Co.'s Buffalo Stamping Plant in Woodlawn also improved its performance, stamping 685 parts per hour compared to 674 the year before. The figure placed the plant "about the middle of the pack" among stamping plants, according to Greg Gardner of Harbour Consulting, which compiles the annual study.

Overall, the report put Nissan Motor Co. in the lead with average labor of 28.5 hours per vehicle. Ford was last at 35.8 hours.

Nissan's productivity figure compares with 29.4 hours in 2004 and does not include its plants in Mexico, which do not participate in the voluntary data-sharing on which the report depends.

Ron Harbour, president of Harbour Consulting, said Nissan's productivity lead amounts to a cost advantage of $300 to $450 per vehicle over less productive manufacturers.

The domestic Big Three have been steadily catching up to Japanese automakers. The difference between the most productive and the least productive narrowed to 7.3 hours in 2005 from 9.1 hours in 2004 and 16.6 hours in 1998.

Recent improvements in productivity have come largely from improvements in quality, Harbour said at the report's presentation in Detroit.

"We live in a world where we think quality costs more, and that's completely backwards," he said.

Because quality is up, plants are spending far less time repairing vehicles when they come off the line, he said.

Although the three major Japanese manufacturers stayed on top, two of them saw productivity fall.

Toyota Motor Corp., which took first place in 2004 at 27.9 hours, came in second in 2005 at 29.4 hours. Honda Motor Co.'s third-place score of 32.5 hours was half an hour more than last year's.

General Motors Corp. was close behind Honda at 33.2 hours, followed by Chrysler at 33.7 hours.

Chrysler improved 6 percent over its 2004 average of 35.8 hours, the biggest move of the six automakers.

Among assembly plants, the Ford facility in Hapeville, Ga., outside Atlanta, stood out with 15.4 hours per vehicle. The plant, which makes the Taurus, is one of seven Ford announced it is closing by 2008 as part of its restructuring.

"When you evaluate closing or retaining a plant, there's hundreds of criteria," Harbour said. "Productivity is only one of them - certainly an important one, but it's not the only one."

The plant's distance from major supply routes was likely a key factor, he said.

The No. 2 assembly plant for productivity, GM's in Oshawa, Ont., also is scheduled for closure.

Harbour noted that GM and Ford made productivity gains even as they cut their volumes, something that historically is difficult to do.

Despite the narrowing productivity gap, the automakers remain far apart by other measures, the study's authors noted. Capacity utilization ranged from 106 percent at Toyota's assembly plants to 79 percent at Ford's.

Another big difference is profitability. Nissan, Toyota and Honda each earned more than $1,200 before taxes on every vehicle they sold in North America in 2005, according to the study.

In contrast, Chrysler Group earned $223, while Ford lost $590 and GM lost $2,496 on each vehicle. This reflects differences in health care and pension costs, as well as rebates and low-interest financing used to cut inventories, the report said.

[SSLL]

From: http://www.washingtonpost.com/wp-dyn/content/article/2006/06/30/AR2006063000454_pf.html
________________________
Global Partners Possible For GM
Kerkorian Urges Alliance With Nissan, Renault
By Sholnn Freeman
Washington Post Staff Writer
Saturday, July 1, 2006; D01

Billionaire investor Kirk Kerkorian yesterday pushed General Motors Corp. to explore a partnership with Nissan Motor Co. and Renault SA, both of which are led by turnaround expert Carlos Ghosn.

In an extraordinary series of events set into motion by Kerkorian, whose investment company owns 9.9 percent of GM's shares, the Detroit automaker's board and management are being pressed to join a global alliance with Nissan and Renault. Under a partnership already in place, Renault holds a 44 percent stake in Nissan, while Nissan owns 15 percent of Renault's shares.

In a letter to GM chairman and chief executive Rick Wagoner, Tracinda Corp., Kerkorian's investment firm, said Nissan and Renault were open to buying significant stakes in GM. In a separate letter, Tracinda notified Ghosn and Renault Chairman Louis Schweitzer that Tracinda has asked GM to form a committee to explore a potential alliance.

Nissan also called on GM's board of directors to study the deal. "At this point, it is necessary that the GM board and top management fully support this project in order to start the study of this opportunity after agreement of Renault and Nissan boards," Nissan said in a statement.

Nissan said Ghosn was approached by Kerkorian and Jerome B. York, a GM board member and Kerkorian adviser, to assess the merits of GM joining the partnership.

GM said it had not received an offer or proposal from Renault or Nissan. But GM said its board will consider Tracinda's request to form a committee to study the proposal.

GM shares rose $2.34, or 8.6 percent, to $29.79, a level they had not reached since October. Financial analysts said Nissan's interest was an affirmation that GM shares were undervalued.

Under the partnership between Renault and Nissan, the two automakers operate as stand-alone companies, but Ghosn is president and chief executive of both. Ghosn is credited with rescuing and rebuilding Nissan after it ran into trouble in the late 1990s. As it has returned to financial health, Nissan has been particularly aggressive in the United States, where its new products have added to pressure that Detroit automakers were already getting from other Asian automakers, particularly Honda Motor Co. and Toyota Motor Corp.

GM is restructuring after years of losing U.S. market share to rivals like Nissan. The loss of market share in its home turf has led to the loss of tens of thousands of high-paying U.S. auto jobs and the closing of assembly plants around the country. GM lost $10.6 billion last year, although results have improved this year.

Analysts said they doubted that either side is planning to rush into a major collaboration. Wagoner was severely criticized for focusing GM on a global alliance strategy of partial investments in auto companies around the world. Those stakes were sold when GM's financial situation collapsed last year. Wagoner has claimed successes in his turnaround plan at GM, but he has acknowledged that the company still has a lot of work to do.

Ghosn also has a full plate. Quality has slipped as Nissan steadily expands production and brings out new models.

Tracinda owns 56 million shares of GM stock, which accounts for 9.9 percent of the company. Kerkorian is GM's largest individual shareholder. He began amassing a stake in the company last year. Since then, his adviser, York, was added to the GM board and has criticized the company for the sluggish pace of its turnaround.

David Healy, auto analyst at Burnham Securities Inc., said Kerkorian might be trying to scare off short-sellers, who are betting that GM's stock will drop, by making moves to shore up GM's share price. He said he doubted that the back and forth between GM and Kerkorian could lead to Ghosn's installation in the top job at GM.

"I think it would have absolutely no management affect," Healy said. "GM and Nissan are bitter enemies. Nissan has been eating GM alive for years. Nissan is one of three reasons that GM's market share and profitability has collapsed in the last three years, the others being Toyota and Honda."

[SSLL]

From: http://www.moneyweb.co.za/shares/international_news/649701.htm
_______________________
GM-Renault-Nissan wouldn't be easy, past auto pacts show
Neal E. Boudette, Norihiko Shirouzu and Stephen Power, Wall Street Journal
Posted: Mon, 03 Jul 2006 08:08

Before General Motors Corp., Renault SA and Nissan Motor Corp. start any discussions about a three-way alliance, they might want to ask DaimlerChrysler AG about the rocky road it has traveled since its own grand automotive merger.

The German-American auto maker once promised to become the world's most profitable car company, but instead has gotten bogged down by infighting, profit breakdowns at its Chrysler and Mercedes divisions and unexpected difficulties realizing synergies. The chief executive who engineered the deal, Jürgen Schrempp, stepped down after he was berated by angry shareholders. Today, DaimlerChrysler's market value is about $42 billion less than in the heady days after its marriage was announced.

"It is pretty tough getting an organization to go in a direction it doesn't want to go in voluntarily," Dieter Zetsche, who succeeded Mr. Schrempp on Jan. 1, said in an interview on Saturday. Seven years after its merger, the company is still trying to deliver "some of the major benefits" of the deal, Mr. Zetsche said.

DaimlerChrysler's experience doesn't bode well if GM decides to pursue the suggestion of its largest shareholder, Kirk Kerkorian, to open discussions about joining the existing Renault-Nissan partnership. The idea was proposed Friday in a letter from Mr. Kerkorian's investment company, Tracinda Corp., to GM Chairman and Chief Executive G. Richard Wagoner Jr. GM's board has said it would consider the idea. Carlos Ghosn, the CEO of both Renault and Nissan, has discussed the matter with Mr. Kerkorian and is willing to talk to GM, according to a statement by Renault and Nissan.

Any three-way alliance could mean the departure of Mr. Wagoner, who has been implementing his own plan to turn around GM, and leave Mr. Ghosn overseeing the three companies. Mr. Ghosn is hailed for pulling back Nissan from the brink of collapse in 1999 and turning it into one of the world's most profitable car makers.

The auto industry, however, is rife with ambitious mergers and alliances that have gone awry. Last year, GM had to pay $2 billion to get out of a 2000 alliance with Italy's Fiat SpA after the Italian auto maker's finances and market share began to collapse. In the 1990s, BMW AG lost billions after buying Britain's Rover. DaimlerChrysler even tried a three-way partnership of its own, bringing in Mitsubishi Motors Corp., but unraveled the tie-up last year.

Mr. Ghosn's initial thinking about a GM-Renault-Nissan partnership is centered on the potential costs reductions, people familiar with the matter said. He suspects the three companies together could reap substantial potential savings if they were to cooperate on engineering; share basic underpinnings, or "platforms," of vehicles; and consolidate their manufacturing operations, these people said.

A Renault spokeswoman said yesterday the company had no additional comment beyond its statement Friday that it is "open" to an alliance with GM. The company declined to make Mr. Ghosn available for an interview.

Born in Brazil to Lebanese parents and educated in France, Mr. Ghosn took the reins at Nissan in 1999 when it was losing money and had net debt of 1.4 trillion yen ($12.2 billion at current exchange rates). Renault paid $5.4 billion for a 37% stake in Nissan and took over management control. Mr. Ghosn slashed costs by shuttering assembly plants and reducing headcounts, by dissolving many of the company's long-standing ties with some 1,400 companies, many of them parts suppliers and dealers in which Nissan held sizable equity stakes, and by asking parts makers to help reduce Nissan's purchasing costs by 20%. Mr. Ghosn used those costs savings and proceeds from the sale of stakes in companies to pare the massive debt Nissan was carrying at the time.

He also invested in new, boldly styled vehicles like the Nissan Murano sport-utility vehicle and Infiniti G35 sports car, which buffed the company's tarnished image. For the fiscal year that ended in March, Nissan earned net income of 518.1 billion yen, although sales have sagged in the critical U.S. market so far in 2006. In February, Mr. Ghosn, by then also chief executive of Renault, outlined a restructuring plan to improve the French auto maker's profitability.

Part of the effort relies on having Renault and Nissan share the cost of developing engines, transmissions and platforms. Extending that effort to include GM would be complicated. The world's largest auto maker by sales has significant excess manufacturing capacity, several poorly performing brands and a product line heavy with trucks while consumer tastes have been moving to more fuel-efficient vehicles. GM is also weighed down by pensions and health care for tens of thousands of union retirees. Mr. Wagoner last week announced a buyout program would enable GM to shed 35,000, or about 30%, of its hourly workers by year end, some two years sooner than it had previously expected.

Any effort to have GM, Renault and Nissan develop components and vehicles together could take years, judging by DaimlerChrysler's track record. "The consultants always tell you there are all kinds of synergies," Mr. Zetsche said. The first years of DaimlerChrysler's merger was marked by deep suspicion on both sides of the Atlantic. Mercedes engineers guarded their technology and saw little to gain by sharing it with Chrysler, which quickly stumbled to massive losses.

Relations only began to thaw when Mr. Zetsche, a veteran Mercedes manager, was sent to fix Chrysler in 2000. Chrysler used Mercedes expertise in rear-wheel-drive vehicles to develop the 300 sedan, which became a hot seller. But broader efforts to share parts and cooperate moved more slowly. DaimlerChrysler is just getting past some of those issues now, Mr. Zetsche said.

One challenge for auto makers is the six-year life cycle of their products. Getting two companies on the same cadence often forces one to make a financial sacrifice. Either one side shortens its cycle and writes off some of its investment, or the other lengthens its cycle and must go a year or two with older models in the market.

For GM, Renault and Nissan, another crucial task of making a partnership work would be ensuring employees and top management are completely committed to the idea.

At Nissan, Mr. Ghosn enforced unity by declaring he and the rest of management would resign if the company failed to return to profitability by the end of the year ended March 2001 -- the first year of Mr. Ghosn's three-year turnaround plan for Nissan.

But uniting two separate organizations is a greater challenge. DaimlerChrysler had difficulties on this point. Mr. Schrempp delegated the task of pushing cooperation to a Mercedes boss who sought to keep it separate from Chrysler.

Mr. Zetsche said he is seen in the company as a "credible broker" since he has worked at both divisions. Since becoming CEO in January, he has sought to accelerate cooperation. Chrysler and Mercedes may develop a family of six-cylinder engine together, he said.

His task has also been made easier because both units have had crises. "That helps," he said. "You can't afford to fight anymore."

In the rush to realize synergies, DaimlerChrysler sometimes "overlooked the feeling of people," Mr. Zetsche said. "Part of it is psychology." Now the company is through the "deep valley of disappointment and misunderstanding."

[fflint]

Toyota's June sales steamroll U.S. rivals

TAVIA GRANT
Associated Press
http://www.theglobeandmail.com/servlet/story/RTGAM.20060703.wautosales0703/BNStory/Business/home

Toyota Motor Corp., the third-largest auto maker in the United States, Monday reported the best first-half U.S. sales in its 49-year history — offering a stark contrast to reports from the U.S. manufacturers.

Toyota's sales leaped 14.4 per cent in June, juiced by record sales of passenger cars such as Corollas. General Motors Corp.'s sales skidded 25.9 per cent in the same month — after discounts sent sales soaring last year — while DaimlerChrysler AG tumbled 13 per cent. Ford Motor Co.'s sales fell 6.9 per cent.

Toyota, meantime, continues to benefit from a consumer switch to more fuel-efficient cars, said Jim Lentz, Toyota's executive vice-president.

“Fuel-efficient products continue to drive the market, even as consumers are likely becoming acclimated to today's fuel prices,” Mr. Lentz said in a release.

“Buyers are turning to hybrids and smaller, more fuel-efficient vehicles as a hedge against future uncertainty.”

Toyota recorded sharp increases for a range of its vehicles. Corolla sales jumped 38.7 per cent while Lexus sales climbed 6.3 per cent, both of which posted record sales for the month.

In the first six months, Toyota sold 1,223,542 vehicles in the U.S.

The Camry, Camry Solara and Camry Hybrid had the best-ever combined June sales while the Prius gas-electric hybrid posted the best-ever June sales.

Not everyone opted for fuel efficiency, though. Toyota's light truck division rose 7.6 per cent, hitting another sales record for the month. Sales of RAV4 compact sport utility vehicles led the gains, where sales more than doubled.

“Toyota has, on a brand basis, all guns blazing,” said Rebecca Lindland, an analyst at Global Insight Inc. in Lexington, Mass. “It's just in an arena of its own.”

On the same day, U.S. auto makers Ford, GM and DaimlerChrysler reported dwindling sales after incentives sparked a unusual buying bonanza this time last year. For GM and Ford, it was the fifth monthly drop in a row.

Higher gasoline prices, heated competition from Japanese auto makers and slower sales of trucks and sport utility vehicles also contributed to the drop. The Detroit-based companies' market share has taken a hit this year as demand dwindles for trucks and SUVs.

For GM, total car sales slipped 2.3 per cent in the month while truck sales shrank 36.8 per cent. Year-over-year comparisons are, however, skewed because GM posted its strongest sales month in 19 years in June, 2005. That's when GM rolled out an employee pricing offer that touched off a summer price war.

“The Employee Discount for Everyone program and the success of that program was probably a once-in-a-decade home run for the industry and certainly for ourselves,” Paul Ballew, GM's executive director of global market and industry analysis, said on a conference call.

He said the June performance was in line with expectations.

Year to date, GM's sales fell about 12 per cent, including a 13-per-cent drop for trucks and an 10.3-per-cent dip for cars.

At Ford, sales of light trucks fell 14.4 per cent. But the company saw a bright spot in car sales, which rose 7.1 per cent, as demand for new midsize sedans — the Ford Fusion, Mercury Milan and Lincoln Zephyr — remained high.

