Posted by: David Welch on May 08
General Motors is down with O.P.P. By that I mean, Other People’s Problems. The company is stepping in to help stop a two-month old strike at American Axle and Manufacturing Co., one of its key suppliers. In an SEC filing, the company said today that it will spend up to $200 million for buyouts and early retirement deals for workers at American Axle, according to Bloomberg.
That should grease the wheels to stop the strike, which has idled or slowed production at 10 GM assembly plants. It’s easy to see why GM is doing it. GM claims that the strike cost the company $800 million in earnings and $2.1 billion in cash in the first quarter. So spending $200 million to help end the strike was comparatively a small price to pay.
But should GM intervene to help parts makers with labor problems? It’s pretty tough to make that argument. GM had to help bankrupt Delphi Corp. The auto maker spun Delphi off in 1998 but still had contractual obligations to the parts firm’s union workers and retirees. That isn’t the case at American Axle, which was formed by company Chairman Richard Dauch when he and some investors bought some weak-performing axle plants from GM in 1994. Dauch has done wonders for those parts-making operations. But he has also had 14 years to make sense of his labor deals and diversify the company to get more than 20% of its business from someone other than GM. He hasn't. So after spending some $8.3 billion helping Delphi get out of bankruptcy and restructure, GM has to help him get end a standoff with the UAW. The only way this makes sense is if Dauch settles the strike, gets lower labor costs and passes some of the savings on to GM.
Posted by: Jim Henry on May 07
Mercedes-Benz (DAI) sold 119,000 passenger cars worldwide in April, including Mercedes-Benz, Smart and Maybach.
That was 22% higher than the year-ago month, thanks in part to the redesigned C-Class, launched last fall. Year-to-date through April, passenger-car sales were 437,700 worldwide, up 14%, the company said.
In the United States, sales of the Mercedes-Benz brand in April were 20,288, down 3%; year-to-date sales were 77,960, up 1.3%. In the U.S. market, Smart is distributed separately by Penske Automotive Group, Bloomfield Hills, Mich. Smart sales in April were 2,683; year-to-date, 6,159. U.S. Smart sales began in February. The Financial has a more detailed look, including some models not offered in America.
Posted by: Jim Henry on May 07
Mercedes-Benz sold 119,000 passenger cars worldwide in April, including Mercedes-Benz, Smart and Maybach.
That was 22% higher than the year-ago month, thanks in part to the redesigned C-Class, launched last fall. Year-to-date through April, passenger-car sales were 437,700 worldwide, up 14%, the company said.
In the United States, sales of the Mercedes-Benz brand in April were 20,288, down 3%; year-to-date sales were 77,960, up 1.3%. In the U.S. market, Smart is distributed separately by Penske Automotive Group, Bloomfield Hills, Mich. Smart sales in April were 2,683; year-to-date, 6,159. U.S. Smart sales began in February.
Posted by: David Kiley on May 06
I like Jim Henry's and Dave Welch's analysis on this. Here's mine:
Bacon here. Bacon. Get your free bacon here. Bacon right on the hood of this here Dodge Durango. Get your bacon here.
And here is that of the Union for Concerned Scientists:
WASHINGTON (May 6, 2008) - Chrysler announced today that it will cover gasoline costs above $2.99 a gallon for customers who buy or lease a new vehicle from the company. The offer is limited to the first three years customers use their cars and covers up to 12,000 miles per year.
According the Union of Concerned Scientists (UCS), Chrysler is trying to fool consumers into overlooking its vehicles' poor fuel economy and environmental performance. The savings the Chrysler program offers, the organization says, don't measure up to the savings one would get from purchasing a fuel-efficient vehicle.
Below is a statement by David Friedman, research director for UCS's Clean Vehicles Program:
"Chrysler is trying to pull a fast one on potential car buyers. It's using this cynical deal to distract consumers from the fact that its cars get poor gas mileage. Rather than sticking customers with gas guzzlers, Chrysler should focus on delivering more miles per gallon. That would not only save their customers money at the pump, it would help cut America's oil addiction and reduce global warming pollution at the same time.
"At the current price of $3.61 a gallon, the buyer of an average Chrysler vehicle would save $400 a year under Chrysler's deal. But a mere 3-mpg boost would yield the same savings over the 15,000 miles per year typically driven in the first three years of ownership. Over the lifetime of a vehicle, such a fuel economy increase would save drivers more than $3,000. It wouldn't stop saving drivers money after just three years.
"Instead of gambling with Chrysler on the price of gas over the next three years, car buyers should go with the certainty of a fuel-efficient vehicle."
Chrysler finished at the bottom of UCS's most recent ranking of auto company environmental performance. It also performed poorly in the Environmental Protection Agency's fuel economy trends report.
For UCS's automaker rankings, go to: www.ucsusa.org/clean_vehicles/vehicles_health/automaker-rankings-2007.html.
Posted by: David Welch on May 06
I’ll concede that Chrysler has hit on a smart marketing move with its “Let’s Refuel America Program.” As Jim Henry details in this blog, Chrysler will give buyers of nearly all of its vehicles a gas card limiting their payout at the pump to $2.99 a gallon for three years. It’s a pretty savvy move considering that about three-quarters of Chrysler’s sales come from pickups, suvs or minivans. With the exception of the vans, most of the company’s offerings are gas guzzlers. This might just work.
But boy are they trying to keep a grip on the past. Gasoline under $3 a gallon is so 2004. The bottom line is that Chrysler has to do this because the company's product line is stuck in the '90s. Big suvs, pickups and jeeps are increasingly irrelevant to middle class consumers who find $3.61 a gallon a burden if they can't get at least 25 mpg. Even Chrysler’s thrifty options, like the Dodge Caliber compact, simply do not stack up with the competition is selling first-rate small cars like the Honda Civic or Toyota Corolla. Will many shoppers really buy a Sebring over a Toyota Camry, Honda Accord, Nissan Altima or Chevy Malibu? I’ll save you the research. They aren’t. Yes, it’s a good marketing move. But it’s necessitated because Cerberus bought a company with a product line that is mostly out of date.
