GM to pay bonus

Wednesday, November 22, 2006
GM to pay bonus



General Motors Corp. will pay union workers and retirees an $800 bonus next month, UAW President Ron Gettelfinger said Tuesday.

Word of the payout came during an online chat Gettelfinger conducted via the UAW Web site. A GM retiree asked if a bonus would be paid.
"Yes, $800," Gettelfinger said.

GM spokesman Dan Flores said the UAW agreed to a bonus in lieu of an increase in workers' base pay during contract negotiations in 2003.

General Motors Corp. will pay union workers and retirees an $800 bonus next month, UAW President Ron Gettelfinger said Tuesday.

Word of the payout came during an online chat Gettelfinger conducted via the UAW Web site. A GM retiree asked if a bonus would be paid.

"Yes, $800," Gettelfinger said.

GM spokesman Dan Flores said the UAW agreed to a bonus in lieu of an increase in workers' base pay during contract negotiations in 2003.








© Copyright 2006 The Detroit News. All rights reserved.

For GM, it's about Malibu's inner beauty

Wednesday, November 22, 2006
For GM, it's about Malibu's inner beauty
Sharon Terlep / The Detroit News






DETROIT -- General Motors Corp. wants its future Malibu to look and feel more sophisticated to drivers and it announced Tuesday that it's starting from the inside of the car.

The 2008 Chevrolet Malibu will feature a striking two-tone cockpit and other upscale features GM hopes will help one of its mainstay models stand out in a crowded field of midsize sedans dominated by Toyota Camry and Honda Accord.

Troy Clarke, president of North American operations, showed the first pictures of the Malibu's new interior to the Automotive Press Association on Tuesday in Detroit.

"We paid very close attention to precision and detail" with the Malibu design, Clarke said. "We're making it look like a much more expensive vehicle."

The Malibu represents GM's efforts to focus more on interiors and design, an area in which the carmaker once lagged the best foreign automakers. GM is also trying to strengthen its position in passenger cars as many buyers turn away from SUVs.

"It's a beautiful car," said Jim Quinlan, a Chevy dealer from Knoxville, Tenn., who saw the new vehicle at a recent dealers meeting in Las Vegas. "They've got a dead winner on their hands with that one."

The automaker is looking to build that kind of buzz about the redesigned Malibu, which will debut in January at the North American International Auto Show in Detroit.

The Malibu's interior "showcases the precision and detailed execution that will differentiate it among the mid-size car segment," Chevrolet General Manager Ed Peper said in a statement. It "will offer a number of striking and progressive interiors that use premium materials to demonstrate quality and value not seen before in this segment."

The new Malibu will come with optional leather trim and more rounded exterior design that will be markedly different from the boxy Malibu of today.

GM has not said how much the new Malibu will cost. Analysts have said the basic model may be similar to the 2007 base price of $17,155.

The Malibu has been an important vehicle for GM. It has sold more than 144,000 units this year, making it the third best-selling Chevrolet car behind the Impala and Cobalt. But demand is down about 12 percent through October compared with the first 10 months of last year.

Edmunds.com's Insideline Web site predicts the new Malibu will "finally put some heat" on the Accord and Camry.

The Malibu is vital to GM not only for its sales, but for its potential to help improve the automaker's image, said Brian Moody, road test editor with Edmunds .com.

The Malibu has long been a worthy competitor among foreign counterparts such as the Accord, but interiors that appear cheap have devalued the vehicle in the eyes of consumers, Moody said.

"They've gotten knocked in the past for having terrible interiors," he said. With the new Malibu, "they've taken things up not just a notch but maybe two or three. This is about projecting an image of quality and competitiveness.

"That's what's at stake."

You can reach Sharon Terlep at (313)223-4686 or sterlep@detnews.com.








© Copyright 2006 The Detroit News. All rights reserved.

GM considers auto exports from China, production venture in Poland

Saturday, November 18, 2006
GM considers auto exports from China, production venture in Poland
Christine Tierney / The Detroit News




BEIJING - General Motors Corp. may use China as an export base in a few years, selling Chinese-built cars in other countries -- and it has already exported a small number of vehicles produced at its Chinese joint ventures.

"We exported some products to Chile this year, and 1,000 or 1,200 cars to Russia," Nick Reilly, president of GM's Asia Pacific region, told reporters Saturday at the Beijing auto show. "We've proven that we can do it."

Most global automakers with Chinese manufacturing operations are not currently exporting vehicles and are struggling just to keep pace with surging domestic demand.

But DaimlerChrysler revealed a year ago that it was considering adding a Chinese-built car to the Chrysler Group's U.S. lineup. Chrysler CEO Tom LaSorda confirmed Saturday that the company was in talks with two carmakers, including China's Chery Automobile, and hoped to conclude a deal by the end of the year.

Up to now, GM wasn't tempted to export vehicles built in China because production costs here aren't as low as people believe. Wages are low but overall operations are "not yet at world levels of competitiveness," Reilly said.

Last year, after Honda Motor Co. of Japan first began exporting small Fit cars built in the Chinese city of Guangzhou, Honda executives said the same car cost less to produce in Japan.

Part of the trouble is that, while Chinese suppliers are improving quality and productivity fast, they're still not as efficient as global suppliers. "We think there's a fair way to go in terms of the competitiveness of the supply industry," Reilly said.

"However, that will change," he said. "In five years, I can see us growing exports from China."

Both GM and Ford Motor Co. are increasing their purchases of Chinese-built components to lower their costs, and GM has equipped its Equinox sport-utility vehicle with a Chinese-built engine.

At this stage, Ford is not considering exporting vehicles from China, said John Parker, Ford group vice president in charge of the Asia Pacific and Africa operations.

The Dearborn automaker came later to China than GM and its share of China's car market is less than a third of GM's.

"We're focused on the domestic market," Parker said. "We're adding products to the portfolio. We're building our brand, and we're building our dealer network. That has got us [occupied] flat-out."