Sales of truck-based sport utility vehicles have been declining across the industry for four years in a row, but until recently, pickups were relatively immune from the phenomenon, Ford said. However, pickup buyers now appear to be delaying purchases because of the pressure of high fuel costs, said Al Giombetti, president of marketing and sales for Ford, Lincoln and Mercury. In the first half of this year, Ford's car sales are up 5.3 per cent while light truck sales are down 9 per cent.

In a statement, Mr. Giombetti said the increase in car sales is “cause for optimism because it shows we can win in the industry's most competitive segment.”

Honda Motor Co. Ltd.'s sales were flat in June while Nissan Motor Co. stumbled 19 per cent.

[dave_boise]

I drive a domestic right now. A 1988 Ford Taurus, made in Chicago. That said, when time comes to replace it, neither nationality nor nameplate matter to me. It matters to few people I know. Heck my dad, a dyed in the wool Ford guy for decades, narrowed his last car search down to two: Chevy Impala and VW Jetta. He got the Impala because he got a better deal on it.

[SSLL]

From: http://seattlepi.nwsource.com/business/276331_gmrenault04.html
_______________________
Tuesday, July 4, 2006
GM alliance would reshape auto industry
Renault, Nissan consider buying into struggling American carmaker

By MIKE HOUSEHOLDER
THE ASSOCIATED PRESS

DETROIT -- With the recent announcement that foreign competitors Renault SA and Nissan Motor Co. are considering buying a significant stake in General Motors Corp., the hunter has become the hunted.

GM, which not too long ago used its power and size to buy into smaller, less developed companies, now is potentially on the receiving end of such a transaction. If the proposed partnership goes forward, it will reshape the global auto industry and may give struggling GM the aid it needs to revive.

Talk of a three-way alliance already is paying short-term dividends for the Detroit carmaker.

Bank of America auto analyst Ron Tadross on Monday upgraded GM from "sell" to "neutral." And GM shares soared nearly 9 percent on Friday, the day billionaire mogul and major GM shareholder Kirk Kerkorian said Renault and Nissan were interested in including GM in their alliance.

GM's sales figures -- released Monday afternoon -- showed it had sold 25.7 percent fewer vehicles than in June 2005. Year-to-date, GM's sales were down 12.2 percent.

Also on Monday, Nissan and Renault said they had approved opening talks with GM over the potential alliance. Renault owns a 44.4 percent stake in Nissan, which in turn owns a 15 percent stake in the French company, and the French automaker's board voted to negotiate with the U.S. company.

A message seeking comment was left Monday for GM. On Friday, GM said in a statement the Kerkorian request would "be taken under advisement" by its board.

Carlos Ghosn, the chief executive of both Renault and Nissan, has discussed the matter with Kerkorian and is willing to talk to GM, according to a separate statement by Nissan and Renault.

Talk of an alliance comes as GM is moving forward on an extensive turnaround plan designed to improve its poorly performing North American division, which is suffering from declining profits, high labor costs and growing competition from Asian automakers, such as Nissan. GM announced plans last year to close 12 plants by 2008 and recently said 35,000 hourly workers had agreed to retire early or accept a buyout offer.



Nissan was on the brink of bankruptcy when Ghosn was sent by Renault to lead Nissan in 1999. Ghosn engineered a cost-cutting and morale-boosting campaign that revived the automaker. GM's wobbly financial footing coupled with Ghosn's track record as a turnaround specialist has some on Wall Street predicting that a Ghosn-led GM would be a step in the right direction.
Morgan Stanley & Co. analyst Jonathan Steinmetz said Ghosn's record of cost-cutting and product development would provide much-needed help for GM in those areas.

"He is the ultimate agent of change," Steinmetz said. "He did stuff in Tokyo that no one thought could be done."

[SSLL]

From: http://www.freep.com/apps/pbcs.dll/article?AID=/20060707/BUSINESS01/607070343/1014
_________________________
Renault should be given more thought as big player

French automaker controls alliance with Nissan

July 7, 2006

BY WILLIAM DIEM
FREE PRESS SPECIAL WRITER

PARIS -- It might be easy for Americans to overlook the significance of Renault SA in the proposed alliance of General Motors Corp., Nissan Motor Co. and the French automaker.
Many Americans haven't given the company much thought since they stopped seeing Le Cars on the road and Renault sold AMC to the then-Chrysler Corp. in the late 1980s.
But while Nissan is a resurgent global player, led by superstar CEO Carlos Ghosn, Renault clearly controls its alliance with Nissan with a 44% stake. Nissan has a 15% stake in Renault, which is mostly symbolic of Nissan's independence.
Renault and Nissan work together only when both sides benefit. Adding GM as a full partner would mean looking for win-win-win areas. Ideas like common engine production, platforms or hybrid development would save money in the future, said Nigel Griffiths, an analyst with Global Insight in London, but "GM needs a quicker fix than that."
A 20% investment in GM by Renault-Nissan, with the 9.9% held by investor Kirk Kerkorian's Tracinda Corp., would give those allies effective leadership of the company as the other big stockholders are unlikely to get into a nasty proxy fight.
But there is no guarantee that Renault-Nissan would stop there.
Ghosn may well aim to double the Renault-Nissan stake later on if GM turns around.
"Below 40%, an alliance is unstable," Ghosn reportedly told analysts in March when Nissan sold its 13% stake in Nissan Diesel Motor Co.
In May, at the Renault annual stockholders meeting, Ghosn said that depressed stock prices made it a good time to invest in another company.
He has been talking about widening the alliance since January's North American International Auto Show in Detroit. When the Dow Jones Newswire asked him about expanding the alliance, he answered, "Why not? We could use the same principles with more players."
The principles are those enumerated in Renault's statement last Friday after the Kerkorian surprise.
"Such an expansion would only be considered by the alliance if it were executed in the full spirit of the alliance, which is founded on trust, transparency, performance and the full respect for individual corporate and brand identity."
Renault Chairman Louis Schweitzer is credited with treating Nissan as a partner, not an acquisition.
That was in contrast to the clear takeovers of Dacia in Romania and Samsung Motors in Korea, which have been folded into Renault as subsidiaries.
While Renault's history provides uncertain clues as to its future strategy, it is clear that the company is no passive investor.
Gerald Meyers, a professor of management at the University of Michigan and the former chairman and chief executive at American Motors, said the fear at GM is that this is the beginning of a takeover.
He said Renault starts out with an alliance and before long, it's running the company.
Renault was a French automaker run by its engineer founder until the end of World War II. France accused Louis Renault of collaborating with the Germans and nationalized the company. (The government still owns 15% of the automaker.)
In the 1960s, Renault made its first overseas deal with American Motors, licensing the right to build the AMC Rambler in its Belgium factory for four years.
Then, in 1982, it bought AMC, only to sell it in 1987 to Chrysler.
"There is nothing in common with Renault's acquisition of AMC and Nissan," said Jean-Michel Prillieux, a consultant with Mavel SA in suburban Paris. "Renault bought 100% of AMC because it wanted to implant itself in North America."
With Nissan, Renault "wanted to establish an alliance of two powerful groups in parallel, one strong in Asia and the other strong in Europe."
Ghosn's strategy with GM, said Philippe Houchois, an automotive analyst at JP Morgan in London, is probably more oriented to Europe and China than North America.
In China, said Houchois, GM's partner SAIC has a better future than Dongfeng, Nissan's partner.
In Europe, he said, Renault would like to run Opel, GM's main European brand, because today "Renault has an extreme dependence on one brand. With two brands, it could operate like Peugeot Citroen and smooth out the cycles of the business, introducing the" Renault "Megane and" Opel "Astra several years apart."
An investment could pay off even if GM goes bankrupt in North America because Renault would be in a position to buy up the parts that will help it the most. And if GM recovers, the investment means more dividends for Renault.
"Given the level of risk, Kerkorian and Renault can run the show without the liability if something goes wrong," Houchois said. "And if the risk goes down, Ghosn will increase his investment."

[SSLL]

From: http://au.news.yahoo.com//060707/19/zozr.html
_____________________________
Saturday July 8, 05:34 AM
GM to enter alliance talks with Renault-Nissan

DETROIT, United States (AFP) - General Motors will enter "exploratory discussions" with Renault-Nissan on a potential alliance, the US automaker said following a board meeting.
GM cautioned the discussions were preliminary and non-binding and that implementing its massive restructuring program remained the automaker's "top priority."

French car maker Renault welcomed GM's decision to discuss the possible alliance first proposed last week by the US automaker's largest private shareholder, Kirk Kerkorian's Tracinda Corp.

"Following GM's board decision, we look forward to starting the discussion process soon," Renault said in a statement issued in Paris.

GM chief executive officer Rick Wagoner will lead the discussions and has already arranged to meet with Carlos Ghosn, the chief executive officer of Renault-Nissan, the American automaker said.

"We periodically receive interesting proposals and we owe it to the company and its shareholders to explore how they might work, and to objectively weigh the potential benefits and issues that each might present," Wagoner said in a statement.

"That is exactly what we recommended to the GM board in this specific case, and exactly what it has agreed we should do."

Wagoner said he contacted Ghosn when the alliance was suggested last Friday.

Renault said on Monday that it was ready to hold talks with GM to form a possible alliance between the companies "if General Motors makes the proposal".

But reports have circulated in Detroit that Wagoner and other GM top executives are opposed to the idea of a merger, despite the interest expressed by Renault-Nissan and the warm welcome issued by the stock market.

Some GM executives said privately this week that an alliance with Renault-Nissan may not be the best solution to the problems of either company.

In the past, GM has tried other alliances, notably with Fiat, and they have ended in failure. Even Jerry York, Kerkorian's principle automotive adviser, has been critical of the alliance strategy in the past.

Hints of caution were evident in Wagoner's statement.

"Given the complexity of any potential relationship, it has to be carefully considered on its merits before coming to any conclusion. We are committed to an objective and thorough review of that potential," he said.

"We will enter into discussions with the managements of Renault and Nissan with an open mind -- eager to hear their ideas of how an alliance between our companies might work to our mutual benefit."

While news of the potential alliance has given GM shares a massive boost this week, some analysts said it may not result in long-term gains.

Dennis Virag, head of the Automotive Consulting Group in Ann Arbor, Michigan, said GM's decision to study the proposal was prudent.

"They have a fiduciary duty to look at the proposal," he told AFP. "But in the end I don't see those two getting together. They're both troubled companies in the way. They both have significant internal problems they have to address before they take on outside issues."

General Motors remains focused on implementing a massive restructuring program that involves the shuttering of 12 plants and the elimination of 30,000 jobs.

Wagoner is battling to restructure the US car giant following its loss of 10.6 billion dollars last year.

So far, the plan is ahead of schedule as 35,000 union members have accepted early retirement packages, but GM continues to struggle with weak sales and a declining market share in its home market.

In the first six months of 2006, GM saw its sales fall by 12 percent while rival Toyota saw sales increase 9.8 percent.

Wagoner said the automaker has "made tremendous progress in implementing all the key initiatives."

But he cautioned that there are some "major items" that need to be resolved, including the restructuring of former subsidiary Delphi Corp and the sale of GM's lending arm, GMAC.

"So there's plenty more work to do to return our North American operations to sustained profitability. We remain focused on achieving this as quickly as possible," he said.

Wagoner's plan received strong support from the board.

"The board continues to fully support the company's North American turnaround strategy, and we encourage management to also continue its efforts to conclude a satisfactory resolution of the issues associated with the Delphi bankruptcy and to complete the pending GMAC transaction," said GM Director George Fisher.

[SSLL]

From: http://www.mercurynews.com/mld/mercurynews/news/breaking_news/14995721.htm
__________________________________
Posted on Sat, Jul. 08, 2006
GM's talk of alliance stirs political concerns
KEN THOMAS
Associated Press
WASHINGTON - General Motors Corp.'s talks over a potential alliance with two foreign automakers have Michigan political leaders talking. But the opening stages have left more questions than answers in a state with a struggling economy.

State and federal officials are cautiously assessing the potential GM alliance with Nissan Motor Co. and Renault SA and what it could mean for Michigan, where tens of thousands of workers are employed by GM.

GM's board on Friday authorized the world's largest automaker to begin assessing the potential benefits of an alliance, an initial step in a process that could take several months. The two foreign automakers have expressed interest in minority stakes that could mutually benefit the companies.

But with the state's economy sputtering and one of the nation's highest unemployment rates, the moves have created some unease in Michigan.

"I don't necessarily always believe that bigger is better and so we have to look at it very carefully. The bottom line is I'm the governor of Michigan, I want Michigan jobs to stay here," Gov. Jennifer Granholm said last week.

"If a partnership occurs with a company in another country, well that company is welcome to come to Michigan but I'm not interested in seeing Michigan jobs going somewhere else," she said.

Rep. John Dingell, D-Dearborn, long a champion of the auto industry in Congress, said too many questions remain to properly assess the potential impact of an alliance.

"Even experts in the industry will tell you you have to wait and see," Dingell said.

Dingell and other lawmakers said it would be difficult to predict how the discussions would be received in Congress, which was in recess last week. Opposition was stiff in Congress last spring against a now-abandoned Dubai ports deal.

During a news conference Friday in Chicago, President Bush was asked about his views of foreign-owned companies buying out U.S. technology companies, including those with military contracts.

Bush said: "On the broader scale, I have no problem with foreign capital buying U.S. companies; nor do I have a problem with U.S. companies buying foreign companies. That's what free trade is all about."

The auto industry is Michigan's largest employer and GM has long led the way, employing nearly 80,000 workers in Michigan through the end of last year. GM, Ford Motor Co., DaimlerChrysler AG's Chrysler Group and Delphi Corp. employed a combined 192,430 hourly and salaried workers in Michigan in December 2005, according to the Michigan Economic Development Corp.

David Cole, president of the Ann Arbor-based Center for Automotive Research, said that while the discussions are in their infancy, he did not see an alliance hurting the state. It could turn out more beneficial for GM than the other automakers.

"GM is at the threshold of a major turnaround and potentially, Renault and Nissan need GM more than vice versa," Cole said. He stressed that whatever makes GM stronger - alliance or no alliance - was the best deal for Michigan.

Detroit-based GM has been trying to reduce its size. The company recently announced that 35,000 hourly workers will retire or take buyouts, a move that will help it shutter a dozen plants by 2008.

The automaker has also negotiated health care concessions from the United Auto Workers union while working to resolve cost problems at Delphi, GM's largest parts supplier that the automaker spun off into a separate company in 1999. Delphi filed for Chapter 11 bankruptcy protection in October.

Rep. Joe Knollenberg, an Oakland County Republican who represents many Delphi workers, said he was concerned by the speed of the talks - investor Kirk Kerkorian first approached GM about the alliance over a week ago - and worried it could hinder a resolution for Delphi.

"A number of things are happening that indicate it might take a little more time before we actually solidify and resolve the Delphi situation," he said.

An unknown factor is what role the potential GM alliance could play in the fall elections. Republicans and gubernatorial candidate Dick DeVos contend Michigan is home to a single-state recession while other Midwest manufacturing states have prospered and have blamed Granholm for the economy.

State Republican party chairman Saul Anuzis said the GM talks fit into the overall dominance that economic issues have had on the race. Polls have shown jobs and the economy as top concenrs on voters' minds.

"It has now touched so many people in so many real ways in Michigan that it has gone beyond a statistic," Anuzis said of the state's high unemployment rates.

Granholm said her administration will be watching the GM talks "very closely. I do applaud the efforts of GM so far to restructure and doing what they need to do. I'll be curious to see what happens."

[SSLL]

From: http://www.latimes.com/business/la-fi-flint10jul10,1,2101679.story?coll=la-headlines-business
_____________________
GM's Troubles Driving Down a City
Tens of thousands of job losses since the 1970s at the carmaker have taken a toll on Flint, Mich.
By Brian Charlton, The Associated Press
July 10, 2006

FLINT, Mich. — James Rutherford has lived here his entire life, in good times and in bad.

The former mayor and police chief, now the director of the Flint Downtown Development Authority, says he doubts that the city — once synonymous with automobile manufacturing — can regain its place as a thriving industrial center.

"I don't think anyone else believes that we'll ever have major manufacturing in the city of Flint again," he said recently. "We've just about hit bottom."

General Motors Corp. and Delphi Corp., GM's former parts operation and now a separate company, announced June 26 that 47,600 of their employees — including 35,000 from GM — had agreed to take early retirement or buyout offers.

Among them were more than 3,100 of the 10,400 hourly workers in Genesee County's seven GM plants and an additional 1,500 of the 2,600 active workers at Delphi Flint East, the parts company's lone remaining plant in the Flint area.

