Dealing with the fallout

Local auto dealers, already enduring a year that has seen new car sales fall by as much as a third in Baton Rouge, say things may be starting to level off.

While they’re mixed about whether the financial woes of Detroit’s big three have been keeping buyers away, all interviewed said their primary battle has been against perception — the steady drumbeat of bad national news souring consumer confidence locally.

The Obama administration said Thursday that Chrysler and the Treasury Department were unable to convince some of the company’s debt holders to renegotiate terms and would have to seek Chapter 11 bankruptcy protection. General Motors’ deadline to reach an agreement with Treasury is not until June 1, with major concessions needed from the labor unions and bondholders. Ford, meanwhile, is hemorrhaging money, but said it is increasingly looking like it will not need to strike a deal with the federal government.

Locally, sales of new cars have been sliding for more than a year, and the year-over-year gap has been widening steadily, according to figures from the Louisiana Office of Motor Vehicles. In the first quarter of last year, new car sales in Baton Rouge were down 7 percent compared with year-before levels. By the second quarter, the gap had risen to 14 percent and then to 19 percent and 20 percent in the third and fourth quarters, respectively.

In the first quarter of 2009, the gap had risen to 32 percent, with dealers selling 5,225 cars compared with 7,712 the same year-ago period.

For further comparison, Baton Rouge auto dealers sold 8,274 in the first quarter of 2007, over 3,000 more cars than they sold in the most recent three-month period.

The situation is perhaps best summed up by Bob Israel of the Louisiana Automobile Dealers Association, who said recently that the March numbers were cause for optimism.

They were down only 38 percent compared with 42 percent in February.

And the slump is felt on the showroom floor, with salesmen going from selling 125 cars a month to one where they’re selling 80 and 85, said Frank Lopinto, general manager of Salsbury’s Dodge City.

“It’s hard to get used to those days when you’re only moving one and two cars,” he said.
The pain has not been felt evenly, and those interviewed are a self-selecting group. Some dealers did not return calls for comment.

Eric Lane, vice president of Gerry Lane Enterprises, said his business — new and used cars — is off about 10 percent for the first quarter.

“I’m not happy with it, but it’s manageable,” he said.

Steve Nunez, new car sales manager at Ralph Sellers Chrysler-Dodge-Jeep in Gonzales, said new car sales are only down about 3 percent there, which, these days and in the broader context, isn’t bad at all.

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FIA GT3 - Silverstone - Race 1 Report

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© Planetlemans - Marcel ten Caat

The opening round of the FIA GT3 European Championship at Silverstone was won by the AutoGt Racing Morgan Super Sport of Dimitri Enjalbert and Johan-Boris Scheier. In an exciting race the #100 Morgan stayed out of trouble and took victory after one hour of racing.

As the lights went out it was the Hexis Racing Aston Martin DBRS9 of Thomas Accary that had the best start and even before the end of the straight it was already ahead of the Morgan. Enjelbert stayed close however and even before the lap had finished he was back in the lead again, two Audi R8 LMS close behind.

Two laps into the race the second Morgan went wide and dropped from fifth to way down the field. One lap later the #1 Matech GT Racing Ford GT spun off and took the Brixia Racing Aston #10 with it. While the Ford GT managed to get back in the race, albeit way down, the Brixia car was forced to retire.

At the front the Morgan, Aston and two Audi’s started to pull away from the rest of the field, the gap growing to the length of the entire pit straight within only a couple of laps. Behind them Luca Moro retired his car at Club while Manuel Rodrigues returned to the pit to retire after colliding with another car.

With the pit window opening on lap 12 several cars came in, but the two Audi R8 LMS cars stayed out and battled each other. Nicolas Armindo went onto the grass in an attempt to pass Christopher Mies, but stayed in fourth place. A couple of laps later all leaders had made their stop.

After the pit stops Johan-Boris Scheier was in the leading Morgan, ahead of Julien Rodrigues in the Aston, with Haasse’s Audi right behind him. This lasted for two laps before Haasse passed the Aston Martin and went after the Morgan.

Twenty-two laps into the race Haasse had closed the gap and at Priory he put the Audi on the inside of the Morgan and moved ahead to take the lead. Haasse pulled away and it looked like Audi would take a win on its debut race rather than Morgan taking its first victory.

However three laps later the car suddenly slowed down and Haasse returned to the pit lane where he retired his Phoenix Racing Audi.