Buoyed by China's growing economy and rising incomes, auto sales are up 30 percent so far this year. Analysts predict the market will grow from 7 million vehicle sales currently to 10 million by the end of the decade.

By then, most industry experts expect Chinese automakers will be exporting cars in substantial numbers. "They have come a long way, and we'd be foolish not to consider them serious competitors in the future," Reilly said.

In a separate effort to establish low-cost operations, GM is in talks with UkrAuto, a Ukrainian manufacturer, about the possibility of producing GM Daewoo products in Poland, he said. "They would potentially build a vehicle for GM Daewoo."







© Copyright 2006 The Detroit News. All rights reserved.

OnStar will be disconnected from some cars

Tuesday, November 21, 2006
OnStar will be disconnected from some cars
All models before 2002, and some newer, will lose service due to old technology.
Ken Belson / New York Times







For the last decade, OnStar has promoted itself as a paragon of convenience and peace of mind for car owners. Best known for its ability to bail out customers in a jam -- and even make an automatic call for help when an air bag has been deployed in an accident -- the service has about 4 million subscribers.

OnStar makes its pitch in a series of alarming radio advertisements that use recordings of actual emergency calls to demonstrate how operators in an OnStar call center are standing by to summon an ambulance, open a car with a child locked inside or track a vehicle that has been stolen. At the push of a button, the operators give directions or act as concierges, pointing to the closest gas station or Chinese restaurant.

But the operators will soon be signing off for some of OnStar's longstanding customers. The dropped connection is a result of a little-known decision by the Federal Communications Commission in 2002 that allows cell phone companies to shut down their analog networks beginning in February 2008.

The decision will affect not only mobile phone users in rural America and other places where digital networks have yet to be built, but also hundreds of thousands of subscribers with older cars whose OnStar systems rely on those analog networks. Some subscribers with 2002 model year or newer cars can have their cars converted to digital equipment, or their cars may already be equipped with the needed hardware.

OnStar, which was a $199 option when they bought their vehicles, will become largely obsolete in 15 months in some 2002-04 models, as well as all models before 2002, because the OnStar electronics cannot be upgraded. Some Acura, Audi, Subaru and Volkswagen owners will also be affected.

Verizon Wireless, the network of choice for OnStar, has not said how or when it will dismantle its analog network, though it has not ruled out shutting off the service all at once. More likely, industry analysts say, the networks will be turned off in stages.

That's cold comfort for Michael Farris. His wife, Vickie, drives a 2002 GMC Yukon and uses OnStar for routing help in unfamiliar areas and to talk hands-free with her cell phone using OnStar's connection to the truck's audio system.

The truck has about 40,000 miles and runs well, so Farris wants to keep it beyond 2008. He must consider whether to sell it, find aftermarket alternatives, or go without.

"This thing we paid for is going to turn into a pumpkin," Farris, of Purcellville, Va., said. OnStar's decision to use analog-only technology "was like putting an eight-track tape player into a new vehicle."

OnStar's decision to use analog networks made sense a decade ago when the service was started because they were the most pervasive and reliable. Even as digital networks expanded in recent years -- their greater call capacities for a given amount of wireless bandwidth made them attractive to phone companies -- analog networks were often the only ones working in rural areas.

Critics say OnStar was negligent in continuing to install analog-only equipment before and after 2002 when it was clear the phaseout might be coming.

OnStar declined to make an executive available, but in a statement said, "We at OnStar sincerely regret that we will not be able to provide OnStar service to vehicles with analog-only hardware after Dec. 31, 2007."

Dealers will upgrade some 2002-04 vehicles to work on digital networks if customers buy a three-year subscription to the Safe and Sound package at $199 a year.












© Copyright 2006 The Detroit News. All rights reserved.

GM seeks quiet riot for Enclave

Friday, November 10, 2006
GM seeks quiet riot for Enclave
2008 crossover boasts soundproofing features in a bid to compete with Lexus, Mercedes-Benz.
Sharon Terlep / The Detroit News






MILFORD -- General Motors Corp. will employ an arsenal of soundproofing technology in hopes of making its upcoming Buick Enclave crossover one of the quietest rides on the road.

Buick officials said Thursday that the brand will face off with the likes of Lexus and Mercedes-Benz when the five-door luxury crossover debuts next year as a 2008 model. The Enclave will be built at GM's new $1 billion plant in Delta Township near Lansing.

GM hopes a sleek exterior, laminated steel and perforated leather seats that absorb sound will quiet critics and sell the Enclave to a younger, more affluent crowd. The features are the latest incarnation of Buick's QuietTuning technology, used in such models as the Lucerne and LaCrosse sedans.

"This technology is very powerful and very simple," Buick general manager Steve Shannon said Thursday at the GM Proving Grounds, where the Enclave underwent sound testing in high-tech wind tunnels and on low-tech bumpy roads. "This is basically a luxury car that just happens to seat seven or eight people."

A quiet ride is not a perk, but an expectation in the luxury market, and it's an area where Buick has fallen short in the past, said Brian Moody, road test editor for Edmunds.com. "People who are purchasing luxury vehicles expect a certain serenity or quietness with a vehicle," Moody said. "If they don't get that, it seems cheap."

GM has been on a mission to reincarnate Buick as an American version of Lexus, Toyota Motor Co.'s popular luxury line.

Buick, while still profitable, has continued to lose longtime customers. U.S. sales dropped 15 percent in the first 10 months of 2006 from the same period last year.

Among the Enclave's soundproofing features:


Acoustically laminated windshield glass that sandwiches a sound-absorbing glass panel between inner and outer panels.


Soundproofing foam in 28 places that expands to seal openings that could let noise in.


Tires with specially designed tread to avoid the noise associated with larger tires.