The prospect of losing thousands of local good-paying jobs is "very traumatic for the whole area," said Russ Reynolds, president of United Auto Workers Local 651, which represents production workers at Delphi Flint East.

"There's a lot of sadness because this has been a good place to work for many, many years, and most of the people that work here live in this community," Reynolds said. "There's a lot of people here affected, not only at our site but in the community."

GM employed 80,000 workers in the Flint area in the late 1970s, but tens of thousands of the jobs have since been sent overseas, contracted out to other companies or simply eliminated. The city's plight gained notoriety after Michael Moore's 1989 film "Roger & Me," which shows Moore pursuing then-GM boss Roger Smith to confront him about laying off 33,000 auto workers in Flint.

As a result of the business climate, other local factories and retail shops have closed. The unemployment rate in Flint, a city of 120,000 residents, rose to 7.3% in May, the highest of any city in Michigan.

Kirby Blankenship, a carpenter who has worked at the GM Flint Metal Center for 15 years, said he and his co-workers were concerned about their jobs and pensions but realized the importance of the restructuring efforts.

"Everyone is a little nervous," he said, "but I think everyone knows it's a necessary step."

Mike Tessmer said business was down 30% at Timothy's Pub, his bar and restaurant near the Delphi Flint East plant. In the two years he has owned the establishment, Tessmer has had to cut his staff in half, to seven employees, because fewer customers are coming in at lunchtime and after work.

"The mood around here is just very depressing," he said. "They aren't working. They're kind of staying home and moping and saving money."

As Gary Lee waited to meet a friend outside Tom's Coney Island, another eatery near the factory, he said he believed that the area's future would rest with its institutions of higher learning. They include Kettering University, the University of Michigan in Flint and Mott Community College.

"I think the next generation will turn out some pretty talented people, and it won't be long until national businesses and even international businesses realize what we have here," said Lee, a salesman who lives in Holly, about 10 miles south of Flint.

Despite his pessimism about Flint's possible resurgence as a major industrial city, Rutherford, mayor from 1975 to 1983, during the city's industrial heyday, said good things were happening downtown.

Many boarded-up storefronts remain, but economic development officials are working hard to attract new businesses to the city. Abandoned homes have been razed, he said, and larger buildings are being turned into apartments and condominiums.

"The downtown area is going to be booming," Rutherford said.

[SSLL]

From: http://www.nytimes.com/2006/07/13/business/13cnd-auto.html?_r=1&oref=slogin&pagewanted=print
____________________
July 13, 2006
Chief of Nissan and Renault Details G.M. Proposal

By MICHELINE MAYNARD
Carlos Ghosn, the chief executive of both Renault and Nissan, said today that he would propose that General Motors join with his two companies in a sweeping three-way alliance that would create a huge global auto company.

In an interview in Manhattan, Mr. Ghosn said he would like to complete discussions on an alliance by the end of the year. But his efforts are not hostile, he said: if G.M. management is not interested in talking about a broad deal, the discussions will immediately end.

Mr. Ghosn is scheduled to meet with G.M.’s chief executive, Rick Wagoner, in Detroit on Friday. The meeting comes two weeks after G.M.’s biggest individual shareholder, the billionaire Kirk Kerkorian, suggested that the three companies hold broad discussions.

The boards of G.M., Renault and Nissan all voted last week to conduct talks.

Initial reports suggested that Nissan and Renault each intended to take a 10 percent stake in G.M., in a deal valued at $3 billion.

But Mr. Ghosn said today that he had no specific stake or figure in mind. That, he said, would be determined in discussions between him, Mr. Wagoner and executives on both sides.

Still, he said, he is not interested in arrangements that merely link the companies in specific ventures aimed at short-term or medium-term gain. He wants to explore long-term arrangements that would take advantage of the strengths of the European, Japanese and American companies to the benefit of all three.

“I would not be here today if I did not think it was big. Big!” Mr. Ghosn said.

He said he was not entering the discussions with the aim of running the alliance himself, although he did not rule that out. Nor did he say whether he expected to receive a seat on the General Motors board, as some reports have speculated.

Mr. Wagoner, speaking to reporters in Washington today after testifying before a Senate committee about retiree health care issues, said G.M. would “move expeditiously” to respond to Renault and Nissan’s proposals.

“Everyone would want to move to a yes or no decision promptly on something like this,” Mr. Wagoner was quoted by Reuters as saying. Though he did not think G.M. needed an alliance with the two companies to prosper, he said, “we’re willing to sit down and talk about the full range of options.”

Earlier in the week, he told a television interviewer that the proposed alliance was “an interesting idea” that he would consider with an open mind.

Many analysts have suggested that Mr. Kerkorian, whose associates have voiced impatience with the pace of G.M.’s turnaround efforts, was bent on ousting Mr. Wagoner and replacing him with Mr. Ghosn.

“I am not expecting anything for the moment,” Mr. Ghosn said about leadership changes. Rather, he said, “I am focused on ‘What is the size of the prize.’ ”

Before G.M.’s board met last Friday, news reports suggested that G.M. management would argue that there was no need for the company to talk with Renault and Nissan. But on Friday, the company issued a statement saying the board had authorized management to consider proposals for an alliance.

The possibility of a link among the three companies was first raised last month, when Mr. Ghosn had dinner in London with Jerome B. York, who has served as a financial advisor to Mr. Kerkorian for more than a decade.

Mr. York, who joined the G.M. board in January, praised Mr. Ghosn’s swift turnaround at Nissan, Japan’s third-biggest carmaker after Toyota and Honda, and called it an example of the clarity and speed that G.M. could embrace.

That meeting led to a dinner in Nashville on June 15 between Mr. Ghosn and Mr. Kerkorian, who made a rare trip from his home in California. Mr. Kerkorian’s involvement has been seen as an effort to raise the price of G.M. stock, which has barely moved since he bought the first of his 56 million shares last year.

Mr. Ghosn said he did not see anything wrong with that. “He’s a big investor,” he said. “You cannot blame shareholders to ask that ‘my shares go up.’ “

[SSLL]

From: http://uk.biz.yahoo.com/16072006/323/toyota-eyes-alliance-gm-report.html
____________________________________
Sunday July 16, 04:45 AM
Toyota eyes alliance with GM: report

CHICAGO (AFP) - Japanese auto giant Toyota Motor (Stuttgart: 853510 - news) is considering proposing an alliance with General Motors (NYSE: GMW - news) to prevent its US rival from forming a three-way tie-up with Renault (Paris: FR0000131906 - news) and Nissan, BusinessWeek magazine has reported.

Citing "people with knowledge of the Japanese auto maker's plans," the magazine said Toyota had "war-gamed" a proposal to assist struggling GM (NYSE: GM - news) , the world's largest auto maker, and head off a deal that would create a monolithic automotive group.
"Toyota has no interest in seeing an alliance like this (linking Renault, Nissan and GM) take place," an executive who asked not to be identified was quoted as saying.

[austin356]

It is really a shame Nissan's factory in Jackson, MS hasnt turned out as good as expected. This brand new plant, which has had reliability problems in its production, is been a major problem for Nissan and a contributor to them wanting to hook up with GM.

What I want to understand is why the plant hasnt been up to par. I know jackson msa doesnt have squat in worker experience for these types of jobs, but neither did the Benz plant in Tuscaloosa, AL back in the early 90's; but that factory has been a huge success.

[Canasian]

I buy a car that is well made and will last. Honda is the best. My current car is made in USA. Nissan Altima. I bought for $700 and still drive today- 203,000miles AND NO PROBLEMS!!!!!!!!!!!!!!!!!!! ( Iv'e had it for three years 1996 Altima GXE)

[James Bond Agent 007]

It is really a shame Nissan's factory in Jackson, MS hasnt turned out as good as expected. This brand new plant, which has had reliability problems in its production, is been a major problem for Nissan and a contributor to them wanting to hook up with GM.

What I want to understand is why the plant hasnt been up to par. I know jackson msa doesnt have squat in worker experience for these types of jobs, but neither did the Benz plant in Tuscaloosa, AL back in the early 90's; but that factory has been a huge success.
In the last JD Powers initial quality rankings which came out a couple moths ago or thereabouts, the Jackson plant had finally reached the quality levels of Nissan's Smyrna, TN plant.

[James Bond Agent 007]

^
Here ya go. The plant is actually in Canton, not Jackson. ;)
http://blogs.edmunds.com/Straightline/1114
^
Good news for Nissan
Good news for Nissan as their quality rating with the most recent J.D. Power "Initial Quality Study," has improved. This is especially true of their Canton, Mississippi plant (Titans, Armadas, Quest, QX56) which had been called the worst car factory in the USA in terms of quality. Now that plant is on a par with their Smyrna plant.

[SSLL]

From: http://www.forbes.com/business/manufacturing/2006/07/17/gm-nissan-toyota-cx_po_0717gm.html
____________________________
Toyota Leaving GM To Nissan
Parmy Olson, 07.17.06, 11:20 AM ET

Toyota Motor today denied published reports that it would seek to break up the budding romance between General Motors and the Nissan- Renault alliance, saying it was not considering a takeover of the leading U.S. automaker.

“We don’t have such plans,” a Toyota (nyse: TM - news - people ) spokeswoman in Brussels, Belgium, said.


Her comments came as the GM (nyse: GM - news - people ) board was reportedly meeting to discuss linking up with Nissan (nasdaq: NSANY - news - people ) and Renault in a global alliance that could help GM return to profitability after an $8.6 billion loss in 2005 that largely reflected weakness in its North American automotive operations.

GM had initially offered a frosty response to the suggestion last month from 10% shareholder Kirk Kerkorian that it consider linking up with Nissan and Renault. In a letter to GM, Kerkorian revealed that he had broached the concept with Carlos Ghosn, chief executive of both Nissan and Renault, and that the automakers were "receptive" to the idea.

GM’s response to Kerkorian’s idea was initially icy: It said that it had not received a proposal from Nissan and Renault and that its board would take the plan “under advisement.” But by July 14, GM Chief Executive G. Richard “Rick” Wagoner Jr. was having dinner with Ghosn in Detroit, and the companies issued a joint statement that said they would conduct a 90-day review of the idea to asses the "potential benefits of such an alliance to each company and the feasibility of achieving them."

Indicating a thaw in GM’s position, Wagoner and Ghosn said in the statement, “We had a good discussion today and are looking forward to having our teams work together to explore our ideas.” The companies cautioned, however, that following the review they would consider whether the proposal warranted further exploration.

In an interview with the French daily Le Monde last week, Ghosn said Nissan and Renault, which have cross-shareholdings in each other, would want to own part of GM as part of any deal. Various reports have suggested the Japanese and French automakers would seek a stake of 20%.

Meanwhile Ford Motor (nyse: F - news - people ), GM’s Motown rival, is getting more environmentally friendly in Europe. The company's European division announced today that it had allotted $1.8 billion to develop greener cars in the U.K.

New technology will be deployed for the Jaguar, Land Rover and Volvo brands and will include more advanced engines, hybrids and biofuels and more lightweight materials. "Environmental motoring has to go mainstream," said the head of Ford of Europe, Lewis Booth, in a statement. It comes as oil prices have hit near record levels.

[SSLL]

From: http://money.cnn.com/2006/07/17/news/international/gm_toyota/
____________
Report: Toyota denies possible GM alliance
Is the Japanese automaker looking at possibly hooking up with GM, or isn't it?
July 17 2006: 9:15 AM EDT

NEW YORK (CNNMoney.com) -- Toyota is not interested in exploring its own alliance with General Motors as a way to try block a potential GM-Nissan-Renault tie-up, according to a published report.

The Detroit News quoted an unnamed top Toyota executive based in the United States as saying there was no truth to the Business Week report that Toyota is interested in a possible deal of its own with troubled U.S. automaker GM.


More on General Motors
Big risks for GM

http://i.cnn.net/money/2006/07/17/news/international/gm_toyota/worldwide_wheels.gif"They haven't approached us, and we haven't approached them," the Toyota executive told the News.

Sunday, after Business Week posted its report on its Web site, GM spokeswoman Toni Simonetti told CNNMoney.com the report was "speculative" and said GM has not been approached by anyone from Toyota regarding working together beyond what the companies are already doing.

Business Week magazine, quoting people with knowledge of the Japanese automaker's plans, said the company is mulling its options and considering different plans that could be proposed to General Motors (Charts), the world's largest but financially imperiled automaker.

The Business Week story quoted one Toyota (Charts) source saying that the company has "war-gamed" a way to help GM. Despite its rapid growth, much of that at the expense of General Motors, Toyota is concerned about the political and social backlash if GM falls apart.

But the News report Monday quoted the Toyota executive as saying "We haven't war-gamed how to help GM. We have looked at possible scenarios, what would happen if GM or Ford went into bankruptcy, but we haven't war-gamed how to help GM" in the context of the alliance negotiations.

Toyota has been reluctant to make acquisitions of other automakers or even enter into alliance. Even the Business Week report said that an equity link, where Toyota and GM would buy stakes in each other, was unlikely.

Nissan-Renault own controlling stakes in one another and even share a CEO, Carlos Ghosn. Ghosn told CNNMoney last week he would like any alliance with GM also to include cross ownership.

Toyota and GM already have ties
David Cole, head of the Center for Automotive Research, said Sunday that he wouldn't be surprised if Toyota was interested in more links with GM, as well as in blocking a GM-Nissan-Renault alliance.

"It depends on the nature of the agreement, what the consideration is on both sides," said Cole. "I know the GM people have high regard for Toyota, and that Toyota people also have high regard for GM."

But Cole noted that it wasn't likely Toyota would make any broad move quickly.

"Toyota moves very slowly with any kind of alliances," he said. "For Toyota, the foundation for whatever they do is already having a very deep relationship with the other company. But a closer partnership with GM would not be a difficult thing because they have a pretty good working relationship already."

The two companies have been successful with a joint venture in California, a plant that makes the Pontiac Vibe, the Toyota Corolla and Toyota Tundra pickup.

Last year it made 417,505 vehicles, with about 45 percent going to GM and the rest to Toyota. The plant has 5,400 employees and has made a total of 6.2 million vehicles from its opening in late 1984 to the end of 2005.

In addition Toyota and GM have research and development partnerships, working together on technology not yet ready for use in autos, such as on fuel cells that could someday power cars.

Toyota would consider expanding cooperative projects with GM, if asked, the News quoted the Toyota executive as saying. But he said that would be in the context of the companies' existing relationship.

Nissan-Renault talks move ahead
These reports comes after Ghosn and GM CEO Rick Wagoner met Friday to discuss a possible alliance. Afterwards, the two companies issued a joint statement that they will work over the next 90 days on a confidential review of the potential benefits of an alliance. The statement referred to Friday's meeting as an "exploratory discussion" about a possible alliance.

The Wall Street Journal reported Monday that the GM board is set to meet Monday about the talks on Friday.

The alliance between GM and Nissan-Renault was first suggested by Kirk Kerkorian, GM's largest individual shareholder who owns a 9.9 percent stake.

A number of industry analysts said Friday they think that a GM-Nissan-Renault alliance was unlikely. But they also said there are risks for GM in just holding talks with its potential partners, no matter what direction they go.

GM, the world's largest automaker, is already taking steps to get back on track after it lost $10.6 billion last year. The company is cutting 30,000 hourly workers, closing a dozen plants and facilities and selling a stake in its GMAC finance unit.

But perhaps the biggest challenge facing GM is its need to develop new cars and light trucks that will attract buyers without resorting to big incentives. GM has seen its share of the U.S. market slide in recent years, as overseas automakers like Toyota, Honda and Nissan have gained.

Some kind of broader pact with Toyota could prove attractive to Wagoner, GM's CEO, as a possible foil to Ghosn and his two automakers.

Other analysts are skeptical about GM's enthusiasm for an alliance with Nissan and Renault.

"GM is a company that wants to get past this blind date they were set up on by Uncle Kirk and concentrate on their turnaround plan," Kevin Tynan, auto analyst for Argus Research, told CNNMoney.com Friday.

"There's obviously a myriad of issues there for them to concentrate on, and there's a lot more potential there [in the internal issues] than in an alliance," Tynan said.

Meanwhile, Ghosn said last week he doesn't want the top job at GM even if an alliance is struck between GM and Nissan-Renault.

