NADA Headlines - 04/18/2013 (Plain Text Version)
A strengthening housing recovery and robust auto sales contributed to moderate growth across the United States in late February and March, according to a Federal Reserve survey released Wednesday. All of the Fed's 12 banking districts grew moderately and growth accelerated in two districts - New York and Dallas - from January and early February. The survey suggests the economy performed better in March than recent government data on hiring and consumer spending indicated. That could mean the weakness may be temporary. The Fed survey, which is based on anecdotal reports, found hiring was unchanged or improved slightly compared with the previous report. And it noted that consumer spending grew modestly. But the report also said higher taxes and a spike in gas prices slowed sales. By contrast, the Labor Department said earlier this month that hiring slowed sharply in March. And retail sales declined last month by the most in nine months, a separate report said last week. Still, reports on housing and autos continue to signal strength. In March, builders broke the 1 million mark on homes started for the first time since June 2008. The increase in the seasonally adjusted annual rate was fueled by a surge in apartment construction. And U.S. auto sales rose to 1.45 million in March, their highest level since August 2007. Car sales fell slightly from last March but pickup truck sales jumped 14 percent.
It was a blowout. Germany was up 4-0 early in the second half over Sweden at October's World Cup qualifier in Berlin. Naturally, the team relaxed–and things unraveled. With 28 minutes to play, Sweden scored, then scored again. And again. And again. The Germans had no response. Final score: 4-4. For Martin Winterkorn, a talented goalkeeper who had professional aspirations and now runs Volkswagen AG, the porous performance was hard to witness. Yet at a recent management meeting he dimmed the lights, cued the video and made his team watch the nightmare play out again. When the lights came back up Winterkorn solemnly reminded his people of what they already knew: “It's halftime.” Five years ago, on the eve of the Great Recession, he had laid out an aggressive plan to land Volkswagen at the top of the global auto industry by 2018, surpassing both General Motors and Toyota. “We've had three strong years,” he acknowledged. “You might feel good, but we have to stay focused.” His goal is more than just topping GM and Toyota financially. By 2018 Volkswagen will be “the world's most profitable, fascinating and sustainable automobile manufacturer,” Winterkorn says, with annual sales of 10 million vehicles and a pretax profit margin of 8% or higher, compared with the modest 6% on sales of 6.2 million cars and trucks worldwide when he took over in 2007. He also intends to have the most satisfied customers and employees (there are 550,000 of the latter worldwide) in the industry.
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European new car sales contracted in March for an 18th consecutive month, led by declines in Germany and France, industry data showed on Wednesday. New vehicle registrations in the European Union fell 10.2 percent from a year ago, the European Automobile Manufacturers' Association reported from Brussels, slipping to 1.3 million vehicles from about 1.5 million. Over the first three months of the year, sales in the 27-nation bloc totaled slightly fewer than three million units, 9.8 percent below the level of a year ago, making the worst start to a year since the association began collecting the data in 1990, when only 15 nations' sales were considered.
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Toyota Motor Corp. is being offered $146.5 million in tax incentives by Kentucky to expand its plant in Georgetown to build the Lexus ES. The Kentucky Economic Development Finance Authority on Wednesday approved the package, based on Toyota enlarging the Georgetown factory to add a new model by 2015. The offer from Kentucky comes as Toyota President Akio Toyoda and North American CEO Jim Lentz prepare to make an announcement on U.S. production on Friday.
In recent weeks, auto dealers have been touring the state and writing commentaries to newspapers promoting SB 126, much-needed amendments to the state's Dealers Bill of Rights. Carrying water for the opposition is Daniel Gage, director of communications/public affairs for the Alliance of Automobile Manufacturers. In addition to meeting with Foster's, Gage's backers have been placing full-page ads in newspapers which challenge SB 126. On April 12, we also published a commentary from Gage under the headline, “SB 126 is bad and unfair public policy." SB 126 rightfully has Gage's clients concerned. It would change the balance of power between dealers and manufacturers. Under normal circumstances, this might be a battle we would stay out of editorially. We tend to be laissez faire when it comes to free enterprise and oppose government regulations which pick winners and losers. Plus, there is a lot of confusing inside baseball which can muddy a discussion of the contractual relationships between dealers and manufacturers. But when we met with local dealers — people we have long known — such as Ron Poulin and Paul Holloway, we began to see the need for SB 126.
Peter Schreyer, who was so successful as Kia's design boss that he was recently promoted to president of design at both Hyundai and Kia, says the two brands still are working on their future positioning and image. “It is a challenge to separate the two,” he tells WardsAuto. “We're talking about how to define and strengthen both brands. Kia is younger, sporty and fresher, while Hyundai is more elegant, on the classical side. We need a strong direction for both.”
A Delaware bankruptcy judge is approving a settlement between electric car maker Fisker Automotive Inc. and its former battery supplier. The settlement approved Wednesday reduces Fisker's claims against the company formerly known as A123 Systems Inc., now called B456 Systems Inc., by almost 90 percent. Fisker will be granted a $15 million unsecured claim on an initial claim of $48.7 million against A123 for breach of warranty. Fisker's $91.2 million claim for rejection of its supply agreement with A123 will be disallowed.
Chevrolet says the diesel version of its Cruze compact sedan is rated 46 miles per gallon on the highway, best of any non-hybrid car. Also better, Chevy brags, than the Volkswagen Jetta TDI diesel. VW's the only mainstream diesel purveyor at the moment. The 2014 Cruze diesel goes on sale in some cities by June, and will be sold nationwide and in Canada early this fall, Chevy says.
Ford Motor Co. has sold more than 8.5 million Mustangs since 1964, but the Dearborn [Mich.] automaker recognizes it has to keep the iconic pony car fresh to boost sales. The Mustang is narrowing in on its 50th anniversary — April 17, 2014 is the official date — and details about its sixth generation, slated to hit showrooms for the 2015 model year, are scant. But changes are coming. Sales of the Mustang in recent years have been at historic lows, but demand for the car — at least globally — is at an all-time high, which means the Mustang of old is nearly ready to make room for the Mustang of new.