A team of engineers worked to ensure the Enclave absorbs sounds, reduces noise made by the vehicle and drowns out noise from the outside. One person's full-time job, for example, was to create the most pleasing sounds for functions such as shutting a door or rolling down a window, said Roger Barlow, a noise vibration team leader at Buick. "We're talking about excruciating detail," he said.

Edmund's Moody said the QuietTuning technology should help the Enclave compete when it goes on sale next summer, But it won't be enough to sell the vehicle in the crowded luxury market.

"There's more to a car," he said, "than making it sound quiet"

You can reach Sharon Terlep at (313) 223-4686 or sterlep@detnews.com.







© Copyright 2006 The Detroit News. All rights reserved.

GM raises its prices to help offset costs

Thursday, November 09, 2006
GM raises its prices to help offset costs
Automaker increases stickers on about a third of its vehicles to cope with costlier raw materials.
Sharon Terlep / The Detroit News






General Motors Corp. raised prices an average of 0.5 percent on about one-third of its vehicles this week to help cope with the soaring cost of raw materials, a company official said Wednesday.

Prices rose from $60 to $425 a vehicle on 35 percent of GMs cars and trucks, GM spokesman John McDonald said. Most increases were from $90 to $140, he said.

The company won't increase prices on the redesigned 2007 Chevrolet Silverado and GMC Sierra pickup truck, which started arriving at dealers this week. It also will not raise prices on other 2007 models such as the Pontiac G3, the Hummer H3 and the Saturn Vue Green Line, GM's first hybrid vehicle, he said.

GM hiked the price of its best-selling U.S. car, the Chevrolet Impala, by $115.

"These are extremely small in terms of the percentage," McDonald said. "But when you look at how much we sell, even this helps the bottom line."

Automakers and their suppliers have been hit with double-digit increases in the cost of several crucial raw materials, from steel to the resin used to make plastic.

Steel prices globally have gone up 13 percent since January.

"High steel prices are adversely impacting the entire U.S. economy," Ford Motor Co. spokesman Paul Wood said. Ford officials said they don't plan price increases directly tied to materials costs.

DaimlerChrysler AG's Chrysler Group will increase the sticker prices for some of its 2007 models, but that will be offset by lower pricing for many extra features, Chrysler spokeswoman Christina Biache said. The company isn't attributing the increases to raw materials costs.

Prices have been rising for several years and, which companies have largely avoided passing those costs on to consumers, they won't be able to avoid doing so for long, said Michael Robinet, an analyst at consulting firm CSM Worldwide Inc. in Farmington Hills.

"They have been able to withstand it so far," Robinet said.

You can reach Sharon Terlep at (313)223-4686 or sterlep@detnews.com.









© Copyright 2006 The Detroit News. All rights reserved.

Delphi gets more time for labor talks

Thursday, November 09, 2006
Delphi gets more time for labor talks
Judge gives auto supplier until Nov. 17 to work out deals with its unions and creditors.
Tiffany Kary / Dow Jones News





NEW YORK -- Delphi Corp. won more time to continue negotiations with its unions, creditors and other parties that might allow the company to cut labor costs without triggering a strike, a lawyer for the company said Wednesday.

At Delphi's request, Judge Robert Drain of the U.S. Bankruptcy Court in Manhattan gave the company until Nov. 17 to try to work out a deal, Delphi attorney Jack Butler said. He spoke after a closed-door meeting between Drain and other lawyers for Delphi, its unions and creditors.

The parties are scheduled to meet Nov. 17 for another status conference and the judge will decide whether or not to continue the adjournment of hearings on the matter, Delphi spokesman Lindsey Williams said.

Tom Kennedy, an attorney for the IUE-CWA union, said all parties were still actively negotiating and "nothing is resolved yet."

Delphi, the largest U.S. maker of automobile parts, filed for Chapter 11 bankruptcy in October 2005 and has been in drawn-out talks with unions as well as its former parent, General Motors Corp., to try and reach a new labor agreement and ward off a possible strike.

Butler also said that the company's negotiations with some of its investors are proceeding: "they have participated actively in all the framework discussions since our last chambers conference," he said. He didn't discuss the investors by name, but Appaloosa Management LP, a hedge fund run by billionaire investor David Tepper, has said it's contemplating a "negotiated business arrangement" with Delphi that could involve either new financing or a rights offering, once the company emerges from bankruptcy.

Bargaining between Delphi and its unions has been going on outside the courtroom since March, when Delphi filed motions to cancel its labor agreements and cancel billions of dollars worth of supply agreements with GM. The company also said it planned to close or sell 21 of its 29 unionized factories in the United States.

Delphi's biggest union, the United Auto Workers, threatened to strike if the labor agreements were canceled. GM, meanwhile, said Delphi's threat to scuttle its supply agreements amounted to "blackmail." To avoid a confrontation, Delphi put hearings on the motions on hold and sought a settlement.









© Copyright 2006 The Detroit News. All rights reserved.

GM may revive the electric car

Friday, November 10, 2006
Phil McCarten / Associated Press
An EV1 electric vehicle is loaded onto a truck at a GM center in Burbank, Calif.
GM may revive the electric car
Automaker expects future success with technology of hybrids, batteries and hydrogen fuel cells.
David Shepardson / The Detroit News







WASHINGTON -- General Motors Corp. is likely to unveil a prototype plug-in hybrid at the North American International Auto Show in Detroit as part of its company-wide focus on "electrifying" the car, GM officials said Thursday.

The advanced technology vehicle would have an extended driving range on battery power alone and would also have a diesel or gasoline engine that could power the car when the battery was low.

Later this month, GM chairman and CEO Rick Wagoner will deliver a speech at the Los Angeles Auto Show in which he will disclose that the linchpin to the company's turnaround is its emphasis on advanced technologies.

Ultimately, GM sees hydrogen fuel cells as the solution to ending the country's reliance on oil. However GM believes the key is using electricity -- through hybrids, batteries and hydrogen fuel cells -- to run vehicles, not gasoline.