Ghosn, 52, was executive vice president of Renault for just over two years when he was named chief operating officer of Nissan in June 1999 at the start of the Nissan-Renault alliance. He was named CEO of Nissan two years later and is widely credited with pulling the automaker back from the brink of bankruptcy. He was named Renault CEO in April 2005.

[SSLL]

From: http://www.detnews.com/apps/pbcs.dll/article?AID=/20060729/AUTO01/607290395
__________
GM, Renault's mini alliance
Automakers weighing global tie-up already produce vans jointly
Bill Vlasic and Christine Tierney / The Detroit News

While the business world obsesses over a possible alliance of General Motors Corp. and Renault SA, the two auto giants are quietly launching their latest vehicle developed together in Europe.
There was zero fanfare -- and no sign of Rick Wagoner or Carlos Ghosn -- at media events this month for the new Opel Movano and Renault Master, nearly identical mid-sized commercial vans developed together by GM and Renault.
The vans are the product of a joint venture between GM and Renault dating back to 1999, when the Detroit automaker and its French counterpart began building light commercial vehicles together for the European market.
It's an obscure partnership among many in the global auto industry, but its success could offer a peek into the future of an historic international alliance between GM, Renault and the French carmaker's Japanese partner Nissan Motor Co.
And since Wagoner, GM's chairman, and Ghosn, CEO of Renault and Nissan, opened talks July 14 on a potentially huge deal to link their companies, the lessons learned from a small joint venture could have a big impact.
"That's really significant," said David Cole, director of the Center for Automotive Research in Ann Arbor. "To establish a relationship is one thing, but if you already have an existing relationship, things can go much easier."
GM and Renault-Nissan have said little about the agenda for the 90-day alliance talks. But if the commercial van business is any indication, the two sides may be more compatible than outsiders expect.
"We have a very professional relationship," said Jamal El-Hout, vice president of planning for GM Europe. "We work through tough issues very well."
Together, they produce 250,000 commercial vans a year at a GM plant in England, a Nissan factory in Spain and a Renault plant in France. About two-thirds of the output is mid-sized vans, and the rest is smaller models sold by GM as the Vivaro and by Renault as the Trafic.
"This is a cooperation that has been very positive for both partners," said a spokeswoman for Renault.
Culture of competition
Bland and boxy, the vans are a staple for small businesses across the Continent. About 2 million light commercial vehicles are sold in Europe each year, according to the European carmakers' association ACEA, and it's a brutally competitive market.
Partnerships are the norm in the segment. German automakers Volkswagen AG and DaimlerChrysler AG collaborate on commercial vans, as do Fiat SpA of Italy and the French manufacturer PSA Peugeot Citroen.
When GM and Renault began talks in the mid-1990s to produce vans in tandem, the fit seemed right from the start.
"One of the things that made it successful was that we needed each other," said Jon Dennis, one of the GM negotiators in the deal. "Everyone else was partnered except us."
Dennis, who now works for GM in Australia, said the tone was set at the top by Louis Schweitzer, Renault's then-CEO, and GM Europe's president at the time, Richard Donnelly.
"There was a lot of support from the leadership," Dennis said. "Schweitzer and Donnelly were motivated to make this happen."
The decision was made to form a 50-50 joint venture, with GM selling vans under its Opel and Vauxhall brands, and Renault marketing its vehicles separately.
Renault took the lead on engineering and design, while GM ran the manufacturing process. After Renault and Nissan formed their own corporate-wide alliance in 1999, the agreement was extended to all three companies.
Since 1999, the companies have built and sold more than 1.2 million vans -- and made money doing it.
"We've been successful with it and I believe it has been successful for the other companies," El-Hout said. "We've grown our commercial vehicle business 125 percent over the last five years."
Partnership still unclear
El-Hout declined to comment on the prospect for the far larger global alliance currently under discussion by high-level teams at GM, Renault and Nissan.
However, his experience in the van venture offers insight into possible areas of cooperation down the road. "This is a productive partnership because it makes sense to get the costs out together and to hook up on the (vehicle) platform," he said.
But sharing costs and production on a niche-market van doesn't change the intensely competitive relationship between GM's Opel brand and Renault across Europe.
"What we would like the product to be, we do that jointly," El-Hout said. "But we compete vigorously in the marketplace even though we are partners."
Speculation has been rife about the prospects of a GM-Renault-Nissan alliance since billionaire GM shareholder Kirk Kerkorian first advanced the idea publicly on June 30. The initial meeting between Wagoner and Ghosn two weeks later made headlines worldwide as the industry watched transfixed at a possible marriage of the No. 1 U.S. automaker and Renault-Nissan.
By contrast, the press previews for the new Movano van last week were hum-drum. Journalists were shown prototypes in Germany and given a chance to test drive the 2.8-metric-ton van.
But as the GM-Renault-Nissan talks heat up in the coming weeks, the trail blazed by the Movano and the Master could be a key indicator of things to come.
"We've seen all kinds of alliances -- good and bad -- in the industry," Cole said. "A healthy relationship like this is really the foundation of the successful ones."

[SSLL]

From: http://www.chicagotribune.com/business/sns-ap-ford-restructuring,1,3103645.story?coll=chi-business-hed
__________________________
Ford's Quarterly Loss Balloons to $254M

By BREE FOWLER
AP Business Writer
Published August 3, 2006, 7:12 AM CDT

NEW YORK -- Ford Motor Co.'s second-quarter loss more than doubled from what the No. 2 U.S. car maker previously reported because of higher-than-expected pension costs. In a second piece of weak news, the company said its luxury car division won't be profitable this year.

In a filing with the Securities and Exchange Commission Wednesday evening, Ford said it revised its loss to $254 million, or 14 cents per share, from the previously announced loss of $123 million, or 7 cents per share.

That contrasts with a profit of $946 million, or 47 cents per share, posted in the second quarter of last year.

Dearborn, Mich.-based Ford attributed the revision to an increase in full-year 2006 pension curtailment expenses to $1.2 billion, up from its previous projection of $1 billion. Full-year special items are expected to total $3.8 billion.

Ford had previously expected its Premier Auto Group, which includes its Jaguar, Volvo, Aston Martin and Land Rover brands, to post a 2006 pretax profit, but be close to breaking even, excluding special items.

The filing came the same day The Wall Street Journal reported that the automaker is starting a review of poorly performing units, including Jaguar, with an eye toward the possible sale of some operations.

Ford also is considering forming an alliance with other automakers, a move that General Motors Corp. is contemplating, the newspaper reported, attributing information to unidentified people close to the situation.

"There are no new plans to divest our brands or invest in a new alliance," Ford spokesman Tom Hoyt told The Associated Press on Wednesday.

Hoyt said Bill Ford recently told industry analysts that while all aspects of the business were being reviewed and he wouldn't rule out any possible moves, company leaders were focusing their efforts on turning around Ford Motor's North American automotive business.

Ford also announced Wednesday that it has contracted with former Wall Street merger and acquisitions whiz Kenneth Leet to serve as a strategic adviser to Bill Ford, the automaker's chairman and chief executive.

Ford has been losing market share to Asian manufacturers for a decade and has been badly stung by high gas prices because big trucks and sport utility vehicles account for a majority of the vehicles it sells. For the first time last month, it sold fewer vehicles than Toyota Motor Corp. in the U.S.

According to the report, Leet will lead Ford's review of its ailing operations. He headed merger and acquisition teams for Goldman Sachs Group Inc. and Bank of America Corp.

"He'll absolutely be helpful in that process and play a key role in that process," Hoyt said.

The newspaper said a team will consider whether Ford should sell some underperforming brands or seek alliances with other automakers. It said the team also will look at what Ford should do with its financing arm, Ford Credit. The unit's borrowing costs have risen because Ford's credit had been downgraded below investment grade.

Ford acquired Jaguar in 1989. Last month, Ford lowered the financial goal for its Premier Auto Group.

Ford sold 224,447 vehicles in July, down 35 percent from 346,429 in July 2005. Toyota's July sales totaled 241,826 vehicles, up 12 percent from 216,417 a year earlier.

Ford's "Way Forward" restructuring plan, launched six months ago, calls for shedding 25,000 to 30,000 jobs and closing 14 plants by 2012. By year's end, the company will have cut production capacity 15 percent and will be a third of the way toward its targeted number of employee cuts, Bill Ford has said.

[SSLL]

From: http://www.latimes.com/business/la-fi-dealers15aug15,1,121874.story?coll=la-headlines-business
_______________
Ford to Scale Back Dealership Network
By John O'Dell, Times Staff Writer
August 15, 2006

Ford Motor Co. wants to reduce its dealership network in the United States, particularly in major metropolitan areas such as Southern California, to allow the survivors to improve profits as the company battles to reverse a decade of slumping sales.

The plan, outlined to dealers at a meeting in Las Vegas last week, will be "voluntary and collaborative," Ford spokesman Jim Cain said Monday. Details have not been announced.

ADVERTISEMENT

For Dearborn, Mich.-based Ford, the problem is too many dealers chasing a shrinking pool of customers for its cars and trucks.

There are 134 Ford dealers in Southern California, selling an average of 900 cars and trucks a year, said one Ford dealer who asked not to be named because he was negotiating a financial deal with Ford and didn't want to sour the relationship. Japan's Toyota Motor Corp., by comparison, has 75 dealers covering the same territory, each selling about 4,000 vehicles a year.

Nationwide, Ford dealers sold an average of 696 new vehicles apiece last year while Toyota dealers averaged 1,613, according to the Automotive News Data Center.

Ford has 4,300 U.S. dealers selling the Ford, Lincoln and Mercury brands, down from 4,400 at the end of 2005, and profit for most has plunged in recent years. Ford has said that its average dealership's profit dropped 10% in the first half of 2006. The company doesn't provide dollar figures.

"A lot of Ford dealers are losing money," said Mark Rikess, a Burbank automotive dealership consultant.

Ford won't say how many dealers it would like to trim from its roster, but the company wants to see reductions in key areas, which could include Chicago, New York and San Francisco, happen "sooner rather than later," Cain said.

The No. 2 U.S. automaker hasn't indicated whether it intends to assist dealers in getting out of the business by offering cash incentives or is planning to let attrition do the job, several dealers said Monday.

"If it's attrition, it could take 10 years," said Dave Conant, co-owner of Cerritos Ford-Lincoln-Mercury. "If Ford really understands what's going on, it would get much more involved" and buy out weaker dealers, he said, adding that he would "be really surprised if they did that."

Burt Boeckmann, president of Galpin Ford in North Hills, the nation's largest Ford dealership, said he believed the automaker would help thin the herd by putting some of its own cash into consolidation deals.

"They could make substantial inroads in three to five years if they aggressively work at it," he said. "Otherwise, all this is just lip service."

Ford isn't alone in its quest to pare its dealer network. General Motors Corp. and DaimlerChrysler's Chrysler Group have dealership consolidation plans.

GM Chairman and Chief Executive Rick Wagoner acknowledged in an interview last week that having too many dealers competing with one another in major metropolitan areas remained one of the problems the company must tackle.

"Look at the volume the big three U.S. [auto] companies lost over the last 10 years and realize that their dealer count hasn't changed much," said Earl Hesterberg, CEO of Houston-based Group 1 Automotive dealership chain and former head of marketing for Ford's North American operation.

"Then look at Toyota and Honda, whose dealer counts are pretty constant but whose volume has gone way up," he said. "They can spend a lot more money on advertising, training, hiring the best people and taking care of their customers."

[SSLL]

From: http://www.nytimes.com/2006/08/23/business/23cnd-ford.html?_r=2&ref=business&oref=slogin&oref=slogin
________________
Ford, Like G.M., Is Looking at Alliances

By MICHELINE MAYNARD
Published: August 23, 2006
DEARBORN, Mich., Aug. 23 — The Ford Motor Company is evaluating the prospects for new alliances with other automakers, people who have been briefed on Ford’s activities said today.

Ford’s chief executive, William Clay Ford Jr., is in charge of these efforts, these people said. As part of the process, they said, Mr. Ford spoke recently with Carlos Ghosn, the chief executive of Nissan of Japan and Renault of France, who is involved in similar alliance discussions with General Motors; that conversation was also reported in The Wall Street Journal today.

The people spoke on condition of anonymity because of the sensitivity of the talks.

Investors appeared pleased by the news that Mr. Ford and Mr. Ghosn had spoken. Ford shares rose 28 cents in noon trading to $7.78 a share.

Mr. Ghosn’s discussions with General Motors concern a three-way alliance proposed by G.M.’s biggest shareholder, Kirk Kerkorian. Teams from G.M., Renault and Nissan are looking at various ties among the companies, and are due to decide by mid-October whether to move forward.

The conversation between Mr. Ford and Mr. Ghosn was described as perfunctory, part of a broader effort by Mr. Ford to determine which companies, if any, would be suitable for alliances with his auto company, the people briefed on the company’s actions said.

They stressed that Ford has not had anything resembling formal discussions with other auto companies. But they added that Ford also has been approached informally by some of its competitors to see if it would consider an alliance.

“There is outreach of all kinds — it’s not just Ford talking to people, it’s people talking to one another,” a person with knowledge of the conversations said. “You have to be prepared, and game things out in a lot of ways.”

This person declined to say which auto companies were involved, but added, “At this point, it is all really, really preliminary.”

Mr. Ford is taking the lead role in the evaluations because of their strategic nature. If the company decided to begin conversations about a deal, Mr. Ford could be expected to draw on the expertise of Kenneth Leet, the former Goldman Sachs and Bank of America executive whom Mr. Ford recently hired as an advisor.

So far, the evaluations are not taking up much of Mr. Ford’s time. His greater priority, these people said, is Ford’s restructuring efforts in North America, where the company is preparing an expanded version of a turnaround plan called the Way Forward.

Ford is expected to roll out details of the broader plan next month. The original plan, unveiled in January, called for Ford to close 14 factories and eliminate 30,000 jobs through 2012.

Since then, Ford has reportedly roughly $1.5 billion in losses for 2005; cut its dividend in half; and said it would reduce production by 21 percent in the fourth quarter. The cuts were the biggest at Ford since the early 1980’s.

Alliances are nothing new to Ford. It has management control of Mazda, it operates a joint venture with Peugeot to produces diesel engines, and it licenses hybrid-electric vehicle technology from Toyota.

[dlocal]

I like Japanese cars. They are more appealing to me.

[SSLL]

From: http://news.yahoo.com/s/ap/20060917/ap_on_bi_ge/japan_ambitious_toyota
_______________
Toyota moves to unseat GM, outpace Ford
By HANS GREIMEL, Associated Press Writer Sun Sep 17, 5:55 PM ET
TOKYO - Toyota Motor Corp. is quickening its quest to unseat ailing rival General Motors Corp. as the world's biggest automaker and widen its lead over Ford Motor Co. with reported plans to boost overseas production by 40 percent to 5 million vehicles by 2008 and blueprints for higher output in North America.

The news comes just days after Ford announced drastic steps to remold into a smaller, more competitive company, slashing thousands of jobs and shuttering two plants to cut costs. Ford's overhaul was aired just as DaimlerChrysler said it would cut U.S. production through the rest of 2006 and follows big cutbacks at GM earlier this year.

Toyota, by contrast, is planning to increase overseas production by 40 percent of its 2005 level to 5 million vehicles by 2008, Japan's Nihon Keizai newspaper reported Sunday, without saying how it got the information.

In North America alone, the world's largest auto market, the Japanese company intends to raise production by 20 percent to 1.84 million vehicles in that period, the business newspaper reported. The Toyota City-based company aims to meet the target with the help of new plants previously planned for Texas and Canada, it said.

The vastly different outlooks underline the diverging fates of Japanese and American automakers. While U.S. competitors are closing plants, letting workers go, and trimming production amid weak sales, Japanese manufacturers, including Toyota and Honda Motor Co., are posting record earnings and cranking output to keep up with demand.

In May, profit-rich Honda announced sweeping plans to spend $1.18 billion on new plants in the United States, Canada and Japan, and boost production to meet soaring sales of fuel-efficient models.

Nissan Motor Co. is meanwhile in talks with Renault SA over a possible alliance with GM to help bail out their Detroit rival.

Under the plans reported Sunday, Toyota also expects to raise production for the first time above 1 million vehicles in Asia, excluding Japan and China. That goal will be achieved by bringing online its third factory in Thailand, the Nihon Keizai reported.

In China, the automaker aims to quadruple production from 2005 levels to 600,000, it said.