With the Morgan several seconds ahead of the Aston Martin and not much time left Scheier made no mistakes and drove a steady last part of the race. When the chequered flag came out it marked the first ever win in the FIA GT3 European Championship for the team, the car and the two drivers.

The full result can be found here.

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Fastlane: New hybrid in Singapore

By Christopher Tan

New hybrid in Singapore

Honda's new petrol-electric Insight, powered by a 1.3-litre 88bhp engine assisted by a 10.3kW electric motor, has been launched by parallel importer Hybrid Motors yesterday.

Authorised Honda agent Kah Motor is expected to bring in the hatchback in the second half of next year. Hybrid Motors' Insight is priced at $76,900, slightly cheaper than the $78,500 Civic Hybrid sold by Kah Motor.

Subaru Legacy unveiled

Subaru has unveiled its new Legacy at the recent New York Motor Show. Singapore will be getting two versions: a 2-litre non-turbo and a 2.5-litre turbo. It should be here by year-end.

First Kia Coupe

Kia has unveiled its first coupe. The Forte Koup EX is driven by a 2-litre 156bhp engine with continuously variable valve timing. There is also a 2.4-litre 173bhp SX version.

Transmission for the EX is a five- speed manual or a four-speed automatic, while the SX gets a six-speed manual or five-speed automatic with quick shift. The Koup is due here in August.

Civic Type R coming soon

Honda agent Kah Motor is likely to bring in the Japanese domestic version of the Civic Type R soon. The four-door version is likely to appeal to driving enthusiasts who need some practicality in their car. The export version Type R is a hatchback that is sexier but is short on versatility.

M Versions

BMW has launched M versions of its X5 and X6. Both powered by 4.4-litre twin-turbo V8s producing 555bhp at 6,000rpm, the cars leap from zero to 100kmh in 4.7 seconds.

That makes the two behemoths as quick as the critically acclaimed BMW M3. The X5 M and X6 M, courtesy of twin-scroll twin-turbo technology, are also capable of enormous pulling power.

Peak torque of 680Nm arrives at just 1,500rpm and is maintained right up to 5,650rpm.

Cute Citroen Mini MPV

Citroen's C3 Picasso, a funky cuboid mini MPV, is set to be a hit. The car boasts lots of cabin space, with a stowage that can be expanded to over 1,500 litres. Its engine is co-developed by BMW Group and the PSA-Peugeot Citroen group.

10 years to recover

Global vehicle numbers will not return to their 2007 peak of 71.9 million for more than a decade, says automotive analyst Graeme Maxton. Following the oil crisis in 1973, US car sales fell by 30 per cent and took 10 years to recover. After the market's next peak in 1986, they fell 23 per cent and took 13 years to recover.

In Japan, South America, South Korea and much of South-east Asia, sales volumes have been structurally transformed by recessions.

Japanese and South Korean sales have yet to return to their pre-crisis peaks. With the current recession expected to be deeper than in the 1970s and 1980s, the outlook for auto sales over the next 10 years is bleak.

"Many consumers have borrowed too much and are seeing the value of their homes evaporate," said Mr Maxton. "When the recovery comes, many will need to focus on rebuilding their savings before buying a new car."

The exceptions may be China and India, where sales are likely to remain strong.

First four-door Aston Martin

Aston Martin's four-door Rapide will be launched later this year. The car is powered by a 6-litre V12 producing 470bhp and 600Nm of torque.

The engine is hand-built at Aston Martin's engine plant in Cologne, Germany. It is mated to a "highly responsive" Touchtronic gearbox. Performance figures have yet to be revealed, although the car is expected to rival four-door sports cars such as Maserati's Quattroporte and Porsche's new Panamera.

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Three new models give Jaguar new confidence

Three new models give Jaguar new confidence

By John Griffiths

Published: May 2 2009 01:19 | Last updated: May 2 2009 01:19

Jaguars have become a bit like buses. Before Mr Design Director Ian Callum reaches for his beautifully crafted Purdey shotgun to answer this slur, I meant it only in the sense that you wait for a new Jag for what seems like an eternity, then three come along together.

Actually, in a few months’ time you will be able to make that four. Just over the horizon is Jaguar’s new flagship, the large XJ luxury saloon, which will join the three cars just launched: the toweringly fast 503 horsepower V8-engined XKR coupe and similarly-powered XFR compact executive saloon, plus the updated XF range, with new diesel and petrol engines. And when the full line-up of these latest-generation cars is in place, then everyone across the broad spectrum of the luxury saloon and sports car markets – Mercedes-Benz, BMW, Audi, Lexus and even Porsche and Aston Martin – must look to their laurels.