GM's Vice Chairman Bob Lutz, who is head of product development, declined Thursday to disclose what would be unveiled in Detroit "because it's a dark secret. But I think you will be pleased with what you see."

Lutz did tell The Detroit News that GM estimates it will take three to four years "to convert from 'power' lithium batteries to 'energy storage' lithium cells," which would allow vehicles to travel farther distances.

Plug-in hybrids are gas-electric vehicles that can recharge their batteries with an extension cord and a normal wall outlet. Like conventional gas-electric hybrids, which have two drivetrains, a plug-in hybrid can also recharge its batteries through a regenerative brake system while on the road. The range on plug-in cars has typically been no more than 20 or 30 miles on battery alone.

In September, Lutz said that GM was "studying plug-in hybrids, and will have more to say about those soon. The whole key there is the development of significantly improved battery technology," he wrote on a company blog. "But rest assured I truly believe that electric-drive vehicles have a real future in this country and around the world."

Andrew Frank, a professor at the University of California-Davis who is credited with designing the first plug-in, said GM's plug-in hybrid would be a "series" hybrid, meaning the vehicle runs primarily on electricity from the battery with the engine as a backup.

"They are adding a little generator on top of a car," Frank said.

Plug-ins will allow energy independence, with owners eventually being able to get their own electricity through solar or wind, Frank said. "That could eliminate all but 10 percent of a driver's yearly gasoline use."

GM, which offers more vehicles that get 30 miles per gallon or more than any other automaker, wants to get away from its image as builder of the H2 and other gas-guzzling SUVs.

In an interview with Motor Trend published in July, Wagoner said killing the $1 billion EV1 program was his worst decision. "It didn't affect profitability, but it did affect image," he said.

Stung by negative criticism over its decision to kill its EV1 electric car program, GM has sought to recast its image. Many automakers have joined the race to bring alternative powertrains to the market.

Toyota Motor Corp., the world's leading producer of hybrid vehicles, has been conducting significant research into plug-in technology.

Honda Motor Co., which introduced the first hybrid in the U.S. in 1999, has also called for exploring plug-ins and is conducting advanced research on hydrogen. It has a fleet of 100 hydrogen fuel cell vehicles around the world.

Ford Motor Co. has a 30-car fleet of hybrid hydrogen Ford Focus Fuel Cell vehicles as part of "real world testing of fuel cell technology." GM will put 100 Chevy Equinox fuel cell SUVs on the road next year.

Ford will unveil its 2008 Ford Escape Hybrid at the Los Angeles Auto Show, spokesman Nick Twork said.

"We're looking at a whole range of technologies," including plug-ins and fuel cells, he said.

DaimlerChrysler AG's Chrysler Group is the only domestic manufacturer that has a plug-in hybrid on the road -- though just three test models are on the roads now.

You can reach David Shepardson at (202) 662-8735 or dshepardson@detnews.com.









© Copyright 2006 The Detroit News. All rights reserved.

GM shaves down 3Q loss

Wednesday, November 08, 2006
GM shaves down 3Q loss
But automaker still has a long way to go to catch up to rival Toyota, which made $3.4B in the same period.
Bill Vlasic / The Detroit News




DETROIT -- While its chief rival continued to rack up huge profits, General Motors Corp. had to be satisfied Tuesday with reporting a narrower loss in the third quarter.

The gap between GM and Toyota Motor Corp. was never more apparent than in announcements of financial results by the world's two biggest automakers.

GM said Tuesday that its third-quarter loss was $91 million rather than the $115 million it had reported last month. The change, the No. 1 automaker said, was due to additional loan sales at its financial-services unit.

But Toyota reported a $3.4 billion profit for the same three-month period, illustrating just how far GM has to go in its turnaround to catch up to its Japanese rival.

In its quarterly report filed Tuesday with the U.S. Securities and Exchange Commission, GM said it is "systematically and aggressively implementing its turnaround plan" in North America with a goal of becoming profitable "as soon as possible."

The automaker also said it will pay a stock dividend of 25 cents in the fourth quarter -- unchanged from the previous quarter.

Industry analysts expect GM to post a companywide profit in the fourth quarter, although its key North American operations will still likely fall short of making money.

"I'm forecasting that GM will earn roughly $900 million in net income, with GM North America at virtually break-even," said David Healy of Burnham Securities. "From where they've come from, that's a pretty impressive feat."

Since posting a $10.6 billion loss in 2005, GM has announced plans to shut 12 U.S. plants and cut 30,000 hourly jobs through buyouts and early retirements. The company also negotiated health-care concessions from its unionized workers and cut benefits for its salaried employees and retirees.

More than 34,000 hourly workers at GM and Delphi Corp. -- the automaker's biggest supplier -- have agreed to participate in the "special attrition" program. GM is also looking toward next year's contract talks with the United Auto Workers to further reduce its labor costs.

"GM's management is putting a high priority on negotiating a more competitive collective bargaining agreement with the UAW in 2007," GM said in its SEC filing.

The company also reiterated its goal of reducing its North American structural costs by $9 billion annually.

But the most pressing issue confronting GM remains a resolution of Delphi's bankruptcy reorganization.

GM has already taken charges of $6 billion to cover its potential obligations to Delphi workers, who were GM employees before the parts business was spun off in 1999.

Delphi, which filed for bankruptcy in October 2005, wants to dramatically downsize its U.S. operations. But GM is anxious for a peaceful reorganization process that averts a potentially devastating strike by union workers.

In its SEC filing, GM said resolving "Delphi related issues remains a critical near term priority." In recent comments to reporters, GM Chairman Rick Wagoner said a deal on Delphi could be reached "reasonably soon."

"Delphi has been hanging over their heads for so long now," said Healy. "It appears that a settlement is getting close."

Other issues addressed in GM's federal filing included ongoing SEC investigations into GM's accounting.