Domestic production is seen rising to 4.15 million vehicles by 2008, bringing Toyota's global output to 9.1 million.

Toyota officials were not available for comment Sunday. But Toyota's robust earnings and sales have put it on track to surpass General Motors as the world's No. 1, analysts say. The only question is when.

GM, which lost $10.6 billion last year, launched a major restructuring in November 2005 that called for closing 12 plants by 2008, slashing its work force, reducing capacity and cutting costs. About 34,000 hourly workers have accepted buyouts or early retirement offers that were extended earlier this year, and the company cut 2,000 salaried workers.

According to figures released by GM earlier this month, the American automaker produced 9.05 million autos worldwide in 2005. Toyota produced 8.23 million worldwide that year.

Since being overtaken by Toyota in 2003, Ford is meanwhile falling farther behind.

Friday's cuts by Ford bring its total plant closures to 16, adding to 14 plants announced in a previous restructuring. Ford also said it would complete cuts of about 30,000 hourly jobs by the end of the 2008, four years ahead of its previous target.

That announcement coincided with more bad news from DaimlerChrysler, which said Friday its Chrysler division will make additional production cuts in the third and fourth quarters to reduce dealer inventories.

The Big Three, which rely more on light trucks for profits than their foreign competitors, have been hurt by declining sales of pickups as customers switch to more fuel-efficient vehicles. They are also struggling with the need to reduce so-called "legacy costs" of big pay and benefits packages for workers and retirees.

Despite its ambitious outlook, however, even Toyota recognizes no automaker is invincible.

Last month, Toyota President Katsuaki Watanabe warned that his company could delay some new models as it tries to improve its quality control amid a spate of recalls. The glitches were partly due to efforts to cut costs by using the same parts across different models, but could do lasting damage to Toyota's reputation for reliability.

Japanese authorities have launched an investigation into three Toyota officials suspected of failing to do anything about a faulty steering part, which may have caused a 2004 accident that injured five people.

And the U.S. government also has opened an investigation of 2004-2005 Toyota Sienna minivans after receiving complaints the liftgate had failed, causing the hatchback to close on motorists. In China, authorities recently said Toyota will recall 20,069 Crown sedans made there because of defective rubber strips in the windshields.

[SSLL]

From: http://www.nytimes.com/2006/09/26/business/worldbusiness/26auto.html?_r=1&ref=business&oref=slogin
_________________________
G.M. Said to Be Wary of Alliance

By MICHELINE MAYNARD
Published: September 26, 2006
PARIS, Sept. 25 — General Motors has raised doubts in its talks with Renault of France and Nissan Motor of Japan that a three-way alliance would yield the benefits that Renault and Nissan insist would result from such an agreement, a senior executive at Renault said tonight.

Patrick Pelata, who is leading the talks for the Renault-Nissan side, said he believed that his side had made a strong case in favor of a deal, which he said could help G.M. fend off a strong challenge from Toyota, which ranks No. 2 behind G.M. worldwide.

But he said he was not sure if the case had been strong enough to convince G.M., whose biggest shareholder, Kirk Kerkorian, proposed the arrangement in mid-July.

Mr. Pelata, a close associate of Carlos Ghosn, the chief executive of both Renault and Nissan, said members of G.M.’s negotiating team, including its chief financial officer, Frederick A. Henderson, have said they are wary of Renault and Nissan’s claims because of G.M.’s experiences in its alliances with global auto companies.

Referring to the hoped-for synergies in those deals, with companies like Suzuki, Fiat and Isuzu, Mr. Pelata said that G.M. officials told the Renault-Nissan side that they had “never seen them come about.”

A G.M. spokesman, Brian Akre, took issue with the notion that G.M. would be skeptical of a partnership because of past relationships with other automakers.

“We’ve had multiple alliances, some of which have been very successful and some of which have not,” Mr. Akre said.

It was the most detail to date about the talks on a possible deal. The discussions began on July 14, after a meeting in Detroit between Rick Wagoner, G.M.’s chief executive, and Mr. Ghosn, who led product development at Nissan after the 1999 alliance with Renault.

The two sides agreed to spend 90 days exploring an alliance, which Renault and Nissan say could range from purchasing to manufacturing to product development.

A spokeswoman for Nissan North America, Frederique Le Greves, said the talks were making progress. “The discussions still go on,’’ she said. “The study will go the 90 days.”

Mr. Akre added, “We’re not commenting on how the meetings are going other than that they’re continuing.”

The two chief executives are to meet again later this week here, where both will attend the Paris Motor Show.

Neither side has confirmed the exact date of the meeting. But in recent days, news reports and industry analysts have suggested that the talks had stalled over the reluctance by G.M. to enter an alliance with Renault and Nissan, particularly when it is moving forward on an overhaul plan.

Some analysts theorize the meeting could provide a graceful way for the two chief executives to end the discussions, which Mr. Ghosn has said would not proceed if G.M. did not wish them to continue.

Nissan and Renault, for their part, have claimed that a three-way alliance would yield a company as strong as Toyota.

Mr. Pelata said his company believed that there were at least 1,000 areas where the three companies would improve their performance and that the list would grow should the two sides agree to a deal.

But Mr. Pelata acknowledged that the complexity of the deal would be “a cost’’ that the companies would have to take into account.

He complained that the 90-day negotiation period was not long enough to yield the kind of detailed data that would allow Renault and Nissan to identify more such areas. He declined to answer when asked if he thought the two sides would talk beyond that.

Still, he said, “I think we have had the right discussions. I don’t know if it is enough.”

Referring to this week’s meeting, Mr. Pelata said, “I think the meeting between Rick Wagoner and Carlos Ghosn will go further” than have the negotiating teams.

In an unusually candid moment, Mr. Pelata said he had told Mr. Henderson that their companies needed to find a way to fend off Toyota, which could pass G.M. to rank as the world’s biggest car company as soon as this year.

“What are we going to do,” he said, other than to perhaps hope that “one day there will be a miracle, and an earthquake in Japan?”

Mr. Pelata also said G.M. could not miss the opportunity presented by the crisis at the Ford Motor Company, which recently hired a new chief executive and expanded an overhaul program that calls for it to cut more than 35,000 blue- and white-collar jobs by 2008.

“I don’t think it is a good bet to say Ford is going to fail’’ and G.M. survive, he said. “If you delay fixing your performance, it’s just going to get worse.”

G.M. officials, however, have said that the company’s overhaul plan drafted by Mr. Wagoner is the right course.

The strategy, outlined 10 months ago, calls for G.M. to cut 30,000 jobs and close all or part of a dozen plants through 2008. G.M., which lost $10.6 billion last year, has slowed its North American losses, and gained market share this summer, although its sales are off for 2006.

Mr. Pelata implied that the overhaul plan alone would not be enough. G.M., Mr. Pelata said, must “find a way to be at the right performance level of Toyota — not 10 years from now, but now.”

Nick Bunkley contributed reporting from Detroit.

[SSLL]

From: http://www.washingtonpost.com/wp-dyn/content/article/2006/09/25/AR2006092501212.html
_____________________
Renault Executive Says GM Deal Would Help Both Firms Fight Toyota
By Sholnn Freeman
Washington Post Staff Writer
Tuesday, September 26, 2006; Page D06

PARIS, Sept. 25 -- General Motors Corp. ought to enter an alliance with Nissan Motor Co. and Renault SA as a defense against the rising global dominance of Toyota Motor Corp., a top Renault executive said Monday.

"What are they going to do about Toyota?" said Patrick Pelata, executive vice president of Renault, in a briefing with reporters. "What are we going to do, and what is GM going to do? Are we just going to say they're going to be winners?"

Pelata said GM needs to recognize the urgency of battling Toyota. The Japanese company is on the verge of overtaking GM as the world's largest automaker within several years, analysts have predicted.

GM's "competition is not Nissan. It's not Renault. It is Toyota," Pelata said. Toyota last week increased its profit forecast for the first half of 2006 and its sales goals for the next two years.

The automaker has steadily expanded its U.S. operations, including new production of pickup trucks and hybrid cars. Nissan has long had an intense rivalry with Toyota in Japan, and both have big ambitions in global markets.

Pelata, who is a participant in the alliance talks, said he saw enough synergies among Nissan, Renault and GM to justify a partnership.

A spokesman for GM had no comment. A Toyota spokesman also declined to comment.

Carlos Ghosn, chief executive of both Renault and Nissan, and G. Richard Wagoner Jr., chairman and chief executive of GM, are to meet here this week to review progress on the talks, said Frederique Le Greves, the top communications official for Nissan's North American operations. The executives will study the progress of 10 teams set up to search for areas of cooperation and cost savings among the three companies, she said.

Recent media reports from Detroit have suggested that the talks have stalled and that the automakers have not found many areas of compatibility. Ghosn has said all along that an alliance can't be had if GM management is opposed.

The talks began in July at the insistence of Jerome B. York, a GM board member and associate of billionaire Kirk Kerkorian, who owns 9.9 percent of GM. York, who was installed on the board last year, has called for deeper changes than GM's management originally planned. York has asserted that "time is of the essence" for the world's No. 1 automaker, which lost $10.6 billion in 2005.

GM's performance has improved so far this year, and Wagoner has said the company is on track to fix its many problems and return to profitability.

Wagoner and Ghosn's meeting comes the same week as the Paris Motor Show. Renault officials are offering tours of their operations to the U.S. press to show off what they say is the successful cooperation between Nissan and Renault. The two automakers linked up in 1999.

Asked if it would be a loss or failure for Ghosn if a major deal with GM does not materialize, Le Greves said: "Is it a failure? A failure for who?"

She said Nissan was open to potential discussions with Ford Motor Co. in the event that no deal is struck with GM, but she added that Nissan and Renault remain committed to finishing talks with GM first. "If GM doesn't happen, if Ford is interested, why not?" she said.

[austin356]

In the last JD Powers initial quality rankings which came out a couple moths ago or thereabouts, the Jackson plant had finally reached the quality levels of Nissan's Smyrna, TN plant.



This is really good news for personal reasons. My parents own a home in the area and success of this plant has much deeper impact than what is just seen on top. If the local workers get a stigma as being "not up to par", chances for competition to build in the local area is demished. If this factory turns out to be a sucess and more are built then that will push up property values in the area (the area has the possibility right now to pull both a Detroit, or a Nashville, and this plant is one push towards the latter) and success will eventually financially benefit me:haha: when parents decide to sell home and move to florida instead of moving in with me:tup: .


Oh and regarding location; the facility is in Canton, a working class suburb of Jackson (15-20 miles) and is in the MSA (1/2 Million).

[SSLL]

From: http://news.bbc.co.uk/1/hi/business/6071666.stm
____________
Chrysler to cut car prices in US

Chrysler has revealed plans to cut the price of every car it sells in the US by $1,000 (�531), as it aims to boost sales and turn itself around.
The news comes a month after the firm, the US unit of German-American group DaimlerChrysler, admitted there was a glut of vehicles on its forecourts.

Chrysler said the price reduction was part of its wider restructuring work, but denied reports of plant closures.

The firm has already said there will be some temporary factory shutdowns.

'Back on track'

"We are now putting a plan together to put Chrysler back on track," DaimlerChrysler chief executive Dieter Zetsche said in an interview with the CNBC television channel.

"We first have an opportunity with eight new vehicle launches this year for the Chrysler Group, but we are also looking at the cost side."

Chrysler confirmed that a "handful" of executives from its sister company Mercedes-Benz had joined the study group looking at potential cost savings at the US unit.

Chrysler's falling sales are mirrored at its US rivals Ford and General Motors.

Collectively known as the "Big Three" US carmakers, they have all been plagued by an over-reliance on thirsty trucks and sports utility vehicles.

Sales of such cars have fallen in the US as petrol prices have risen in recent years.

[SSLL]

From: http://www.boston.com/business/globe/articles/2006/10/25/toyota_on_track_to_surpass_gm_as_no_1_automaker/
_________________
Toyota on track to surpass GM as No. 1 automaker
Demand for small, fuel-efficient cars drives production
By Associated Press | October 25, 2006
TOKYO -- Toyota Motor Corp.'s global production rose 3.8 percent in September, putting the company on track to overtake General Motors as the world's biggest automaker. It was the company's 23d consecutive monthly advance.

Surging oil prices have prompted drivers to favor fuel-efficient cars, including the Prius hybrid, Corolla compact, and the mid-size Camry, the best-selling model on the US market for eight of the last nine years.
Toyota's total output last month came to 696,594 vehicles, the company reported yesterday. Overseas production climbed 2.8 percent to 340,945 units, while domestic output rose 4.7 percent to 355,649 vehicles.
Earlier this month, the first hybrid version of the Toyota Camry made outside Japan rolled off the assembly line of its Kentucky plant, positioning the Japanese automaker to take an even larger share of the gasoline-electric vehicle market in the United States.
GM in 2005 sold 9.2 million vehicles globally and produced 9.05 million vehicles, compared to Toyota's sales of 8.13 million for that year. The Japanese automaker surpassed Ford Motor Co. in terms of vehicle sales in 2003.
Toyota has said it will boost global sales to 9.8 million vehicles in 2008 -- even as its troubled US rivals are closing plants. Toyota did not release an output target.
Nissan Motor Co., Japan's second-largest automaker, said global vehicle production fell for a ninth month in September, dropping 12.5 percent to 274,788 vehicles.
Nissan said output in the United States fell 18.9 percent last month from a year ago to 60,600 units, largely due to the changeover of the 2007 Altima model.
Honda Motor Co.'s global production rose 5 percent to 318,946 vehicles, its 14th monthly rise. Overseas production climbed 6.6 percent to 199,932 units, boosted by a monthly record in both North America and the rest of Asia.
Domestic production at Honda rose 2.3 percent to 119,014 units.
Mazda Motor Corp. reported worldwide output posted a 1 percent gain to 106,332 units. Its overseas production rose 1.2 percent to 21,420 vehicles on increased production of the Mazda6 and Premacy models, including a strong demand in China.
Mazda, which is 33 percent owned by Ford, said production in Japan rose 1 percent to 84,912 units -- the 11th straight month of higher domestic production.
Mitsubishi Motors Corp. said worldwide output fell 15.4 percent to 106,666 vehicles. Domestic production slipped 5.4 percent to 62,812 units while overseas output fell 26.5 percent to 43,854 units.

[SSLL]

From: http://www.iht.com/articles/2006/10/30/business/autos.php#
________________

Europe gives hint of Detroit's future
By Micheline Maynard
The New York Times

Walk inside Toyota's five-year-old factory here, an hour's drive from the Belgian border, and step into a world stuck on fast-forward. Forklifts speed down aisles bearing fresh supplies of parts, forcing visitors to flatten themselves against the walls as the deliveries go by.

Huge stamping presses beat out an ear-splitting rhythm of "ca-chunks" as they bang out metal sides and roofs for the small Yaris cars built here. Deep inside the plant, injection-molding machines spit out brightly colored front and rear bumpers, looking like so many Lego pieces, which are loaded onto racks to be towed to the assembly line.

By contrast, the atmosphere at BMW's plant in Leipzig is decidedly more refined. Its soaring gray and silver factory, designed two years ago by the architect Zaha Hadid, is the equivalent of automaking by Armani.

Unpainted car bodies, their sheet metal the hue of brushed pewter, ride silently through the plant lobby, lighted from beneath in blue, providing a perfect accent to the colors of the building.

Outsiders are not allowed near these 3-Series models; instead, they must observe production from a catwalk above the assembly line. Below, in what seems more like a very expensive kitchen than a factory floor, workers clad in neat coveralls stroll along an assembly line that spreads into a series of fingers, the places where the real work goes on.

These two plants, one high-volume, the other high-end, may seem to have little in common with each other. But together, these plants, and the niches they serve, may offer some idea of what lies ahead for American automakers on their home turf.

During the past, awful year for Detroit, industry executives and experts have been puzzling through what will become of General Motors, Ford Motor and Chrysler Group. One potential future consists of total disaster, with the Detroit automakers vanquished by their Asian and European rivals. This is an option that only those with a doomsday complex really believe, given the Detroit companies' billions in cash and broad infrastructure. Another potential outcome is that the Big Three vanquish the competition to again rule American roads, a prospect that has faded in 30 years of fighting the imports and is even more improbable now that foreign companies hold nearly half of the market.

