GM Cutting 1,100 Dealers–Is Yours One?
GM's plan to cut the numbers of dealers that sell its vehicles is in motion, as the company outlined its next step in restructuring.
General Motors executives said that the company would shrink its total number of dealers from 5,969 stores with GM vehicles today, to about 3,600 outlets at the end of 2010.
The number includes a roster of approximately 1,100 dealers notified today that their stores were not among those that GM sees "as part of its dealer network on a long-term basis." GM has contracts in place that commit most of those dealers new vehicles through October 2010. The dealers being separated from GM are "underperforming" and generate "very small sales volumes," according to a release from the company. GM is hesitating in calling today's action a "termination," but says it will engage in discussions with affected dealers as it tries to fend off lawsuits that would slow or stop the cuts to its dealer network.
Another 470 dealers are affected by GM's decision to shut down or sell its Saturn, Saab and HUMMER brands. Those dealers are in limbo until GM announces the fate of the brands. HUMMER's sale is expected by summer; there's no official word on Saturn or Saab's future, other than suggestions the brands could be sold off or involved in a complex shuffling of global car brands involving Italy's Fiat Group.
Earlier this week Chrysler informed 789 dealers that it would end their agreements as that company makes its way through the initial stages of a Chapter 11 bankruptcy proceeding. Chrysler has more leverage in bankruptcy to end dealer agreements, but some stores are threatening legal action to prevent a loss of new products for their showrooms.
Mark LaNeve, GM's vice president for marketing and sales, called GM's dealers "not a problem, but an asset," while delivering the message. Detroit's newspapers report the dealers in question were notified this morning by telephone or Fedex.
For car shoppers, the effects of the closures will be more from a community perspective than a consumer perspective. GM operates multiple dealers in many large cities, and the surviving dealers may end up becoming more profitable--but the closures will result in job losses and empty showroom buildings at the very least.
GM declined to publish a list of affected dealers.
For more on the GM restructuring, follow our General Motors tag.
This story originally appeared at The Car Connection
GM and Segway Look Ahead…To An Electric Rickshaw?
If you ask some of the foremost automotive designers, transportation experts, and futurists what personal transport will look like several decades from now, they're likely to converge on a landscape that includes vehicles that are lower-impact, intelligent and networked, and definitely more intimate and personal. But you might not be doing the driving.
At the New York Auto Show today, General Motors and Segway are embracing this idea in a two-seat electric vehicle called Project P.U.M.A. (Personal Urban Mobility and Accessibility). The prototype, says Segway CEO Jim Norrod in an early morning release, demonstrates a "dramatically different approach to urban mobility."
In case you missed the picture above, this "car" has two wheels and looks a bit like a rickshaw missing its runner (or bicycle), crossed with a wheelchair. And it ultimately would drive itself. And nope, April Fool's Day was last week.
"Imagine small, nimble electric vehicles that know where other moving objects are and avoid running into them," said GM's research and development chief, Larry Burns in the release. "Now, connect those vehicles in an Internet-like web and you can greatly enhance the ability of people to move through cities, find places to park, and connect to their social and business networks."
The project combines GM's work with electric vehicles and vehicle-to-vehicle (V2V) communications systems with Segway's proprietary dynamic stabilization technology. The Project P.U.M.A. prototype employs dual electric motors, a lithium-ion battery pack, and "digital smart energy management" to carry two or more passengers at up to 35 miles per hour, for a respectable range of up to 35 miles.
The vehicle would ultimately drive and park autonomously, communicate automatically with other vehicles, and avoid traffic jams.
GM cites a trend toward urbanization, at the same time that cities are looking at ways to combat both congestion and air pollution. Such a vehicle might be good for those in dense cities and rapidly developing countries—if the Segway technology, lithium-ion batteries, and networking wouldn't push the price through the ceiling.
Running costs, GM insists, are low; the Project P.U.M.A. vehicle would cost one-fourth to one-third of what today's cars cost to own and run.
As if to address the other obvious reaction, that this moves us one step closer to car-as-appliance, the release mentions both the "emotional connection" that Segway owners have to Segway products, and Project P.U.M.A.'s opportunity to "let designers create new fashion trends for cars, and to focus on the passion and emotion that people express through their vehicles." That is, if people are looking up from their holographic social networking and out to their surroundings as they're being scooted around.