GM said it "has been cooperating with government in connection with a number of investigations." The company confirmed that the SEC and a federal grand jury have issued subpoenas to GM in connection with several inquiries -- including a Delphi investigation that resulted last week in civil charges being brought against Delphi's former chief executive officer, J.T. Battenberg III.

You can reach Bill Vlasic at (313) 222-2152 or bvlasic@detnews.com.







© Copyright 2006 The Detroit News. All rights reserved.

GM looks to China to fuel rebound

Wednesday, November 08, 2006
GM looks to China to fuel rebound
While it's cutting back in North America, automaker has plans to spend $3B in 2004-2007 in the nation.
Elaine Kurtenbach / Associated Press







SHANGHAI, China -- Government worker Xue Weiqing is just the sort of customer General Motors Corp. is banking on to help power its turnaround.

At 33, Xue is already buying his second GM car, a shiny Chevy Lova sedan, after outgrowing his Buick Sail.

"I had the Sail for almost two years and it felt just a bit small, so I decided to go for something a bit roomier," said Xue as he waited for his shiny dark blue sedan at a Chevrolet dealership in western Shanghai.

General Motors Corp., beset by sluggish sales and crippling legacy costs, needs China -- the world's third biggest car market behind Japan and the U.S. -- to provide growth it won't find in the U.S. and other Western markets as it engineers its comeback.

While it's closing plants and trimming production in North America, GM is pouring more money into China -- with plans to spend $3 billion in 2004-2007.

It already has five vehicle factories and one engine plant in China, an auto financing venture and is quickly expanding dealerships.

So far the investment seems to be paying off.

Last year, GM surpassed German rival Volkswagen AG to become the No. 1 automaker in China, GM's biggest national market after the United States.

GM and its local joint ventures' sales jumped 36.7 percent, a tick above industrywide growth, to 645,680 units in the first three quarters of this year. That compares with flat second-quarter sales in North America for GM, which reported a net loss of $3.2 billion largely due to one-time costs associated with its restructuring program.

In 2005, GM's sales in China rose 35.2 percent year-on-year to 665,390.

"In China, GM operates on a level playing field with Toyota," says Peter Morici, a business consultant and professor at the University of Maryland, referring to GM's heavy burdens of pensions and other benefits back in the U.S.

"It does well in China because it has the engineering and marketing know-how to compete without those liabilities," he said.

GM is looking increasingly to its Chevrolet brand to rev up sales volume in this increasingly competitive market, where incomes still average only about $150 a month, or about twice that in Shanghai.

In early 2005, GM announced that it would make Chevy its main brand in China. It incorporated the Sail, a compact model that was then part of the Buick brand, into Chevy's economy to midsize lineup.

"What we're trying to do is build the brand here," says Steve Betz, Chevrolet brand manager at Shanghai GM, GM's joint venture with state-owned Shanghai Automotive Industrial Corp. "We have to win here. That's the overall goal. We can't take our focus away from here," he says.

Chevy sold about 80,000 units in China in 2005, its first year. This year, third-quarter sales were up 51 percent year-on-year, with the company forecasting full-year sales of more than 100,000.

GM has also been helped by strong demand for the minivans and compacts assembled by its second joint venture, called SAIC-GM-Wuling, which accounted for more than half GM's total sales in China last year.

The Chevy familiar to U.S. drivers isn't the one being sold in China. For one thing, the lineup includes no pickups, but has models which are not sold elsewhere, such as the Lova.

The target car buyer is a young professional, 20-35 years old.

"Our goal is to capture them and keep them for life, bring them through the GM family," says Betz.









© Copyright 2006 The Detroit News. All rights reserved.

GM ready for Toyota trucks

Tuesday, November 07, 2006
GM ready for Toyota trucks
Tundra will claim some of the pickup market, but Detroit automaker is confident in its products.
David Shepardson / Detroit News Washington Bureau




WASHINGTON -- General Motors Corp. Vice Chairman Robert Lutz said Toyota's redesigned Tundra pickup, hitting showrooms in February, is likely to be a strong seller, but GM doesn't expect to cede much market share to the Asian automaker.

"They'll do well," Lutz said in a brief interview with reporters Monday in Washington, but he doesn't think the Tundra will steal much from GM's full-size truck sales, which add up to about 1 million units annually.

Toyota Motor Corp. will open an $850 million, 2.2-million-square-foot manufacturing facility next week in San Antonio, where the Japanese automaker will begin building the pickups, which are bigger than previous versions of the Tundra and more competitive with GM, Ford and Dodge trucks.With the new Tundra, Toyota is taking on Detroit's Big Three in one of the most profitable vehicle segments, one they have long dominated.

GM, Ford Motor Co. and Dodge parent DaimlerChrysler AG's Chrysler Group accounted for about 90 percent of the 2.5 million vehicle full-size pickup truck market last year, led by GM's 935,000 unit sales and Ford's 901,000.

That pecking order is not likely to change even as sales projections vary. Analysts -- and Ford -- estimate sales of full-size trucks will be down as much as 8 percent to 2.3 million units this year. GM sales chief Mark LaNeve expects sales to "be up slightly next year."

Demand has wavered this year amid volatile gas prices.

Ford's F-series sales -- 901,000 in 2005 -- rose 3 percent in October but are off 10.2 percent for the year. Chevy's big pickup sales are down 10.8 percent through October.

In September, Don Esmond, senior vice president of automotive operations at Toyota Motor Sales USA, told The Detroit News the automaker wants to double Tundra volume with the 2007 model.

Sales of the current Tundra rose 17.1 percent in October, to just over 10,000 units.

Lutz said Toyota was relying on heavy incentives to sell the pickup.

GM's new 2007 Silverado, meanwhile, got off to a strong start with sales up 104 percent last month. The vehicle debuted in mid-October.

