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Inside this issue
Opinion: It Could Be a Slippery Slope
Toyota Outsells GM in First Nine Months of Year
GM Taking New Approach to Global Engineering, Vehicle Architectures
Despite Quality Improvements, Costly Safety Issues Continue to Dog Automakers
Fiat Can't Afford Chrysler Without Outside Capital
On the Road to Autonomous, a Pause at Extrasensory
Dealers Amp Up Local Economies
Click here for more auto industry news at NADAFrontPage.com. .
Top Stories
Opinion: It Could Be a Slippery Slope
By Keith Crain

There have been several stories recently about General Motors' plan to use the Internet to sell cars with the help of franchised dealers. GM's online car-shopping program, Shop-Click-Drive, which it has been piloting and plans to roll out nationally by year end, allows shoppers to buy vehicles from start to delivery from participating dealership Web sites. This could be the beginning of a slippery slope for GM. In 1999 GM, following a Ford initiative, decided it could circumvent the franchised dealer and own dealerships so it could control the transaction. It was a complete disaster for Ford and was just as bad for GM. GM discovered quickly that although it was good at manufacturing cars, it didn't know much about retailing. It was an expensive lesson in what not to do.

The Internet has altered the dynamics of the automobile business. It has changed the way cars are designed, engineered, built, marketed and retailed. The Internet must make it very enticing for manufacturers to reason that they can simply cut out all retail relationships and deal directly with the customer. It doesn't work that way. The franchised dealer system has been around for a long time, and it has been around for a reason. It works.
Source: Automotive News
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Toyota Outsells GM in First Nine Months of Year

Toyota's global sales for the first nine months of the year reached 7.41 million vehicles, little changed from the previous year but outpacing General Motors to keep its lead as the world's top-selling automaker. Detroit-based GM said earlier this month that its global sales for January through September totaled 7.25 million vehicles, up 4.6 percent from a year earlier. Toyota's vehicle sales for the first three quarters inched up 0.1 percent. Germany's Volkswagen AG sold just over 7 million vehicles worldwide during the nine months, making it a close third. Volkswagen's global sales increased almost 5 percent during that period from last year.
Source: Associated Press
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GM Taking New Approach to Global Engineering, Vehicle Architectures

General Motors plots a fresh approach to global engineering, shifting the epicenter of product development back to its suburban Detroit R&D campus and rethinking vehicle architectures. “The center of GM engineering is in Warren, Mich. Period,” says John Calabrese, vice president-Global Vehicle Engineering and president-Global Technology Operations at GM. Consolidating its global engineering back to Southeast Michigan answers a need the restructured automaker sees for greater consolidation and standardization in its vehicle development. By rethinking how it shares vehicle architectures, GM will discard a generations-old strategy of using fixed core architectures based on vehicle segments for a more flexible approach that mixes and matches modules across its product portfolio. It marks a first for GM, although rivals such as Volkswagen are taking a similar path.
Source: WardsAuto

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Despite Quality Improvements, Costly Safety Issues Continue to Dog Automakers

In a May evening in 2001, Jacques Nasser sat in his office at Ford Motor Co.'s world headquarters, faced with a choice that auto executives have come to see in their nightmares. Rollover crashes caused by faulty Firestone tires on Ford SUVs had already killed more than 100 people, forcing Ford and Firestone to jointly recall 6.5 million tires the year before. Nasser, then Ford's CEO, had been briefed earlier that day by Ford engineers who determined that millions of Ford trucks had Firestone tires that weren't covered by the initial recall but were still prone to disintegrating at highway speeds. The engineers' conclusion was grim: Eight or nine more people were likely to die in Ford vehicles that summer if the company did not act.

The tire crisis was a turning point for Ford. It was also a defining episode in the history of auto recalls, spotlighting the huge costs -- financial and otherwise -- of letting a safety problem spiral out of control. Industry experts agree that today vehicles are better engineered, safer and higher in quality than they have ever been. Even so, recalls remain a persistent and costly reality, with repair tabs that likely total in the tens of billions of dollars each year.
Source: Automotive News

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Fiat Can't Afford Chrysler Without Outside Capital

Fiat may have to borrow at least $1.9 billion to buy all remaining Chrysler shares and prevent an initial public offering of Chrysler stock, according to one analyst. But if it pays more than $5 billion for the 41.5% of Chrysler owned by the UAW's retiree health care trust credit rating agencies likely will downgrade Fiat's debt which in turn will drive up its cost of borrowing. Sergio Marchionne, CEO of both companies, may offer clues as to Fiat's financial options Wednesday when Fiat and Chrysler report third-quarter financial results.
Source: Detroit Free Press
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On the Road to Autonomous, a Pause at Extrasensory

The self-driving car, whenever it arrives, is sure to be hailed as a breakthrough. The truth is, autonomous cars have been arriving in bits and pieces for years. Bristling with sensors and microprocessors, cars — especially at the top end of the price spectrum — have long been lightening the driver's workload and improving safety with features like parking assist, lane-departure warning, adaptive cruise control and various crash-avoidance technologies. More bits of autonomous driving technology are arriving in the new model year.
Source: The New York Times
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Dealers Amp Up Local Economies

Greater New York City auto dealers want something known: They are a big part of the Big Apple's economy. Dealers across the rolling Republic can say the same thing about their hometown influences. Whether they are doing business in big cities, suburbs or rural towns, dealers contribute much to the financial well-being of respective communities. New York auto retailers want to make their case in no uncertain terms. So rather than vaguely say, “We employ people and pay taxes,” the Greater New York Automobile Dealers Assn. commissioned an economic-impact report on just how much franchised dealers did for the local economy in 2012. “We've got some really strong numbers,” says Nick Crispe, a spokesman for the association that has nearly 400 members.
Source: WardsAuto

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Quotable
"The franchised dealer system has been around for a long time, and it has been around for a reason. It works."

--- Keith Crain, commenting on GM's new online car-shopping program in a commentary in Automotive News, Oct. 28

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