It's an exciting future, but it hardly feels like an auto enthusiast's dream, eh?
From New York, we'll bring you the latest this morning as GM and Segway pull the wraps off the P.U.M.A.
This story originally appeared at The Car Connection
2009 New York Show: 2010 BMW X5 M and X6 M
They said it would never happen--a supersport version of BMW's big SUV and its swoopy sister. That was the old normal.
The new normal is a pair of ferocious "M" versions of the 2010 BMW X5 and X6 sport-utes, destined for a world premiere at the 2009 New York auto show. BMW promises the new duo will have the same stunning performance as other M models, and though they don't say it, the new versions are an invitation to an inter-Germany smackdown with the likes of the Porsche Cayenne Turbo.
The M&Ms are the first all-wheel-drive vehicles to bear the singular letter, BMW says. And the designation doesn't come cheaply: BMW stuff its twin-turbo, 4.4-liter V-8 into the machines for a grand total of 555 horsepower and 500 pound-feet of torque. The subdermal injection of power cuts 0-60 mph acceleration times to 4.5 seconds, they claim. They also credit the design of the engine's intake manifold and the precisely timed staging of its two turbochargers for the Xx M's smooth power delivery and distinct engine note. A six-speed dual-clutch automatic handles the shifting work, via shift paddles and an unconventional lever on the center console.
Handling is on the tweak list, too. BMW's xDrive all-wheel drive and Dynamic Performance Control systems spread torque around on demand and change the suspension and steering feel to sportscar levels, BMW suggests, creating "incredible stability and precisely controlled steering qualities." DPC also allows drivers to choose a manual-shift mode and a launch-control mode that makes itself know on the gauges with a racing-style start flag icon. It also shifts the torque bias more to the rear for better handling, and tunes the stability systems to intervene later--which lets drivers have more fun before electronics shut down the wheelspin party. Huge brakes with anti-lock and brake-drying control are upgraded from the standard utes, as are the M's massive 275/40R-20 front and 315/35R-20 rear tires.
Distinguishing the M versions from the standard 2010 X5 and 2010 X6 should be easy. Spotters will note the new fender gills, 20-inch wheels, big air intakes, body-color aero add-ons and quad tailpipes. The M models also sit about a half-inch lower than stock versions. Inside, the M gauges have additional displays and white lighting, along with power heated sport seats and a special steering wheel.
Pricing hasn't been announced, but you can bet it will soar over the $75,000 mark. Standard features will include navigation with real-time traffic data, iDrive, a 12-speaker audio system, radar cruise control, park distance control and xenon adaptive headlights. Options include a head-up display, automatic high beams, and a rearview camera.
We'll have more from the 2009 New York auto show next week--in the meantime, you can see all the photos of the new vehicles over at our X6 and X5 BMW review pages, or read our comprehensive review of the 2009 BMW X6.
This story originally appeared at The Car Connection
Chrysler’s Plan for the Future: More Government Loans
Chrysler's Congressionally mandated plan for its turnaround has hit the Web--and new vehicles are a part of the plan, so long as Chrysler gets another $2 billion in federal cash.
In the plan -- pasted in below here for you to digest, since you're now a stakeholder -- Chrysler is asking for another $2 billion in loans to add to the $7 billion it's already been loaned by you, me and Uncle Sam. That $9 billion package, the company says, will be repaid with interest--but not starting until 2012.
The vehicles that will flesh out the turnaround plan are largely a mystery. That's in part because Chrysler is leaning on newly announced partner Fiat to fill out the small-car end of its lineup. Those vehicles are yet to be decided, while the alliance itself has yet to be nailed down in legalese. Next in the Chrysler plan: a raft of extended-range electric vehicles similar in concept to the 2011 Chevrolet Volt, and based on Chrysler's ENVI green-car powertrain that's been shown in various Dodge and Jeep and Chrysler vehicles. Other improved powertrains, like a new V-6, will round out the innovations yet to be named.
The actual named vehicles yet to come in the Chrysler/Jeep/Dodge lineup include a new 2011 Jeep Grand Cherokee, set for a debut at the 2009 New York auto show; a new unibody Dodge Durango, likely built off the Grand Cherokee in Jeep plants; a new Chrysler 300 and a new Dodge Charger, both revamped from the current underpinnings and both due next year.