A third option, much more likely than the others, is for GM, Ford and Chrysler to adapt to a new American market that in many ways resembles Europe's: a fragmented bazaar that has little in common with the mass-production ethos of Detroit's first century. In this new American market, it is very hard to profitably support enough different brands and models to guarantee "a car for every purse and purpose," which Alfred Sloan, as GM's president, declared to be the company's mission in the 1920s.

Rather than trying to be all things to all people, Toyota, BMW and other successful carmakers on both continents are concentrating on a different strategy: Find a niche, hone it and own it. In Europe, for example, the market is not dominated by any single player or small group of players with market shares that dwarf smaller competitors the way GM, Ford and Chrysler once did in the United States. Instead, Europe's car sales are splintered such that 5 percent is enough to make a difference, and 20 percent is more than anyone can expect.

As is the case in Europe, no automaker in America can automatically count on selling hundreds of thousands of one model annually as they could even five years ago, meaning that they must find ways to profitably stay on top of market trends - or be left behind. In Europe and increasingly in America, consumers are demanding the latest in environmental technology, both to save gasoline, as with hybrids, or to avoid using it, as with diesel-powered cars. While some national loyalty lingers in Europe, as it does in the United States, no company can rely on such loyalty to sell cars.

Carmakers are forced to continually update their brand images in order to stand out in a crowded market. At the same time, like their European counterparts, America's unionized autoworkers must also adjust. They cannot count much longer on the cushy contracts that typified their jobs in the past, because new deals at new factories have chipped away at pay and benefits while emphasizing more-productive work methods.

European companies have long competed this way, but it is a new reality for American carmakers who were so dominant for much of the last century. As recently as 1990, GM, Ford and Chrysler together sold more than 70 percent of the cars bought in the United States; GM alone accounted for more than one- third of auto sales.

Now those companies' American market share has dropped to around 50 percent, while the influence of Toyota and other foreign manufacturers is growing. Though GM remains on top, its share has slipped below one-quarter, and the battleground has become the section between 10 percent and 20 percent of the market. That is the area where Ford and Chrysler have slipped and where Toyota and Honda have grown.

In many ways, the changes in the United States have European parallels. Toyota is also rising in Europe, where its market share has more than doubled over the last 10 years, to about 5.7 percent. It has forged the gains by focusing on one segment, well-made small cars, and pursuing it with single-minded determination. Its factory here in Valenciennes is evidence of that focus.

Inside the factory offices, the plant manager, Didier Leroy, sits in front of an electronic tally board that shows the plant's production goals for the day and the number of vehicles it has actually built. This board, along with others inside the plant, gave a disappointing picture on a recent afternoon, showing that workers had fallen behind their target.

But Lero confides with a smile that managers intentionally set the targets a little too high, to keep workers focused on their tasks. If employees believe that they are falling behind, he says, pointing to the board, they will work more vigorously than if they think the day's objective is easy to achieve.

The Valenciennes factory is among Toyota's most important plants worldwide, ranked even above its American operations, according to some inside Toyota. An important reason lies inside the body shop, where major structural parts of the car are welded together.

Valenciennes was the first Toyota plant outside Japan to receive what the company calls its Global Body Line: a configuration of robots that can be programmed to build a number of different styles of vehicles without having to modify the entire factory. Today, that same body line is in Toyota's plants in Kentucky and Indiana, and has been installed in the pickup factory that Toyota will open next month in San Antonio.

While the Valenciennes plant builds only one model, the Yaris, it produces it in four configurations - left-hand and right-hand drive, and equipped with gasoline and diesel engines. Each configuration requires different parts and production steps. That flexibility, which can also be harnessed to produce wholly different models on the same assembly line at the same time, is a hallmark of Toyota's factories around the world, and an example that other companies, both in Europe and the United States, are striving to emulate.

On a recent weekend, Peter Claussen, the manager of BMW's Leipzig plant, went to his bookshelf to seek guidance on solving a problem there. He found a solution in "My Life and Work," written by Henry Ford in the 1920s. Back then, Ford offered advice that still sounds appropriate today, as American companies look to Leipzig, Valenciennes and elsewhere for hints of the future.

"If there is any great secret of success in life," he wrote, "it lies in the ability to put yourself in the other person's place and to see things from his point of view - as well as your own."

Nick Bunkley contributed reporting from Detroit.

[SSLL]

From: http://www.thestar.com/NASApp/cs/ContentServer?pagename=thestar/Layout/Article_Type1&c=Article&pubid=968163964505&cid=1162810867710&col=968705923364&call_page=TS_Business&call_pageid=968350072197&call_pagepath=Business/News
________________
GM betting on China's growth
Nov. 6, 2006. 07:24 AM
ELAINE KURTENBACH
ASSOCIATED PRESS

SHANGHAI, China — General Motors Corp. (NYSE: GM) intends to keep investing in China's fast-growing market, and it is confident its sales are still outpacing the industry average, GM's chairman Rick Wagoner said Monday.
"We are willing to invest ahead of demand here because we are very bullish that demand is going to keep growing here," Wagoner told reporters after taking a ceremonial spin, with Shanghai Mayor Han Zheng, in GM's hydrogen fuel cell-powered Sequel.
GM's sales jumped 36.7 per cent in the first three quarters of this year, helped by strong demand for newly launched models such as the Buick LaCrosse.
Wagoner said GM expects its sales growth in China this year to outpace the industry average of about 20 percent.
China and other overseas factories accounted for more than half of GM's total output of 9.2 million vehicles last year, Wagoner said. The company says its total production will remain at about that level this year.
Monday's event was meant to showcase GM's progress in bringing its newest technology to market, and its willingness to cater to China's appetite for advanced technology as it builds up its auto sector.
Shanghai GM, the company's joint venture with local partner Shanghai Automotive Industrial Corp., plans to begin manufacturing hybrid gas-and-electric powered vehicles by 2008, part of the effort to shift into next-generation technologies that might help reduce the environmental impact of growing vehicle use among the 1.3 billion Chinese.
Ultimately, GM is betting on hydrogen fuel-cell technology such as that used in the Sequel, which looks like a minivan and has a range of 300 miles.
"We believe fuel cell vehicles offer the best long-term solution for meeting the world's growing demand for automobiles in an economically and environmentally sustainable manner," Wagoner said.
"Sequel represents the most production-ready fuel cell vehicle available today," he said. "We've made a lot of progress in making it a real life technology.''
Still, the vehicle is far from ready for commercial use, Wagoner acknowledged.
Nearly all the world's major automakers are testing hydrogen-powered vehicles, with some in use by government workers.
The pollution-free technology holds the potential of zero emissions and a sustainable source of energy produced when hydrogen and oxygen are mixed. Experts say they could begin arriving in showrooms by 2020, or perhaps earlier.
But many obstacles exist, including the high cost, relatively short range and a lack of fuelling stations.
GM has managed to reduce costs for making the Sequel by 12 times, but still needs to reduce them by seven times more to make it competitive, Wagoner said.
And automakers need help from governments in developing the infrastructure for hydrogen fuelling, he said.
"Developing new technologies is really a team sport that requires business and governments to work together," he said. "It's doable, it's not that expensive, but it's going to require some work."

[SSLL]

From: http://chron.com/disp/story.mpl/business/4327558.html
______________
Nov. 11, 2006, 7:27PM
Toyota aims to roil pickup market
New Tundra rolls off the line in San Antonio later this week

By SEAN M. WOOD
San Antonio Express-news

Toyota calls the 2007 Tundra the most important product launch in its history, more significant than Scion and even more significant than Lexus.

On Friday, the first new Toyota Tundra pickup rolls off the line in San Antonio. It will move a few hundred feet into the reception area of the plant, never to be driven.

It's the other 199,999 trucks the plant will be able to produce in a year that Toyota is counting on to change the domestic pickup landscape.

"I think this will be the beginning of Toyota's incursion into the last domestically owned segment in the market," said Karl Brauer, editor in chief of the automotive comparison site Edmunds.com.

Edmunds has already dubbed the 2007 Tundra the most significant vehicle of the year, even though consumers won't find them at their local dealerships until February.

Brauer said vehicles don't have to be on sale in order to be important.

"We think the Tundra is going to be hugely significant," Brauer said. "It's got such a wide range of options and configurations that will appeal to truck buyers. That includes real truck users whose livelihoods depend on their trucks."

The Tundra has been seen as a "nine-tenths" truck. Its domestic rivals, from Ford Motor Co., General Motors Corp. and Dodge have always beaten it in size, towing and payload, not to mention sales. GM and Ford combined sell nearly 10 times the pickup trucks that Toyota builds.

But some industry analysts say the new Tundra could change that.

"Tundra has grown up slowly and gained credibility," said Gordon Wangers, an automotive marketing consultant. "They've never really come out and said it is a direct competitor to the domestics until now. They catch the domestics at a time of particular vulnerability."

But not everyone is vulnerable, said Rebecca Lindland, analyst with Global Insight in Boston. She said the new half-ton pickup from GM is more than capable of holding its own against the new Tundra.

"GM doesn't have anything to worry about," she said.


Big part of the mix

Trucks are a major part of the domestic automakers' mix.
The vehicles are revenue generators, with higher sticker prices that cover the wages and benefits the domestic automakers have to pay their organized workers and retirees. But sales of full-size trucks are down nearly 10 percent this year through September.

Some of the decline stems from higher fuel costs, but analysts say it is also a result of tired designs and drivers waiting to buy the newly designed Tundra and GM trucks.

"This year is a bit of an anomaly," Lindland said. "It's not entirely typical that two major companies are redesigning at the same time, with the Tundra pickup truck and the GMT 900 from GM."


Ford and Dodge numbers

She said Global Insight forecasts strong sales for the Tundra and the new pickups from GM. Sales of Ford's F-series pickups will lose 3 percent to 4 percent in 2007, she predicted, while sales of the Dodge Ram will be down nearly 5 percent.
Achieving even those sales, however, will require Ford and Dodge offering heavy incentives, Lindland said.

That should be good news for truck buyers in 2007.

"It's a great time to buy a pickup," Wangers said. "Looking at the differences between trucks, it's splitting hairs.

"The Nissan Titan is a great truck. The new Tundra is a spectacular truck. The new Chevy is phenomenal. The F-150 is fantastic and the Dodge is also an excellent truck.

"Whatever you end up with, you're a winner."

[SSLL]

From: http://www.thestar.com/NASApp/cs/ContentServer?pagename=thestar/Layout/Article_Type1&c=Article&cid=1163976613847&call_pageid=968350072197&col=969048863851
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GM open to Ford alliance
Nov. 20, 2006. 08:24 AM
REUTERS NEWS AGENCY

ZURICH — No. 1 U.S. carmaker General Motors is open to an alliance with its No. 2 rival Ford, vice-chair Bob Lutz said in a newspaper interview yesterday.
Asked whether GM would choose to go it alone or merge with Ford, Lutz said, "We are open to alliances. But we can also be successful alone."
Lutz spoke in an interview in the Swiss newspaper SonntagsZeitung.
Both Ford and GM are restructuring North American operations to adjust to a loss of market share in their home markets. GM is attempting to recover from a $10.6 billion loss in 2005.
Lutz said GM remained open to a smaller deal with Renault-Nissan after GM declined to pursue a larger tie-up with the French-Japanese group.
"We would have been in agreement with a smaller deal on engines, and we still are today," he said.
After nearly three months of talks, GM, Nissan and Renault said in October that they would end their discussions on a possible partnership.
Lutz told the newspaper that GM would have benefited from the proposed alliance far less than Nissan and Renault.

[SSLL]

From: usatoday.com/money/autos/2007-01-23-china-1b-usat_x.htm
______________
Detroit has a craving for Chinese
Updated 1/23/2007 3:43 AM ET

By Chris Woodyard, USA TODAY
DETROIT — A generation ago, the arrival of Japanese cars here was greeted with sledge hammers.
Auto dealers selling domestic brands gleefully offered customers visiting the sales lots a whack at one of the little imports. Some companies and Detroit-area union locals banned foreign cars from parking lots. A bumper sticker declared "Toyota, Datsun, Pearl Harbor."

The hostility was prompted, at least in part, by fears that for every auto industry job created in Japan, one was being lost in America. It inspired a wave of protectionism that has made Japanese cars a hard-sell in much of the Midwest for decades.

PHOTOS: Changfeng Motors makes a splash at Detroit auto show

Now, the Chinese are poised to become the fourth wave of exporters of inexpensive cars to American shores — after the Germans, Japanese and South Koreans. And how is Detroit responding this time?

With open arms.

Instead of trying to throw up new barriers, Michigan seems to be taking the attitude that if you can't beat them, at least invite them to come and sink money into the beleaguered state's economy.

"We want Chinese automakers and their investment here," Michigan Gov. Jennifer Granholm declared as she toured the North American International Auto Show here earlier this month. "We want to make sure we take advantage of the global economy and are not just victimized by it."

Instead of viewing imports as a threat, state and local officials say they see them as a path to enhancing Detroit's role as the center of the automotive universe.

The Chinese so far haven't engendered the kind of anti-pathy that dogged the Japanese. U.S., Japanese and South Korean automakers all are taking part in joint ventures with Chinese companies to open China's domestic market. By contrast, much of the resentment of Japan 35 years ago centered around the perception that the USA was being shut out by an alliance of Japanese automakers, suppliers and its government — "Japan Inc."

That was long before Japanese automakers and suppliers began building U.S. plants.

Gaining a comfort level

In China, General Motors was the top automaker last year, followed by Volkswagen, Hyundai and Honda, PricewaterhouseCoopers says. GM Vice Chairman Bob Lutz says Americans shouldn't fear a "Chinese menace" when it comes to auto imports. "Because we are inside that 'menace,' I'm more comfortable," Lutz says.

And, frankly, when it comes to the U.S. market, Chinese cars aren't ready for prime time. They don't yet measure up to American quality or safety standards.

That gives Detroit automakers a few more years to figure out how to survive — or take advantage of — the coming onslaught.

Meantime, Michigan isn't waiting. Wayne County, where Detroit is situated, now has three trade offices in China and has sponsored two trade trips. The state of Michigan's trade office in China switched two years ago from focusing on hawking the state's products to Chinese companies to trying to lure those same companies to set up shop in the Wolverine State.

For now, state and local officials aren't expecting a lot of success. It took years before the Japanese and South Koreans set up auto plants in the USA. Maybe the Chinese will consider opening a research center, test track or sales office as a first step.

Nailing the first one is what counts. "If we get the initial companies here, the rest are going to follow," says Wayne County Executive Robert Ficano in an interview in his office, where a case holds the plates and other gifts he received on China visits. So far, he says, the county has attracted one small, press-shy Chinese auto parts maker.

What he's trying to avoid is having Chinese automakers slip away the way that the Japanese and South Koreans did. At the same time that Michigan's resentment of Japanese cars was starting to boil, the Asian brands were situating their U.S. headquarters in Southern California. "I don't want to see that mistake repeated," Ficano says.

Ficano, a Democrat and the county's top elected official, didn't let the opportunity pass when Changfeng Group showed up at the big auto show this month, the first Chinese automaker to exhibit on the show's floor. He exchanged gifts with company's chairman, Li Jianxin, in a ceremony before the press unveiling of Changfeng's SUVs and pickup. "Our doors are open, and our workforce is ready and willing," Ficano told the Chinese.

Granholm, also a Democrat, toured Changfeng's display as part of her rounds through the auto show. "We're glad that you're here, and we would love investment if there ever is an opportunity," she told the automaker's vice president, Allen Zhiyu Han, who ushered her among the models. "We're interested in seeing production here, too, for the American market as you open it."

Jianxin, through a translator, said Changfeng came just to make an appearance and doesn't have immediate plans to open a U.S. headquarters. When the time comes to enter the U.S. market in about two years, the company would probably start selling vehicles regionally.

Teaming up could mean jobs

Michigan needs help with jobs, having one of the highest unemployment rates in the nation. The state's seasonally adjusted jobless rate of 7.1% in December — 7.7% in greater Detroit — was far above the national average of 4.5%. The state lost 39,000 manufacturing jobs, the kind of good-paying jobs on which the employment base is built, last year, according to the state Department of Labor and Economic Growth. GM and Ford Motor announced dramatic lists of plant closings and employee reductions last year. Meanwhile, European and Asian brands have continued to pick up market share and grow by building plants primarily in other parts of the Midwest and in the South, where unions aren't as strong.

Michigan, however, has advantages that other states lack. It extols its car-building tradition, strong universities and inexpensive real estate. "We have a ready workforce of people who grew up with autos in their DNA," says James Epolito, CEO of Michigan Economic Development.