"The customers will decide," LaNeve said Monday. "I do know that we have done a sensational job of listening to our customers."

Toyota spokeswoman Denise Morrissey agreed the market will decide, but said the automaker expects to sell 200,000 Tundras next year, up from about 126,000 in 2005. Through October, Toyota has sold about 100,000 Tundras.

Morrissey noted that when Dodge launched a redesigned Ram in 1994, sales tripled as 215,000 buyers switched to Dodge.

"We've been competing with Ford, GM and Dodge for 50 years," Morrissey said. "We know the full-size market is very loyal and smart. Once they get familiar with the Tundra, get to know it, I think they will consider it. Loyalty is definitely key in this market, but it will only get you so far."

Jim Quinlin, a Knoxville, Tenn., Chevrolet dealer, expects the Toyota truck to be a tough competitor.

"They are going to take some share," he said. "But the new Chevy truck is great, so I don't think they'll take too much from us."

David Healy, an auto analyst with Burnham Securities, said Toyota will be a formidable rival, but it won't be easy.

"Toyota is not going to get a lot of the good ol' boys out of the Silverados and F-150s," Healy said. "The idea is mostly these are going to be sold to people who already own Toyotas and are looking to upgrade into that area."

Lutz said when Japanese automakers grabbed significant share in the U.S. car market between 1979 and 1981, Toyota and Honda Motor Co. were building better quality vehicles.

In the truck market, Detroit's Big Three build vehicles of comparable quality to Japanese models, he said, which makes it less likely loyal GM buyers will shift to a foreign nameplate.

You can reach David Shepardson at (202) 662-8735 or dshepardson@detnews.com.









© Copyright 2006 The Detroit News. All rights reserved.

Trucks lift GM, Ford

Thursday, November 02, 2006
October auto sales
Trucks lift GM, Ford
Figures up from last year's dismal results; Chrysler slips
Josee Valcourt and Christine Tierney / The Detroit News





Helped by new models and falling gas prices that sparked truck sales, General Motors Corp. and Ford Motor Co. sprang back last month from dismal year-earlier sales, but Chrysler posted a small retreat.

GM bolstered claims that its recovery is on track, reporting a 16.8 percent sales gain even though it was the only major automaker to scale back on incentives last month.

Ford sales jumped 8.8 percent from weak levels last October, when Detroit automakers were reeling from the aftereffects of summer employee discount offers.

Sales for DaimlerChrysler AG's Chrysler Group fell 3.2 percent, according to figures from Autodata Corp., which were not adjusted to reflect one less selling day compared to October last year.

But overall, Detroit automakers pushed back aggressive Asian rivals, increasing their U.S. market share by 1.4 percentage points to 53.8 percent. For the year to date, however, their share is down more than three points, at 54.1 percent.

On a seasonally adjusted basis, October's annualized selling rate strengthened to 16.16 million vehicles from an anemic 14.84 million a year earlier.

"Last October was not the strongest month for the industry," Ford sales analyst George Pipas said Wednesday. "Sales were down double-digit for the industry. Sales were down double-digit for Ford."

New vehicles such as the Saturn Aura and Ford Fusion sedans contributed strongly to last month's gains.

In addition, a slide in gas prices revived light truck demand. "That's one reason our trucks, SUVs and crossovers are gaining share," said Mark LaNeve, vice president for sales and marketing of GM North America.

GM truck sales surged 32.8 percent, Ford was up 21.1 percent in trucks and Chrysler truck sales rose 9.3 percent, even though it has an older large vehicle lineup.

But with heavyweight Toyota Motor Corp. showing no sign of letting up, analysts say U.S. automakers remain under pressure.

"GM did have a great month, there's no denying it, but they're still down 9 percent for the year to date," said Rebecca Lindland, analyst at forecasting firm Global Insight.

GM's sales analyst Paul Ballew said last month's rebound partly reflected extremely weak truck sales in October 2005."We have at least taken the real intense pressure off on those categories that we saw when the gas price was around $3 a gallon," he said.

Sales of the Chevy Tahoe large SUV nearly doubled last month. "They did quite well with the new redesigned Tahoe," said Jesse Toprak, an analyst for Edmunds.com, a Web site for car buyers.

Across the industry, trucks scored well, he said. "Our explanation for that was partially lower gas prices but also an increase in incentive spending, specifically for larger vehicles."

Discounts on large SUVs averaged $4,800 industry-wide, compared with $685 for compact cars.

Ford and Chrysler offered the biggest discounts, averaging close to $4,000 per vehicle in October, according to Autodata.

The leading Japanese manufacturers increased incentives by an average of $154 per vehicle. Overall, however, their discounts averaged $1,401 per vehicle in October, compared with $3,436 for the U.S. automakers.

GM was the only major automaker to cut discounts last month, by $226 to an average of $2,836 per vehicle.

Financial analysts watch sales trends but also track incentive spending and factors such as fleet sales to gauge profitability.

GM and Ford are both downsizing their domestic operations, and Chrysler is expected to announce restructuring measures early next year after losing $1.5 billion in the third quarter.

Ballew said GM is focusing less now on its U.S. market share, expected to be under 25 percent for the year, as it targets improving profits in North America.

"We don't get too obsessed with market share these days," he said. "This year we've bitten the bullet in terms of not chasing marginally profitable business." GM's fleet sales were down last month from year-earlier levels.

Steven Landry, Chrysler's vice president of sales, said lower fleet sales also contributed to Chrysler's weak performance in October, relative to its Detroit rivals.

He said Chrysler also had reduced inventories from September as well as from year-earlier levels to 508,724 vehicles -- or an 80 days' supply.

Pipas said Ford's fleet sales are expected to drop significantly next year with the discontinuation of the Taurus sedan, which ended production last month.

Asian brand sales rose in October but less than the domestics, in part because foreign-based automakers refrained from rolling out big summer discounts in 2005 and didn't suffer a resulting sales slowdown in the fall.