Such a positive prognosis might puzzle some, given that Tata, the Indian owner of Jaguar and its sister company, Land Rover, is seeking a garage-load of financial support from the government to tide them over the global car market collapse. But in this respect Jaguar is no different from the rest of the luxury and executive car industry: it’s suffering from the absence of people in a mood to buy and of the credit they require in order to do so. Jaguar has a particular problem, however – bad timing. The cars it has been designing and building over the past few years are all capable of meeting rivals eyeball-to-eyeball, and the launch early last year of the original XF saw total Jaguar sales up nearly 9 per cent for 2008. But this upturn followed years of heavy losses and arrived just as the market crashed.

After test drives of all three of the new cars, however, it is almost impossible not to conclude that, present troubles notwithstanding, Jaguar can face the future with confidence; the kind of confidence that leads its executives to confront motoring journalists with a race track and toss them the keys to the cars.

That is exactly what Jaguar did with the XKR and XFR at Spain’s challenging Monteblanco circuit near Seville – an act of trust and bravery rarely contemplated by any of its German or Japanese rivals. Race tracks tend to strip even “prestige” cars of their pretensions, exposing flaws easily hidden on normal roads. Both Jaguars, however, were a revelation: supremely poised, fluid in their handling, emitting not a squeak or rattle when bounced hard over the kerbs and – with 500-plus horsepower on tap – very, very fast. Most impressive of all, they appeared content to be driven flat out all day. Suddenly, BMW’s mighty M5 saloon and M6 coupe – despite their similar power – seem old and wooden in their responses. Audi’s RS6 and Mercedes-Benz’ latest 63 AMG saloons and coupes stand up better; but if I were spending my own money, it’s the Jaguars I’d be buying, without question.

The XKR and XFR are, however, relatively low-volume, high-performance models. The bulk of sales are expected to come from more mundane versions. And in a European car market where more than 60 per cent of all new cars sold are diesels, it is to the new 3 litre diesel model – the main subject of these tests – that Jaguar must look for a large slice of its income.

The original 2.7 litre XF diesel, still little more than a year old, is already a success story – it took 68 per cent of the UK’s shrunken “prestige” diesel car market in January. When that market revives, the just-updated models should give the XF even more momentum. The V6 engine goes from 2.7 to 3 litres, with an “S” version offering 275bhp, compared with the “standard” version’s 240bhp. Both have levels of refinement inconceivable for diesels even five years ago – helped on the new models by the adoption of an acoustic laminated windscreen. They also provide much more than adequate performance, with that delightful low-revs diesel thrust which, in real-world conditions, is often more useful and enjoyable than high-power petrol engines. They can’t quite match BMW’s much-respected 535d for get-up-and-go, mainly because they’re heavier. But perhaps more relevant, even the “S” model offers roughly 10 per cent better fuel economy – 42mpg on the EU rural/urban test cycle – and reduced carbon dioxide emissions (179g/km) compared with the XF diesel it replaces.

Externally, there are few visual differences except for new wheels. Internally, however, there are rather more tweaks, with an expanded range of wood veneers and an options list based around three levels of trim: luxury, premium luxury and the bells-and-whistles “portfolio”. The portfolio spec includes a concert hall of a 525-watt sound system from Bowers and Wilkins, making the XF’s interior even more of a “feel-good” environment. Interiors are a peculiarly British design strength, with Jaguar perhaps their foremost exponent.

Is all this praise excessive for the products of a company that, to be blunt, was a basket case for years and is still only in the early stages of convalescence? I have thought long and hard – and the answer remains “no”. In spite of today’s dire market conditions, there is a spirit of rebirth, pride and sheer fun within the company and its people which is being reflected increasingly in its products. It is no insult to Callum, MD Mike O’Driscoll and their engineering gurus to describe them as big boys revelling in their toys.

....................

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An auto maker ‘clearly in a different place'

has become a ray of hope amid the Detroit Three's gloom.

Ford's stock is up 36 per cent since early February, and this week investors were grabbing its bonds �like paparazzi after Brangelina,� quipped debt analyst Shelly Lombard of Gimme Credit. The company, she said, has become the unlikely �rock star� of a decidedly motley crew of U.S. auto makers.

Ford stands alone in not seeking cash from the U.S. and Canadian governments. And its market share is growing on the strength of gas-miserly new models such as the Ford Fusion, while Chrysler and GM continue to lose ground.