There's more to come from Chrysler and from GM as the duo tries to convince Washington of their viability plans. Stay tuned.
Chrysler LLC Viability Plan Submitted Today to The U.S. Treasury Department
Chrysler LLC viability plan to be finalized by March 31 deadline
Chrysler to complete its aggressive restructuring started in 2007 and 2008
Chrysler viability plan is conservatively based and newly reflects an average annual 1.8 million-unit reduction in the Company's expected annual U.S. SAAR through 2012
Chrysler's viability plan is built around a robust product plan, including 24 launches in 48 months and the introduction of electric vehicles to help meet current federal fuel economy standards
The Company's submission demonstrates standalone viability which could be enhanced through a strategic alliance
Dealers, suppliers and 2nd lien lenders' concessions have been implemented or fundamentally agreed upon
A tentative agreement has been reached with the UAW that complies with the terms and conditions of The U.S. Treasury Department's loan agreement
Due to unprecedented economic decline and a drop in current and forecasted U.S. SAAR, the Company adds $2 billion to its original $7 billion loan request
Payback of Chrysler LLC's working capital loans with a premium would begin in 2012
Auburn Hills, Mich., Feb 17, 2009 - Chrysler LLC today submitted its viability plan to the U.S. Treasury Department, outlining the Company's plans to: enhance its product lineup; complete its ongoing aggressive restructuring; and achieve cost reducing concessions from stakeholders. The Company's plan is required to be finalized by March 31. The submission outlines significant progress towards meeting the terms of the U.S. Treasury Department's loan agreement related to achieving competitive costs and increasing fuel economy.
"On behalf of the men and women of our extended family, we thank the Administration and the Congress for the opportunity to continue the process of requesting federal loans to assist Chrysler LLC in the restructuring necessary to achieve long-term viability," Chrysler LLC Chairman and CEO Robert L. Nardelli said. "We fully understand the need to adapt to significantly reduced annual U.S. sales and to national concerns over energy security and climate change.
"We believe that Chrysler LLC will be viable based on the updated assumptions contained in this submission, and that an orderly restructuring outside of bankruptcy, together with the completion of our standalone viability plan, enhanced by a strategic alliance with Fiat, is the best option for Chrysler employees, our unions, dealers, suppliers and customers. Today, our people are eager to re-establish Chrysler as an iconic American company and, in the process, repay the U.S. government and taxpayers for their faith in our future. We believe the requested working capital loan is the least-costly alternative and will help provide an important stimulus to the U.S. economy and deliver positive results for American taxpayers. This plan will ensure the continued provision of health care and pension benefits to our active employees and retirees, while continuing to protect hundreds of thousands of middle class, quality American jobs at Chrysler, our dealer network and our suppliers."
To help meet customer needs and increased federal fuel economy standards, Chrysler plans 24 vehicle launches in 48 months, and announced electric technology as a primary strategy for developing fuel-efficient, low emission vehicles, including an electric-drive vehicle in 2010. The viability plan shows compliance with current federal fuel economy requirements as set forth in the Energy Independence and Security Act of 2007. Going forward, Chrysler supports the development of a uniform national standard that reflects the input of all constituents.
To reduce costs, dealers, suppliers and 2nd lien lenders' concessions have been implemented or fundamentally agreed upon. A tentative agreement has been reached with the UAW that complies with the terms and conditions of The U.S. Treasury Department's loan agreement. Once realized this tentative agreement would provide Chrysler with a work force cost structure that is competitive with the transplant automotive manufacturers.
Since Chrysler LLC's original $7 billion submission, there has been an unprecedented decline in the automotive sector. The continued lack of available credit affects consumers and dealers, leading to reduced wholesale orders for Chrysler. Due to this continued lack of consumer credit, we are revising our Seasonally Adjusted Annual Rate (SAAR) forecast in the plan submitted today, which is conservatively based and reflects the reality of a declining automotive industry. We are now projecting a SAAR level of 10.1 million units for this year, (which is a 40-year low for our industry) and an average SAAR level of 10.8 million units for 2009-2012. This is a reduction from our original December submission of 7.2 million units, or an average 1.8 million units annually during the four years. For Chrysler, this represents a sales decline of approximately 720,000 units, (or an average 180,000 units per year) assuming a 10 percent market share. For Chrysler, this results in approximately $18 billion in lost revenue and a $3.6 billion decline in cash inflows during the four years.