Toyota Motor Corp. had its best October ever with a 9.2 percent rise in sales, helped by strong demand for its RAV4 SUV.

Nissan Motor Co. reported a 3.9 percent gain in October, breaking a months -long decline due to a dearth of new products.

Honda Motor Co. sales were flat, with car sales down but truck sales bolstered by higher sales of its CR-V SUV.

Detroit News Staff Writer Sharon Terlep contributed to this report. You can reach Josee Valcourt at (313) 222-2300 or jmvalcourt@detnews.com.













© Copyright 2006 The Detroit News. All rights reserved.

Pontiac buys into fantasy Internet

Wednesday, November 01, 2006
Pontiac buys into fantasy Internet
Automaker links up with 'Second Life,' where it will create a virtual auto culture.
Anita Lienert / Special to The Detroit News






In its search for the next big thing on the Internet, Pontiac has settled on a place called "Second Life," where it hopes consumers will spend a lot of time creating a fantasy automotive community.

Starting this month, the automaker will have a major presence on Second Life, an online 3-D world that has been described by Popular Science magazine as "an animated version of real life."

Participants create an avatar, an idealized version of themselves right down to skin color and torso shape, and take part in an elaborate make-believe society that even has its own currency -- and now, its own car culture.

Pontiac will debut a virtual place called Motorati Island where consumers can "create a vibrant car culture within the community," General Motors Corp. says. The automaker is giving away free land on Second Life, thus saving you monthly fees on the site that range from approximately $5 to $195 per month.

To get in on the deal, you have to submit proposals for land use to Motoratilife.com. Pontiac will review the proposals and choose the best ones.

Motorati Island will eventually have a futuristic Pontiac dealership that sells customizable versions of the Solstice GXP. Pontiac envisions weekly competitive driving events, drive-in theaters playing car-related films and car-themed fashion shows.

So realistic is this project that I assumed you could buy a real Solstice GXP on the site, but you can't. Pontiac spokesman Jim Hopson said the idea isn't "to replace the dealership experience."

But Pontiac is interested in Second Life because Hopson said some pundits are predicting it will become the next My Space, one of the hottest Internet destinations.

My initial reaction to the Pontiac project was one of skepticism. It's hard enough to manage one real life and one or two cars, after all. But designing a brave new automotive world does have some attraction.

My Motorati Island fantasy would include minivans with onboard toilets, dealerships that respect women buyers and standard, state-of-the-art safety equipment on even the humblest vehicle.

Pontiac may be on the right track with this idea, after all.

You can reach Anita Lienert at conseye@aol.com.













© Copyright 2006 The Detroit News. All rights reserved.

2007 Saturn Vue Green Line

November 1, 2006
2007 Saturn Vue Green Line
General Motors
He Drove, She Drove
Saturn Vue walks the Green Line but needs additional updating
By Paul & Anita Lienert / Special to The Detroit News







General Motors' first hybrid utility vehicle, the 2007 Saturn Vue Green Line, elicited a mixed reaction from us. But there is no denying the gas-electric Vue's key selling points -- great fuel economy at an attractive price.

We tested a modestly equipped Vue Green Line with a sticker price of $23,750.

HE: GM was smart to make Saturn the lead brand in rolling out a hybrid SUV. Saturn continues to have a great reputation and positive image among owners. They should really appreciate the virtues of the Vue Green Line, including the fact that it's the industry's least expensive hybrid SUV -- more than $3,000 less than a Ford Escape Hybrid.

SHE: The Vue Green Line may be the perfect vehicle to get you to transition out of a conventional gasoline-powered SUV. It gets 20 percent better fuel economy than the standard four-cylinder Vue, with EPA ratings of 27 miles per gallon in city driving and 32 on the highway. Plus it's quicker than the standard gas-engine model, accelerating from 0-60 in just over 10 seconds.



HE: I have no complaints concerning hybrid powertrain, which is very impressive. I'm less taken with the Vue itself, which is starting to look and feel a bit long in the tooth, despite a facelift last year. I had a number of issues with our test vehicle, and none of them involved the hybrid system. A huge problem was a right front door that was not properly sealed, which enabled wind to come whistling through the passenger compartment at speeds over 40 miles per hour. The Vue also has massive windshield pillars that block the driver's view; in fact, I almost plowed into two pedestrians crossing the street as I was turning left at a local intersection because I never saw them.

SHE: You're right. There's very little to criticize about the hybrid system, which in the Saturn is fairly simple and straightforward. The Vue Green Line uses the same 2.4-liter four-cylinder engine that's in the Saturn Sky roadster. It makes 170 horsepower and comes with a standard four-speed automatic transmission. The electric motor is used mainly to supplement the gas engine; about the only time it runs by itself is at very low speeds. The gas engine also shuts itself off automatically at stoplights to save fuel, then starts itself up automatically when you step on the throttle.

HE: It's clear that GM engineers put a lot of time and effort into getting the hybrid system right. I just wish the driveline had a little more muscle. Sometimes the Vue feels like it's taking forever to get up to cruising speed when you're entering the freeway.

SHE: My concerns about the Vue Green Line center around safety. Sure, traction control and antilock brakes are standard. But there is no stability control and no side air bags. Side curtains, which protect the heads of all outboard passengers, are available at extra cost, but only come bundled in a $1,125 option package. I also am a little uncomfortable with the fact that there's no spare tire -- the battery pack takes up that space under the rear cargo floor. Granted, there's an inflator kit in case you get a flat.

HE: Hmmm. Does that mean you're the wrong demographic for a hybrid vehicle? I think we still need to applaud Saturn and GM for making hybrid technology accessible to more consumers. Now they need to replace the Vue with a more modern vehicle if they really want to get the attention of the rest of us.

He drove, she drove Anita and Paul Lienert are partners in Lienert & Lienert, a Detroit-based automotive information services company.