Of course, Ford still faces enormous challenges. It's using up cash at a rate of more than $1-billion (U.S.) a month because of continuing losses. And its vital network of suppliers, which it shares with its ailing rivals, is at the mercy of what happens to GM and Chrysler.

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But analysts agree that Ford is much better positioned for an inevitable rebound in car sales.

Ford chief executive officer Alan Mulally's secret isn't so much what he's done, but when. Ford made many of the tough choices in 2006 that GM and Chrysler are only now tackling.

Ford was first to restructure its debt, first to win deep concessions on legacy costs from the United Auto Workers and first to slim down its roster of brands.

�We're clearly in a different place,� Mr. Mulally told CNBC recently.

�We are well down that restructuring route and we have the cash to continue this transformation.�

The company worked out a deal with lenders 21/2 years ago, when Wall Street still had an appetite for car maker's debt, assuring itself a nice cash cushion when the chassis later fell out of the global auto market.

Mr. Mulally was quick to dump non-core luxury brands Jaguar, Land Rover and Aston Martin, while buyers were still interested. Contrast that to GM, where its Saab subsidiary is in bankruptcy protection and Opel needs a bailout from European governments.

Ford also moved last fall to work out a deal with workers to fund ballooning retiree health care costs. Chrysler and GM are only now tackling those issues. Ford also has contracts with much more flexible work rules, which makes it easier to assemble multiple models under one roof.

�Ford has done some impressive things,� agrees Harley Shaiken, a professor and auto industry expert at the University of California at Berkeley. �The overall picture is of a company that has taken risks and is succeeding.�

Much more so than GM and Chrysler, Ford accepted the UAW as a partner in the restructuring of the company, Prof. Shaiken said.

�They view the UAW as an asset, not a burden,� he pointed out.

Ford is also producing higher-quality cars, with better fuel economy than its rivals, Prof. Shaiken pointed out. He cited the 2010 Fusion, which comes in a hybrid version, and its efficient Ecoboost engine as the examples of Ford's growing technological edge.

�It shows the technological prowess and vision of U.S. industry at its best,� Prof. Shaiken said.

But even Mr. Mulally acknowledges Ford still has a long way to go in the face of a dramatic decline in U.S. auto sales � to below 10 million this year from nearly 17 million earlier this decade.

Ford, like nearly all car makers, continues to lose money but insists it won't need to seek government cash. And also like its rivals, sales are continuing to tumble (down 33 per cent in March from a year earlier).

The company ended the first quarter with $21.3-billion in cash, after posting a loss of $1.4-billion.

Ford points to its cash �burn rate� as evidence that the worst may be over. The company burned through $7.7-billion in the third quarter of 2008, $5.5-billion in the fourth quarter and $3.7-billion in the first quarter.

Mr. Mulally doesn't expect Ford to return to profitability until 2011. That means Ford is a little like a driver with a maxed-out credit card, slowly running of gas on a long trip. At the current rate, Ford would run out of cash by the end of next year.

Unless the car market picks up soon, some analysts warn that Ford may have to seek a bailout as early as the end of this year. FORD (F) Close: $5.69 (U.S.), down 29�

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Love cheats drive flashy cars

            

Love cheats drive flashy cars

Drivers of expensive cars are more likely to have an affair, according to a new poll. The illicitencounters.com website, which describes itself as the UK�s largest extra-marital dating site, conducted a survey of its members. It found that 20.9% drove a high-ranking executive car. This included 16 Bentley owners, 31 Porsche owners, five Aston Martin owners and 135 BMW owners. And while the adulterers said their own car was important to them, only 19% admitted to being interested in their lovers� cars. ananova

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'We will be profitable in 2009'

What impact are you witnessing on the top-end car business from the economic downturn?

We expect a 30-50 per cent downturn in this type of car in the first quarter. Aston Martin has seen a better-than-average result [in this period] with 30 per cent less sales than 2008. With the new cars to come out, the DBS Volante and V12 Vantage, and with the ongoing success and demand for the DBS, we think we can finish the year well. In 2008 we made nearly 6,000 cars and this year we will make 4,500 to 5,000 cars. This [reduced production] is the direct result of the hesitation in the market, the negative discussions in the market, and the negative reports in the press. We were the only car company at the Geneva motor show to show four new cars.

In terms of your priorities, are you focusing more on certain regions, and have you reduced your focus on some areas?