Based on this, we will require incremental financial support to continue our orderly and effective restructuring and are therefore now seeking an incremental $2 billion in addition to the remaining $3 billion that was within the scope of our original December 2 plan submission.
Chrysler LLC Viability Plan Highlights
Strategic Alliance
Chrysler has signed a non-binding agreement to pursue a strategic alliance with Fiat that represents significant strategic and financial benefits to stakeholders. The written and oral testimony Chrysler submitted to the U.S. House and Senate in 2008 stated the Company's intent to seek the benefits of global partnerships and alliances. The proposed Fiat Alliance would enhance Chrysler's viability plan and would provide the Company with access to competitive fuel-efficient vehicle platforms, distribution capabilities in key growth markets and substantial cost-saving opportunities.
Products
Chrysler's product line is a key component of its Viability Plan. In 2010, the Company will launch four highly successful platforms: a new Jeep Grand Cherokee, a new Dodge Charger, a new Dodge Durango and a new Chrysler 300 (the most awarded car in automotive history since its launch in 2005). The Chrysler 300 launch will be followed by a new, bolder Dodge Charger and an all-new unibody Dodge Durango.
In 2008, Chrysler offered six vehicles with highway fuel economy of 28 miles per gallon or better. For 2009, 73 percent of Chrysler LLC's vehicles show improved fuel economy compared with the prior year's model. Fuel economy will continue to improve in 2010 with the introduction of the all-new Phoenix V-6 engine, which will provide fuel efficiency improvements of between 6 to 8 percent over the engines it replaces. A two-mode hybrid version of the Company's best-selling vehicle, the Dodge Ram is scheduled for 2010. The first Chrysler electric-drive vehicle is also scheduled to reach the market in 2010. It will be followed by other electric-drive vehicles, including Range-extended Electric Vehicles, in the following years in order to further reduce fuel consumption.
The proposed Fiat alliance would further help the Company achieve these standards as Chrysler gains access to Fiat's smaller, fuel-efficient platforms and powertrain technologies. The alliance would enable Chrysler to reduce its capital expenditures while supporting the company's commitment to develop a portfolio of vehicles that support the country's energy security and environmental objectives.
Restructuring Actions
Chrysler LLC has aggressively restructured operations to significantly improve cost competitiveness while improving quality and productivity. Through year end 2008, Chrysler has:
Reduced fixed costs by $3.1 billion
Reduced its work force by 32,000 (a 37 percent reduction since January 2007)
Eliminated 12 production shifts
Eliminated 1.2 million units (more than 30 percent) of production capacity
Discontinued four vehicle models
Disposed of $700 million in non-earning assets
Improved manufacturing productivity to equal Toyota as the best in the industry as measured by assembly hours per vehicle according to the Harbour Report
Achieved lowest warranty claim rate in Chrysler's history
Recorded the fewest product recalls among leading automakers in 2008
The following additional restructuring actions are planned in 2009:
Reduce fixed costs by $700 million
Reduce one shift of manufacturing
Reduce total manpower by 3,000 people
Discontinue three vehicle models
Take out 100,000 units of capacity
Sell $300 million additional non-earning assets
Management Concessions
Chrysler will fully comply with the restrictions established under section 111 of EESA relative to executive privileges and compensation. In addition, the Company has suspended the 401k match, incentive bonuses, merit increases and has eliminated retiree life insurance benefits.
Dealer Concessions
Chrysler will achieve cost savings/improved cash flow through a number of initiatives including: reduced dealer margins, elimination of fuel fill, reduction of service contract margins.
Union Concessions
The signed term sheets for the UAW Labor Modifications and VEBA modifications fundamentally comply with the requirements set forth in the U.S. Treasury Loan and once realized would provide Chrysler with a work force cost structure that is competitive with the transplant automotive manufacturers. This agreement is subject to ratification.