Michigan has the right idea, says Stephen D'Arcy of PricewaterhouseCoopers' automotive consulting practice. But while Detroit may have a rich ethnic tradition — visible communities of Greeks and Middle Easterners, for instance — its Chinese are more widely dispersed. To lure Chinese companies, D'Arcy suggests the state go on a charm offensive, adopting the attitude: We are going to fall over ourselves to make you welcome.

Epolito isn't hurting for prospects. Changfeng is only the most visible of the Chinese companies eyeing the U.S. market. Last year, Chinese brand Geely exhibited a car in the foyer of the car show, though not on the floor itself.

And sending the biggest quake through the auto show this year, Chrysler Group announced it has a tentative agreement with Chinese maker Chery to develop small cars to sell in the USA and worldwide.

But getting Chinese cars to market in Michigan or anywhere else won't be easy.

First, Chinese parts suppliers may not be sophisticated enough yet to produce the fancy systems that U.S. consumers demand, cautions Michael Robinet, vice president of global vehicle forecasting for CSM Worldwide.

Then there is the matter of how to find the many dealerships that would be required to sell the cars. "It has little to do with the Cherys and Geelys and Changfengs. It's a distribution issue," Robinet said at a Detroit conference last week.

Last, there are questions about how fast the Chinese can catch up to American quality expectations. "Our customers here are pretty sophisticated, and in many cases the demands they have on products exceed the ability of the Chinese" automakers and suppliers, says Jim Press, president of Toyota Motors North America.

Changfeng is, in some ways, a good example of how the Chinese are catching up to, but haven't yet caught, most of Western automakers. Founded in 1950 as a military plant, Changfeng has developed its line of mostly SUVs over the past decade. By 2010, it hopes to produce 288,000 vehicles a year.

By comparison with the industry, that's still just a smidge. Changfeng's production goal is about equal to the number of Chevrolet Impalas sold in the USA last year.

The vehicles Changfeng brought to the Detroit show were mocked by some observers for issues such as poorly fitting panels and uneven paint jobs. "You get what you pay for," Khalid Al-Naif, who specializes in the economies of developing nations at the William Davidson Institute at the University of Michigan, said as he looked over Changfeng's vehicles.

But he doesn't underestimate how Chinese cars could conquer the market, having seen them make inroads in his native Jordan. "Even if they break, (parts) are cheap."

The entry of China into the U.S. market "can't do anything but help" because of increased competition, said Paul Lisi, 46, a computer technician from Cincinnati who was touring the show with his 18-year-old son, Phil.

Still, he added, "Henry Ford is rolling in his grave."

But over time, the line between what constitutes a foreign or domestic car has blurred anyway. "Even American cars have foreign parts," says Jeff Bucher, 55, of Toledo, Ohio, who runs an auto repair shop.

Can't hide from global economy

Michigan officials say there is no reason to fear the Chinese auto industry as long as the state can take advantage of its interest in the USA.

"Don't be afraid of China," says Yvonne Warmbier-Ramp, the Mandarin-speaking head of Michigan's Shanghai trade office. "It's going to help us."

Ficano agrees. Wayne County and Michigan, he says, can't afford to be left out of the game.

"It's a global economy. If we stick our heads in the sand, we're going to pay a heavy price."

U.S. CARS SOLD IN CHINA

GENERAL MOTORS

Buick Chevrolet

LaCrosse Epica

Regal Lova

Royaum Aveo

Excelle (sedan and station wagon) Sail

HRV S.RV

GL8 (2.5 and First Land) Spark

Cadillac Saab

CTS 9-5 sedan

SRX 9-3 (sport sedan, convertible and sport combi)

XLR

Escalade

SLS

FORD MOTOR

Ford Volvo

Mondeo S40

Focus S80

Fiesta XC90

Transit C70

Maverick Land Rover

Lincoln Navigator Range Rover Sport

Jaguar Range Rover

S-Type Discovery 3

XJL Freelander

XK

DAIMLERCHRYSLER

Chrysler Jeep

Grand Voyager Cherokee

300C Grand Cherokee

PARTNERSHIPS

Ford- Chang'an Automotive Group Chrysler- BBDC, China Motor Corp.

GM- Opel, SGMW (SAIG-GM-Wuling Automobile)

Sources: Company websites, PricewaterhouseCoopers


HOW GM, FORD RANK

Top 10 automakers in China, by number of vehicles made in 2006:

1. General Motors
880,706

2. Volkswagen
697,796

3. Hyundai
397,207

4. Honda
360,051

5. Chang'an
345,786

6. Toyota
306,632

7. Chery Auto
287,700

8. China FAW
287,590

9. Ford Motor
255,642

10. Renault-Nissan
238,639

Source: PwC Automotive Institute 2007 Q1 Data Release

[Alta California]

I tried hard to really like US cars for the 2007 models. Alas, it's a MINI for me. The Japanese cars are too dull, and the Pontiac G6 (it was the only US car that I found to be "designed") seem to demand an entire Gulf state to keep it running.

[TexasStar]

It truly distresses me to see the number of Americans driving down the road in rice-burners.

[fflint]

You get truly distressed whenever you see all the many, many people who have chosen a superior vehicle?

I'll never understand the whole aesthetic--that we should all be diapers absorbing whatever Detroit shits out of its sloppy ass.

[SSLL]

From: http://www.usatoday.com/money/autos/2007-03-22-american-usat_N.htm
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How do you tell which car is more American?
By Chris Woodyard, USA TODAY
Joe Luehrmann likes American cars, has owned a string of them and is considering buying another.
But he faces a problem in trying to figure out what's American anymore.

His brother just bought a Chevy Equinox, but some of its parts are from China. And he knows all about the Kentucky-built Camry, but buying a Toyota ships the profit to Japan.

Toyota brags in ads about its growing list of U.S. plants, yet it imported 37% more cars from Japan last year to meet increased demand. General Motors promotes its trucks in TV commercials to strains of This Is Our Country but makes some of its best-known SUVs in Mexico.

"What's American, vs. what's foreign? I can't really say," says the frustrated Luehrmann, a Chicago accountant. "It's not that easy. It's very shades of gray."

The ambiguity creates a quandary for the many who consider "Made in the USA" a badge of honor. To them, the label means putting fellow countrymen to work at decent wages and supporting the U.S. economy in wartime. Some domestic-brand dealers use patriotic appeals to try to rev up the Buy American spirit.

But many consumers are increasingly confused. The world is no longer as simple as us vs. them, Detroit against the Asians and Europeans.

It's a global industry now, in which all manufacturers are touching their automaking toes on the shores of just about every industrialized nation. Even GM, long the icon of American industry, hedges its bets. "We're very proud for the economic role we play in this country," says GM spokesman Greg Martin. "However, we're a global car company that happens to be based in the United States."

The contradictions of a borderless automotive economy are borne out by government figures that track where vehicles are made and their domestic parts content. The search for the American car leads to:

•Foreign cars made in the USA. Honda's Ohio-built Accord is 70% domestic parts. Toyota's Corolla is made in a California plant alongside General Motors models.

•American cars made abroad. Ford's hit Fusion sedan is made in Mexico; only half its parts are from the USA or Canada. GM pitches its small HHR sport utility and giant Suburban straight at the American market, but they, too, are built in Mexico. HHR has only 41% American and Canadian parts.

•Famous American names and foreign owners. More than three-quarters of the parts in Dodge's new Nitro SUV, which is assembled in Toledo, Ohio, are American or Canadian. But the profits go to Germany because Dodge is part of DaimlerChrysler. Chrysler Group, meanwhile, just became the first major automaker to announce it's going to make small cars for the U.S. market in China.

Despite the confusion, about half of Americans surveyed say they still try to buy products made in the USA, says Britt Beemer of America's Research Group.

The government makes it easy for buyers wandering sales lots to figure out which vehicles are most American. The location of the plant where a vehicle was assembled and its amount of U.S. or Canadian parts — they aren't separated out — are pasted on the window sticker.

Arguably, the most American of all vehicles right now is Ford's hulking 2007 Ford Expedition, a USA TODAY check of government listings, manufacturers and dealer sales lots reveals. The SUV is composed of 95% U.S. or Canadian parts, and it was made in Michigan. Ford's new Edge crossover and the Crown Victoria sedan also have 95% components, but both they and their corporate cousins are assembled in Canada.

Even though individual models vary widely, Detroit automakers overall still had more domestic parts in their vehicles when weighted according to sales, says an analysis from a pro-Detroit trade group.

Detroit's Big 3 derived about 77% of their parts from U.S. and Canadian factories from domestic sources. That compares with slightly less than half for Japanese brands overall, according to the Automotive Trade Policy Council, which represents the domestic manufacturers in trade issues. Among Japanese brands, Honda had the most domestic content at 59%.

"The data is clear: Domestic auto plants create more jobs in this country than overseas producers who locate here," says United Auto Workers President Ron Gettelfinger in a statement to USA TODAY. But he was quick to note that foreign automakers have created more jobs in the USA by opening plants here, and he respects their workers.

Many auto dealers selling domestic brands are playing to the patriotism theme.

In Tampa, Bill Currie Ford credits pro-USA ad themes for contributing to fast growth. A billboard posted along Interstate 275 shows an American flag and outlines of Japan and South Korea. The message: "Whose country are you supporting?"

"We've had some compliments," says Currie's community relations director, Danny Lewis. And, he adds, "very little criticism."

In Roseville, Minn., Cadillac dealer Wally McCarthy runs radio ads on WCCO-AM in Minneapolis that say, "Buying a vehicle from GM, quite simply, helps support Americans."

Manufacturers — and not just those in Detroit — have picked up on the patriotism theme lately, especially when it comes to pickups.

To crack the full-size pickup market with its new Tundra, Toyota doesn't hold back in promoting how American it has become. The new Texas truck plant where the Tundra is built "is just one more example of our commitment to America," Toyota touts in colorful newspaper ads that mention lots of new jobs and a $15 billion U.S. investment.

GM counters with its Our Country campaign, filled with images of vintage Americana, for its Chevy Silverado pickups.

Consumers who care the most about patriotism when it comes to purchases are usually working-class white men; thus the emphasis on the pickup market, says Dana Frank, a history professor at the University of California, Santa Cruz, and author of Buy American: The Untold story of Economic Nationalism.

Pickup buyers also are notoriously loyal, another reason the campaigns are targeting them. They'll wear a Chevy belt buckle with pride, notes Honda Senior Vice President John Mendel, adding, "Not a lot of Lexus owners have an 'L' tattooed on their arm."

Half the domestic pickup buyers surveyed by J.D. Power and Associates cited not wanting to own a foreign-made truck as the chief reason for their purchase decision, even more than the one out of three who said they didn't like foreign-truck styling.

Pickup buyers "tend to be flag wavers, and they aren't convinced that Toyota is an American company," says Art Spinella of CNW Marketing Research. Consumers may be a little predisposed against Toyota, with 61% of those participating in CNW focus group panels in five cities saying they don't consider Toyota to be a U.S. company despite efforts to tint its image more red, white and blue.

"It does bother me that they have a series of ads showing they are part of the heartland of America, yet their imports increased," says building contractor Jim Urbano, 53, of Woodbridge, Conn., who also researches car-buying options on Edmunds.com. He says he prefers American-made vehicles, because, "It troubled me to see so many U.S. autoworkers being laid off."

Besides its flag-waving Tundra ads, Toyota has been running a public relations campaign in greater Washington, D.C., to cultivate an apple pie, not sushi, image among policymakers.

It helps that Toyota announced that a new assembly plant will be built in Tupelo, Miss., its fifth in the USA, with a goal of increasing production by 600,000 vehicles by 2010. Honda is also building a new assembly plant in Indiana.

"We are committed to building where we sell," says Toyota spokeswoman Martha Voss. "No one is adding more capacity than we are."

Voss cites demand for small cars last year as the reason Toyota's Japanese imports rose by so much. Altogether, Toyota imported close to half of all the vehicles it sold in the USA last year from Japan, including all its gas-electric hybrids and most of its luxury Lexus division vehicles.

Honda's imports soared 30% last year, Mazda's rose 19%, and Suzuki's were up 23%, the Congressional Research Service finds in a new report. It says Japanese makers are simply trying to meet customer demand while running their U.S. plants at full tilt.

Japanese automakers encountered "capacity restraints in their existing U.S. plants as a sharp increase in the price of gasoline sparked greater consumer demand for fuel-efficient, environmentally friendly vehicles," says William Duncan, general director of the Japan Automobile Manufacturers Association's office in Washington, D.C.

All told, each of the Detroit automakers supports 2½ times more U.S. jobs than Toyota, says Jim Doyle, president of the Level Field Institute, a Washington research group. He acknowledges, however, that "people are trying to define what an American car is, and they are having a tough time."

The confusion pains Luehrmann, 48. Hoping to reach a decision soon about his next car, he's looking at everything.

He's a believer in American cars, but, says with a tinge of regret, "I don't feel any great loyalty anymore."

What do you think makes a car an 'American car'? Do you care and does it affect what you buy?

[SSLL]

From: http://www.freep.com/apps/pbcs.dll/article?AID=/20070414/BUSINESS01/704140355/1002/BUSINESS
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Fewer than 50% buy U.S. vehicles
Domestics' retail market share falls
April 14, 2007
BY SARAH A. WEBSTER
FREE PRESS BUSINESS WRITER
Despite a good start to the year by General Motors Corp., fewer than half of American consumers -- 48.9% -- bought new cars and trucks in the first quarter this year from Detroit automakers, according to retail sales data provided exclusively to the Free Press by the Power Information Network.
Retail sales are purchases made directly by consumers in showrooms, and they exclude fleet sales to rental car companies, businesses and governments, which are typically sold in bulk at a discount.
Advertisement

Industry experts view retail sales, which represent about three-fourths of the industry's 17 million sales, as one of the best measures of market demand and the future financial performance of automakers, because they are generally more profitable sales.
The new low point in Detroit's share of the retail market is the result of a long-term consumer move away from their brands that seems to have picked up speed since September, fueled by a housing market slowdown, high oil prices and shaken consumer confidence.
While GM had the strongest quarter among metro Detroit automakers, Ford Motor Co. and DaimlerChrysler AG lost important retail market share to foreign competitors -- led by Toyota Motor Corp., which managed to drop its incentives to below $1,000 per vehicle on average and still snap up a substantial number of new customers.
To be sure, this is not the first time that Detroit automakers have dipped below the 50% mark in retail sales. But if the trend continues, this might be the first full year that non-U.S. automakers take the majority of the U.S. auto market.
"I think, in the near term, both Chrysler and Ford will continue to lose share, and that aggregate loss will more than offset any possible gain by GM," said Tom Libby, senior director of industry analysis at PIN, a subsidiary of J.D. Power and Associates.
"I don't expect the domestics' share to move back up above 50% this year."
Still, the performance of GM shows arguable improvement. The world's largest automaker is stabilizing its retail performance, despite slashing its cash-back rebates and other discounts by an average of $500 per vehicle.
Automakers don't typically provide detailed information to the public on their retail sales, so PIN compiles estimates with sales information collected from more than 7,000 dealerships, which represent one-fourth of all retail sales.
Mark LaNeve, vice president of sales, service and marketing for GM North America, said GM's performance is better than the PIN estimate suggests. LaNeve said retail sales at GM were up half a percentage point in the first quarter. That performance, he said, likely will translate to a nearly flat retail market share because industry-wide retail sales are up an estimated 0.7%.
"We know our numbers for a fact," LaNeve said. "It was the first quarterly increase we've had in probably 18 months or so, and we think we held our own in a pretty tough market."
Although the numbers at Ford and Chrysler weren't nearly as encouraging, they're not giving up.
"It's still very early in the calendar year," Steven Landry, vice president of sales and field operations for the Auburn Hills-based Chrysler Group, said in an interview Thursday. "I think it's presumptuous to think that, as a group, we may finish below 50%."
Downward trend
Although Detroit could make a comeback, the domestic retail sales performance has been consistently on the decline for some time.
In 2005, Detroit's automakers had 54.5% of the retail market. By the end of last year, that had edged down to 50.1%.
Now, Detroit is down to 48.9%. That's a 1.2-percentage-point decline from the fourth quarter of 2006, and it's an even larger 2.1-percentage-point decline from the first quarter of last year.
These declines, measured to the tenths of a percentage point, might not seem like much. But each point of retail share keeps about one half of an assembly plant running.
Libby said even a half of a percentage point is considered an admirable gain in today's marketplace and a full percentage point is like "a huge mountain."
And Detroit, despite its best efforts, continues to lose mountains.
Behind the power shift
Ultimately, sales trends at just two automakers -- Toyota and Ford -- explain most of the power shift this year.
While most of the major automakers gained or lost a half percentage point of market share or less, Ford lost a full 1.1 percentage points and Toyota gained 1 percentage point.
Those numbers reveal just how tough the situation has become at Ford.
That's because the Dearborn-based automaker simultaneously increased its incentives, such as cash-back rebates and other discounts, by 44.6% or $1,342 per vehicle, during the period, to an average of $4,350 per vehicle, according to Autodata Corp. of Woodcliff Lake, N.J. Usually, big discounts such as those encourage consumers to shop and buy more. George Pipas, Ford's top sales analyst, said that Ford's declines, if they continue, could have implications for the company's turnaround plans, which already have called for shuttering 16 plants and eliminating 44,000 jobs.
"We know that one of the key assumptions in the Way Forward plan is to stabilize our retail market share," he said. "If we don't, then we maybe haven't gone far enough on our cost reduction."
That said, Ford's retail market share numbers provided by PIN include all of the company's six major brands, such as Jaguar, Land Rover and Volvo, all of which have posted sales declines this year. But the company's Way Forward plan is based primarily on Ford's domestic Ford, Mercury and Lincoln brands.
Pipas said the number for those three brands has held steady at about 13% of U.S. sales. So that would support Ford Chief Executive Officer Alan Mulally's recent comments to reporters at the New York auto show last week that "we are stabilizing our market share."