Nearly two years ago we modified our direction from having 30 per cent of our sales in America, 30 per cent in the UK, 30 per cent in Europe and 10 per cent in the rest of the world. We are now focusing on our sales outside the UK, US and Europe. We have seen first successes in this. We have started to sell cars in China, we started in the middle of last year in Russia, we have opened in Croatia, a first dealership in Eastern Europe that will be followed by Prague, and we have started our own dealer representation in Kuwait, which has a big success after a lot of under-representation.

Many car companies were focusing on countries like Brazil, Russia, India, China and Eastern Europe, but now cars sales are drastically down in these places as well.

But we are not in the mass market, we are not in the automotive business, we are in the luxury goods business. This has nothing to do with what the volume manufacturer has to achieve. We are in one place in Beijing and Shanghai, which cannot be considered as China, so what this means is that in these places there is a demand for a brand like Aston Martin. This has nothing to do with a global downturn or something else.

Is the dealership in Kuwait a result of Investment Dar's acquisition of the company?

We used to have a target of having 10 per cent of our sales all over the world, including the Middle East. We had a distributor in the Middle East that just distributed cars in some of the places, and four years ago we terminated this importership. We are doing this ourselves now. So this has nothing to do with Investment Dar's investment. [But] the quality of what we are doing now in Kuwait is of course with the support of Investment Dar.

There were reports that Investment Dar was considering selling its Aston Martin stake.

Investment Dar is not selling Aston Martin. I have said this before that Aston Martin is a core asset of Investment Dar, it is a long-term commitment, and there is no indication that Dar would sell its stake in Aston Martin. We are looking for a capital increase to finance the future growth of the company. We will grow the company at least by twice in the next five years by market, by new models. We need to the same thing [capital increase] as Mercedes is doing.

What has changed at the company since the new set of investments came in? Do you find them as long long-term partners?

Within Ford Motor Company, we were a very small wheel in their business. The change in ownership is something we wanted to have, not that Ford wanted to have it. We wanted to become independent as the management had plans and vision to grow the company. We could not realise this vision under Ford.

The new ownership of Dar approved the development of our Rapide [a new four-door car], which is a new car concept to be launched in September, and will come to the market in December and January. They allowed us to diversify our DB products, DBS Volante, which we should bring to the market in June this year. We have invested in a wonderful design studio and in engineering. This was the change under Dar. We have the support and understanding of Dar for growing and stabilising the Aston Martin brand and reviving the Lagonda. This is enough not to question the support from Dar, from our investors.

What is the percentage of Dar's stake?

It does not matter whether they have 51 per cent or 95 per cent. They have the majority stake and they give us the necessary support to run and grow the company. Aston Martin is the only car company that will have reasonable growth potential with two new products in about 70 new markets. We have 30 markets now and will have 100 in the future. In this market development, even if we make 15,000 cars in 100 countries it would be 150 cars per country. This is the dimension we are taking about.

Since you are talking about doubling the size of the company, would you need more funding from your shareholders or would you get new investors onboard?

We are looking for a capital increase. All the projects that I've mentioned are funded for this year but still there is a long way to go. This is why we are going for capital search wherever it comes from. We are speaking with individuals and companies, which we think are all over the world, in Asia, America in Europe and the Middle East.

Mention Aston Martin and James Bond comes to mind. Do you pay for featuring your cars in the movies?

We have a love affair with James Bond. Since we represent the best of British character it is quite a natural fit. We are not paying money. A love affair is without money.

But you probably lose a car or two?

This is what you lose sometimes. On the other hand those cars are very valuable because a car that has been featured in the film, like the car in the Quantum of Solace, we still have this car with all the damages. It is a great attraction. When we say this is the real Bond car in the film, people touch it and sit in the car. If we do an auction, it would give us much more money.

So you will probably auction it?

No. We will keep it because it is so valuable.

Profile: Extensive experience

Ulrich Bez became chairman and chief executive of Aston Martin in July 2000. He has more than 30 years of experience in the motor industry, having been involved in product design and development at Porsche, BMW and Daewoo.

Before joining Aston Martin he was a business adviser to Ford Motor Company in the United States. Born at Bad Cannstatt in Germany, Bez has a doctorate in engineering from the University of Berlin.

He is the author of more than 40 publications on subjects related to passive safety, aerodynamics, material and design.

He is a skilled test and development driver with experience in racing and sports cars. In 2007, a group of investors led by Kuwait's Investment Dar and its partner Adeem Investments acquired the majority stake in Aston Martin from Ford in a deal worth about £500 million.

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