Supplier Concessions
The Company has initiated the dialogue with its suppliers and believes that it will be able to obtain substantial cost reductions from suppliers that will result in achieving targeted savings. Chrysler supports the supplier associations' proposals, which would provide a government guarantee of OEM accounts payables.
2nd Lien Debt Holders Concessions
Chrysler anticipates that the holders of the 2nd Lien Debt will agree to convert 100 percent of their debt to equity. Chrysler's Viability Plan includes expectations to further reduce its outstanding debt by $5 billion. In addition to strengthening the Company's balance sheet for the long term, this reduction will also provide immediate cash flow via interest savings of between $350 million and $400 million annually.
This story originally appeared at The Car Connection
In The News: Daniel Sperling And Two Billion Cars On The Daily Show
Last night on The Daily Show, Jon Stewart had a sit-down with Daniel Sperling, co-author of Two Billion Cars. (The other authors: policy consultant Deborah Gordon and governator Arnold Schwarzenegger, who wrote the foreward.) As with most talk shows, the segment was too short to generate truly thoughtful, in-depth discussion, but Sperling managed to broach a number of topics, including: the increasing number of vehicles roaming the Earth's surface, the need for sustainable and cleaner methods of transportation, and today's more promising technologies.
As you might expect, Sperling has some fairly strong opinions on these matters, namely:
- Fuel technology (e.g. the development of new fuels) isn't as exciting or advanced as automotive technology (e.g. electric and hybrid systems).
- Corn ethanol in particular is a pretty bad idea.
- As nifty as today's technology is, it doesn't do anyone any good until the auto industry and consumers embrace it.
- A variable national gas tax--not unlike the one that's being talked about these days--could encourage the public to move toward more fuel-efficient vehicles. Maybe.
He's a pretty engaging personality, and it's clear Sperling knows what he's talking about. Have a look for yourself and give us your take on the guru's thoughts:
This story originally appeared at The Car Connection
Saturn’s Rings Stretch To 2012
Regardless of whether Saturn is 'A Different Kind of Company, A Different Kind Of Car,' or simply re-badged Opels and Chevys, GM has extended the division's lease on life until 2012. We've reported that Saturn is one of the brands GM has strongly considered killing as it tries desperately to downsize in lean times.
GM told Saturn dealers they've organized funding to keep producing Saturn vehicles through 2012 and even 2013 for some models. They did not, however, mention new products, nor are they promising the brand will stick around for the long haul. Hmm, no new products for Saturn...sound familiar?
Sky devotees, Outlook aficionados, and Spring Hill Reunion resurrectionists (and even drivers of SW1s - egad), you can pat yourselves on the back; the Wall Street Journal reports that tenacious brand loyalty might be one of the reasons for the shift in Saturn's fortunes. If you're one of the faithful, you can even sign the 'Save Saturn' petition over at SaturnFans.com. I'd only consider it if they promised to never again build the Ion.
[source: Wall Street Journal]
This story originally appeared at The Car Connection
Chevrolet Equinox Fuel Cell Vehicle At NAIAS GM/SAE Conference
The Society of Automotive Engineers (SAE) and General Motors are teaming up to present a press conference about development of the fuel cell at the Detroit Auto Show Wednesday. The presentation will be a part of the show's Education Day this Wednesday, January 21, and will kick off at 10:00 a.m. at the GM exhibit in Cobo hall.
The aim of the conference is to present SAE International's 'A World in Motion,' which is a K-12 program designed to foster "the fundamental skills necessary for a future career in science, technology and engineering." The program is targeted towards middle school students across the U.S.
On hand will be an example of fuel cell technology in the form of a Chevrolet Equinox fuel cell vehicle, which converts hydrogen into electric energy to power the vehicle's electric motors. With zero emissions (apart from water vapor) from its electric propulsion system, an Equinox fuel cell vehicle will be on hand for test drives at the Ride-And-Drive Park inside Michigan Hall.
While hydrogen-powered vehicles like the 7-series, Mazda RX-8, and Honda FCX Clarity do offer zero emissions, they face huge hurdles due to nascent infrastructure for hydrogen refueling. If you really want in on the hydrogen experiment, you better live in California; currently there are six stations in Northern California and a surprising 20 in Southern California. Not to mention, hydrogen gas is quite volatile, making storage and transfer a relatively hazardous affair. Whether or not this clean technology succeeds remains to be seen, but any advancement in the realm of zero-emissions vehicles is a laudable mark of progress for clean transportation.