[SSLL]

From: http://www.iht.com/articles/2007/04/24/business/toyota.php
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Toyota ends GM's reign as leader in global sales

By Keith Bradsher
Published: April 24, 2007

HONG KONG: Toyota surpassed General Motors in worldwide vehicle sales during the first three months of this year, marking the end of one of the longest runs of dominance in all of global industry and another milestone in America's long decline from unchallenged industrial pre-eminence.

Toyota announced Tuesday that its worldwide sales reached 2.35 million cars and trucks in the first quarter; GM had previously announced that its sales totaled 2.26 million in the first quarter.

GM swept past Ford Motor in 1931 in the enormous U.S. market and in worldwide sales, and barely looked back for seven decades. But a combination of inattention to quality, poor labor relations, adverse regulatory decisions and a slowness to recognize the potential for small cars eroded GM's seemingly insurmountable lead starting in the mid-1960s.

Emerging from the ashes of Japan's defeat in World War II partly thanks to U.S. assistance during the Korean War, Toyota established itself through the 1970s and 1980s as the industry standard for quality and reliability. It has since built a reputation for technological leadership as well, most notably with the Prius and other hybrid cars.

Toyota took the worldwide lead in the first quarter as it stepped up sales in every major market. GM continued to gain market share in China, but is struggling in the United States and Europe and has never been able to gain a firm foothold in the Japanese market.

GM and Toyota spokesmen were equally reluctant Tuesday to portray themselves as engaged in a global car race for leadership. GM has been trying to emphasize its future as an international automaker - three-fifths of its sales are now outside the United States - and not on the greatness of its past.

"We're focused on providing the best cars and trucks for our customers all around the world," said John McDonald, a GM spokesman in Detroit. "We're not focused on a race."

Toyota has been leery of the attention, and often the criticism, that frequently come with being the biggest in any industry. It has frequently been the main target of trade restrictions in the United States and Europe, and this has made the company cautious of being seen as too large or too aggressive.

"We look at the results as simply a reflection of how our products are viewed favorably around the world," said Paul Nolasco, a company spokesman in Tokyo. "We don't just make them and push them out the door - we have a 'pull' system and we build them when they are ordered."

Industry analysts were bolder. "It is a historic moment" for Toyota, said Benjamin Asher of Automotive Resources Asia, which was acquired last year by J.D. Power & Associates. "Everyone was expecting it to assume the number one position, the question was when."

Yale Zhang, the director of greater-China vehicle forecasts for CSM Worldwide, an automotive consulting firm, said that while Toyota lags behind Volkswagen and GM in the fast-growing Chinese market now, it is on track to pull into the lead in 2013.

Toyota has trailed mainly because it has been slow to enter some segments of the market in China, as Chinese officials were wary of granting permission for Toyota to build factories in the 1990s given decades of Sino-Japanese rivalry. But Toyota is now expanding swiftly.

"It's pretty easy for Toyota in China given Toyota's brand image, the quality and the design of the cars," Zhang said.

General Motors has ruled the auto industry for so long that statisticians had difficulty figuring out the precise quarters in which it last trailed another automaker. Comparing automakers' worldwide sales on anything less than an annual basis is a fairly recent phenomenon.

Ford opened its first plant outside North America in England in 1911, while GM expanded aggressively in the European market in the 1920s. But automakers had typically eschewed worldwide sales announcements until the last few years, announcing monthly and quarterly sales separately in each country instead.

This has changed as the Internet has improved communications and as automakers have begun forcing their far-flung operations to work closely together, instead of functioning as a series of separate fiefdoms.

Ford briefly overtook GM in American sales in July 1998, when a strike lasting nearly eight weeks at two GM parts factories in Flint, Michigan, triggered the shutdown of almost all of GM's assembly plants across North America. Ford also outpaced GM briefly in the autumn of 1970, when a 10-week national strike crippled GM's operations.

[SSLL]

From: http://www.forbes.com/home/business/2007/04/25/cars-detroit-japan-biz-cx_tvr_0426cars.html
____________
Can Detroit Accelerate?

Tom Van Riper, 04.26.07, 6:00 AM ET
First, Toyota passes General Motors as the top selling car company in the world. Then, Honda announces a quarterly profit on Wednesday that blew away the numbers expected from Ford a day later. It all makes for a dour mood in Detroit, where losses, layoffs and restructuring plans have become the order of the day.

But while there's more pain to come, don't necessarily bet long term on GM (nyse: GM - news - people ), Ford (nyse: F - news - people ) and Chrysler to go down meekly before their Asian counterparts. Detroit's product mix, which got slammed in the face of rising gas prices a couple of years ago, is steadily growing more competitive. And while there's still a lot of work to do on the cost cutting front to get out from under piles of long-term obligations, there are at least signs of progress. Over 30,000 GM workers have accepted buyout offers from the company as it attempts to downsize it reflect the market share reality of the global marketplace.

"Yes, it's possible," says auto analyst David Healey of Burnham Securities on whether GM could outperform Toyota (nyse: TM - news - people ) as a five-year investment.

"Toyota has been a terrific stock, doubling in value [since late 2003]. It's got to slow down some.... GM has been making progress on its legacy costs, though more needs to be done," he says.

After losing a combined $12 billion in 2005 and 2006, General Motors reported a 5.5% drop in sales for this year's first quarter. Ford, when it reports on Thursday, is expected to report a first-quarter loss of 60 cents a share, or 35 cents after one-time items, following $12.6 billion in losses last year. Meanwhile, Honda (nyse: HMC - news - people ) continued its roll in the first quarter, announcing a 9% jump in revenue to $26 billion, even as profit slipped 20% from last year due to the elimination of a pension reimbursement from the Japanese government that it counted on its books in 2006.

Still, investors have at least shown some willingness to give the top two U.S. automakers some rope as they execute their turnaround plans, bidding shares up in recent months. GM shares have risen to $30 from $19 since early last year. Ford's stock, while it's worth half what is was five years ago, has quietly crept up 27% since last June.

Most encouraging for the Big 3 is that their Asian rivals, while on a relative roll in recent years, are hardly invulnerable. Nissan (nasdaq: NSANY - news - people ), after a nice surge of popular new vehicles a few years ago, has not had a hit in quite awhile. The company, which reports earnings along with Ford on Thursday, cut production 10% in March while announcing 1,500 layoffs.

Honda, which increased production in March while raising units sales 6.2% during the last quarter, is benefiting from a consumer trend toward fuel efficiency and environmental concerns over the past couple of years. But its product lineup, while solid, is not exactly exciting. Analysts point out that the company is not particularly competitive in the pickup and SUV markets, which are still important high margin vehicles even with unit volumes well below the peaks of a few years ago. And the trend of fuel efficiency and hybrid engines it's been cashing in recently may prove to be just that--a trend.

"That's the market coming to them," says Kevin Tynan, an analyst at Argus Research. "For what it does, Honda's portfolio is good. But as a growth driver it's not."

Toyota, which enjoyed a robust 11% jump in sales last quarter as it sprinted past GM, still dropped output by 1% in March. The company has expressed some caution going forward, voicing concern that a more competitive pickup truck market could crimp ambitious sales goals for the Toyota Tundra. Also, its manufacturing costs are rising in the U.S. And that's where politics potentially come in.

The Democrats who now run congress have historically been friendlier to Japanese carmakers that invest in factories in the U.S. rather than export vehicles from overseas, because it means American factory jobs. So Toyota and Honda may have to live with those rising production costs--the alternative is to risk trade restrictions if they try to produce more back home and ship cars to North America.

Meanwhile, Ford's redesigned F-Series pickups are expected to compete strongly with the Tundra. And after exiting the minivan market, the company has enjoyed some initial success with its Ford Edge and Lincoln MKX crossovers, a growing segment. General Motors, Healey reports, is accelerating the redesign of its large SUVs, sharply improving their production, sales rates and pricing in the first half of last year. The company is also quietly eliminating low margin cars that it's been selling to rental fleets. The lineup at Chrysler, where employees sit and await a likely sale from parent DaimlerChrysler (nyse: DCX - news - people ), still seems a bit "truck heavy," according to Tynan, though its leadership in minivans should benefit from the decision by Ford and GM to get out of the segment.

And the Big 3 are finally seeing some benefits from rising prices, as they wean consumers off the heavy discounts of a couple of years ago.

For sure, the clock is ticking in Detroit as its automakers scramble to get their financial houses in order. But unlike the past, when each company got SUV-happy during $12-a-barrel oil, the cars and trucks rolling out of the factories now better reflect the diverse tastes of the marketplace. Plus, their backs are really against the wall this time.

"If this latest restructuring round isn't successful, it won't be five years before something dramatic happens," Tynan says.

[SSLL]

From: http://news.yahoo.com/s/nm/20070612/bs_nm/toyota_gm_dc;_ylt=AsOMdBpIDykIsnbF9JIBADuyBhIF
___________
Toyota surpassed GM as top carmaker in 2006: journal
Tue Jun 12, 5:28 AM ET
Was it 2006 or 2007?

The milestone that the global auto industry has been holding its collective breath for -- Toyota Motor Corp.'s (7203.T) unseating General Motors Corp. (NYSE:GM - news) as the world's biggest carmaker -- came last year instead of in 2007 as many had expected, according to a leading industry journal.

Detroit-based weekly Automotive News, whose data centre publishes a widely quoted ranking of the world's automakers around this time every year, said Japan's top carmaker outsold GM by about 128,000 units last year based on a technicality that excludes sales of vehicles at minority-held subsidiaries.

"A little-known Chinese microvan played a role in Toyota's victory," the magazine, published by Crain Communications, said on its website.

In its final tally for 2006, GM included the seven-seat microvan and other Wuling-brand vehicles built by a three-way venture with China's Shanghai Automotive Industry Corp. (SAIC) and Liuzhou Wuling Automobile even though it owns less than half of the company, the journal said.

Automotive News credited 51 percent-owner SAIC for the 420,140 units the venture sold in 2006, putting GM's global sales at 8,679,860 units in 2006, against 8,808,000 for Toyota.

In its ranking, Automotive News Data Center includes sales of a subsidiary in the total for the parent company with the majority stake.

GM, which is in the throes of sweeping restructuring but is growing rapidly in China, has claimed the top spot for 76 years, including 2006.

In April, Toyota and GM announced sales figures for the first quarter of 2007 which showed the Japanese automaker edging past its U.S. rival by 90,000 units. The news prompted extensive media coverage as the first time ever for the switch at the top.

Toyota's figures, which correspond with Automotive News' tally, include sales at units Daihatsu Motor Co. (7262.T) and Hino Motors Ltd. (7205.T). GM's comprises a dozen brands, including Chevrolet, Buick, Opel and Saab.

Toyota is almost certain to take the lead for all of 2007 even by GM's count after it projected sales of 9.34 million units against the U.S. giant's forecast for 9.2 million.

[James Bond Agent 007]

http://online.wsj.com/article/SB118886140902916287.html?mod=hpp_us_whats_news

GM Crossover Trio Lures Drivers Away From Asian-Brand Vehicles
Offerings Are Bright Spot
Amid U.S. Sales Decline;
Dealers Can't Get Enough
By NEAL E. BOUDETTE
September 4, 2007; Page A3

General Motors Corp. is struggling to halt declining U.S. sales, but it has a bright spot in the three large crossover vehicles it launched in the past year.

The Buick Enclave, GMC Acadia and Saturn Outlook each have three rows of seats and look like big sport-utility vehicles, but they are lighter, have a smoother ride and get better gas mileage than SUVs. Made from many of the same parts, all three are selling briskly and have a GM plant in Lansing, Mich., running at full capacity, a key to profitable auto production.

More importantly, the trio is doing something few other Detroit vehicles can achieve these days -- they are pulling drivers from import brands.

Luring drivers of foreign brands back to domestic vehicles is a critical task for all three Detroit auto makers as they scramble to turn around their North American operations and stem their decades-long slide in market share. Fresh evidence of their troubles is due today in August vehicle-sales reports, which are expected to show continuing weakness for both foreign and domestic manufacturers.

http://online.wsj.com/public/resources/images/NA-AN872_GM_20070903194040.gif

Brian MacDonald is one driver attracted by GM's new crossovers. An investment-fund manager in California, Mr. MacDonald has driven nothing but BMWs and Mercedes-Benzes for the past 20 years. But last month, with the lease on his Mercedes ML-Class winding down, Mr. MacDonald leased a $45,000 Enclave, the most luxurious of GM's three models.

"If someone had told me a few months ago I'd be driving a Buick, my reaction would have been 'no way, no how,' " says Mr. MacDonald, 46 years old. The Enclave, he said, offers the roominess to haul around his three young children and the styling and interior comforts he was accustomed to with the Mercedes. Because the Mercedes ML sells for about $30,000 more than the Enclave, his monthly payment on the Buick was almost $300 lower.

GM, Ford Motor Co. and Chrysler LLC remain the dominant manufacturers of trucks, but sales of pickups and SUVs have been falling amid high gasoline prices and changing consumer tastes. With more and more consumers moving to passenger cars and crossovers, the Big Three have to step up their competitiveness in these segments or their turnaround efforts could be squeezed for cash.

But it is an uphill battle. About two-thirds of the vehicles GM sells through its dealerships go to customers who trade in GM vehicles, according to data from the Power Information Network, a division of J.D. Power & Associates. Only a fraction -- less than 3% -- go to people trading in vehicles made by Toyota Motor Corp. or Honda Motor Co.

The three new crossovers do much better. Half of all Acadias and Outlooks go to customers who trade in GM vehicles; about 20% go to people trading Asian-brand vehicles. For the Enclave, the numbers are slightly lower but still better: 44% of all trade-ins are non-GM brands; 14% of the trade-ins are Asian vehicles.

GM doesn't disclose profit margins of its vehicles, but other measures indicate the three crossovers are performing well financially. The company just added a third shift at the Michigan plant producing the vehicles, at a time when GM is trimming production of its full-size SUVs and pickup trucks.

Dealers say they can't get enough Acadias and Enclaves. "We're selling them as soon as they come off the truck," said Dan Marquardt, owner of Barrington Buick-Pontiac-GMC in Barrington, Ill.

At the end of July, GM had enough cars and trucks in inventory to last 70 days. But it had only a 22-day supply of Enclaves, a 32-day supply of Acadias and a 51-day supply of Outlooks.

Such tight supplies cut the need for sales incentives. "We're getting full price," Mr. Marquardt said.

It will be a challenge for GM to keep the three crossovers in this position. A Chevrolet version is in the works, and could skim buyers from the Buick, GMC and Saturn models. The Chevy model will be built in a different plant in Spring Hill, Tenn.

[J. Will]

It truly distresses me to see the number of Americans driving down the road in rice-burners.

I'd consider that term to be borderline racist. I guess that mods don't agree.