This story originally appeared at The Car Connection
Abandoning Ship in Extreme Winter Weather
With snow drifting down gently on Las Vegas Wednesday night, we thought it might be a good time to remind winter drivers how to abandon their vehicles if the going just gets too tough. PEMCO insurance of Washington State advises that there is a right way and a wrong way to abandon your vehicle, and they suggest you avoid driving altogether if the conditions promise to be particularly nasty.
If forward progress becomes impossible or too dangerous, they advise staying with your vehicle if at all possible; abandoned vehicles are likely to be either towed or struck by other vehicles, and abandoned-vehicle towing charges are steep and often not covered by insurance.
But if you must abandon ship:
- Try to get as far off the traveled roadway as you safely can.
- Turn on your flashers, and leave them on.
- Set out flares to warn other drivers, if you can safely do so.
- Make a reasoned judgment about whether to remain with the vehicle and call for help, or to strike out on your own.
- Leave a note in the window with your contact information.
- Take your most valuable items with you.
- Be sure to remove personal information that could allow a thief to locate your home and loved ones, steal your identity, or otherwise defraud you.
- Secure the vehicle by setting the emergency brake and locking the doors.
We'd imagine that abandoned-vehicle tow charges are especially steep in Vegas, but they're probably a lot more common due to, oh, deliriously high blood-alcohol levels than they are to a random bit of snowfall in Sin City. What's that saying about hell freezing over?--Colin Mathews
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This story originally appeared at The Car Connection
GM Finds Extra $230 Million in Sale of Suzuki
Scrambling through the couch cushions for enough loose change to keep it solvent for the time being, GM offloaded its 3 percent stake in Japan's Suzuki Motor Corporation to the tune of $230 million, said Automotive News. Having burned through nearly $7 billion in the last quarter alone, $230 million seems a trifling amount of money in comparison, and GM seems to be treading water with increasing desperation as its waits for promised Federal assistance.
CEO Rick Wagoner claims that despite the sell-off, GM and Suzuki will remain in partnership on various vehicles and ventures. Collaborations include hybrid vehicles, fuel cell vehicles, global purchasing, and the CAMI assembly plant in Canada that produces the Suzuki XL7 SUV, Chevrolet Equinox SUV, and Pontiac Torrent SUV. GM has said that at its current spending rates, it might go out of business early next year if it does not receive an infusion of capital from the Federal Government.
Across town, Ford Motor Company is considering a similar move with Japan-owned Mazda. Ford has a much bigger stake in Mazda, at 33 percent, and it too burned through huge amounts of cash in the third quarter: $7.7 billion, to be exact.--Colin Mathews
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This story originally appeared at The Car Connection
Honda Shuffles Civic, CR-V Production
While other automakers are shutting down plants in record numbers, leaner manufacturers like Honda are shifting production and altering output of various manufacturing facilities in order to meet shifts in the market. For example, because it wishes to build more CR-V crossovers at its East Liberty plant in Ohio, Honda will end production of its Civic at that plant early in 2009 according to Automotive News.
A new plant in Greensburg, Indiana, as well as one in Alliston, Ontario, will take up production of the Honda Civic sedan, which has seen sales numbers soar as Americans have turned toward smaller, more fuel-efficient vehicles in the midst of uncertain economic times and fluctuating oil prices. Honda spokesman Ed Miller explains: "With the freed up capacity in East Liberty, we will be able to increase CR-V production significantly."
CR-V sales fell 5.5 percent in September compared to the same period from 2007, a total of 158,024 sales. While this is down, it is a far less painful story than some of the sales declines seen in the SUV market as of late, even at competitor Toyota whose RAV4 saw sales declines of 19.1 percent in the first nine months of 2008.
The silver lining for Honda is its Civic sales, which are up 12.1 percent through September: 285,715 thus far for 2008.--Colin Mathews
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Make sure you check out our partner sites dedicated to focused news, reviews and more for Ford, Chevrolet, Toyota, Honda, and the Toyota Prius.
This story originally appeared at The Car Connection
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