2007 Saturn Vue Green Line offers an excellent hybrid powertrain but could update its interior and exterior design


2007 Saturn Vue Green Line

Type: Front-engine, front-wheel drive, five-passenger utility vehicle.
Price: Base, $22,995 (inc. $625 shipping charge); as tested, $23,750.
Engine: 2.4-liter I-4; 170-hp; 162 lb-ft torque.
EPA fuel economy: 27 mpg city/32 mpg highway.
Where built: Spring Hill, Tenn.
Estimated 12-month insurance cost, according to AAA Michigan : $1,184
Anita

Rating: 4

Likes: Great for the budget-minded hybrid shopper. Attractive, clean-looking exterior styling. Standard traction control and ABS. Roomy cabin. Driving feel is close to conventional Vue. Ample cargo space, even with batteries under rear floor.
Dislikes: No spare tire. No 4WD model. No side air bags. Side curtains cost extra, and only come bundled in $1,125 option package.
Paul

Rating: 3

Likes: Industry's least expensive hybrid SUV -- $3,300 less than a Ford Escape Hybrid. Significant increase in fuel economy. Comfortable front seats. Better-than-average materials and build quality. Carlike ride.
Dislikes: Front passenger door poorly sealed, with lots of wind noise. Massive windshield pillars block vision.












© Copyright 2006 The Detroit News. All rights reserved.

Ex-CEO at Delphi charged

Tuesday, October 31, 2006
Ex-CEO at Delphi charged
SEC: Former execs, others inflated supplier's earnings
David Shepardson / Detroit News Washington Bureau







Charged in case

J.T. Battenberg III, former CEO and chairman of the board at Delphi

Alan Dawes, former chief financial officer (settled fraud charges, agreeing to a five-year ban on serving as an officer or director of a publicly traded company and to pay $687,000 fine)

Paul Free, former controller and chief accounting officer

John Blahnik, former treasurer and senior vice president

Milan Belans, ex-director of capital planning, pension analysis

Catherine Rozanski, former director of financial accounting and reporting

Judith Kudla, former director of finance in Delphi's IT department

Laura Marion, former director of financial accounting and reporting (settled aiding and abetting Delphi's reporting and books-and-records violations and agreed to pay $40,000 penalty

Atul Pasricha, former assistant treasurer at Delphi (settled aiding and abetting charge and will pay $55,000 penalty)

Scott McDonald, EDS accounting official

Stuart Doyle, former EDS client executive, will pay $40,000 to settle.

Kevin Curry, ex-EDS client executive, will pay $25,000 to settle.

B.N. Bahadur, owner and CEO of BBK Ltd., will pay $569,257 to settle, including $350,000 improperly earned from Delphi.






WASHINGTON -- In a stunning fall from grace, J.T. Battenberg III, the once highly respected ex-chairman and CEO of Delphi Corp., was among 13 people charged Monday after a 27-month probe by the Securities and Exchange Commission into rampant accounting fraud at the bankrupt auto supplier.

In a civil complaint filed in U.S. District Court in Detroit, the SEC detailed a laundry list of fraudulent accounting moves by Delphi that inflated the company's earnings and misled investors about its declining financial health.

Battenberg and former chief financial officer Alan Dawes were among nine ex-Delphi executives accused by the SEC of participating in or aiding and abetting a fraudulent accounting scheme from 2000 to 2004.

Four other executives were charged -- including the CEO of a Southfield turnaround firm and the former vice president and controller of Texas-based EDS.

The SEC filing raises questions about the conduct of Delphi's former parent, General Motors Corp., in a 2000 transaction that is the subject of a separate SEC probe.

The SEC also charged Troy-based Delphi in the complaint. The company settled with the SEC without admitting or denying wrongdoing and will not face penalities, partly because it cooperated with the investigation.

"The facts here are particularly troubling because of the number of fraudulent schemes engaged in by Delphi, the length of time over which they occurred, and the number of Delphi employees, including senior officers, who carried out the schemes," said Linda Chatman Thomsen, the SEC's enforcement director.

Six agree to fines

Six of the people charged Monday, including Dawes, have agreed to settle with the SEC and pay fines and costs totaling $1.4 million. They didn't contest the allegations.

Dawes agreed to $687,000 in fines and a five-year ban on serving as an officer or director of a public company.

Delphi, which filed for Chapter 11 protection in October 2005, hopes to emerge from bankruptcy next year after closing or selling 21 of its 29 U.S. factories.

"We are pleased to put the SEC investigation behind us and consider this settlement an important step in our transformation process," said Delphi Chairman and CEO Robert S. "Steve" Miller.

The charge against Battenberg, who denied wrongdoing Monday, had been expected but was nonetheless jarring given his status as one of the preeminent Detroit auto executives of the past two decades.

Erudite and no-nonsense, Battenberg capped a distinguished career at GM when he took the top job at Delphi in 1995.

He then guided Delphi through the 1999 spinoff from GM that made it the world's largest auto supplier and led an expansion into emerging markets such as China.

He drew praise in July 2002 when he was the first executive to personally certify the accuracy of his company's financial results as part of the Sarbanes-Oxley reforms instituted after the Enron scandal.

Battenberg announced his retirement in February 2005, just before the company disclosed the severity of the accounting issues.

The SEC seeks to bar Battenberg and John Blahnik, Delphi's ex-treasurer and senior vice president, from serving as officers of a publicly traded company. From the pair and four others, it seeks the return of improper financial gains -- likely salary or bonuses.

Criminal charges remain a possibility. A parallel Justice Department investigation of Delphi's accounting led by its fraud unit in Washington is ongoing.

The Detroit News has learned the Justice Department plans to interview a cooperating former Delphi executive next month as it decides whether to seek indictments.

Delphi routinely met or exceeded Wall Street expectations in the first years after its spinoff from GM, partially due to improper accounting that boosted revenue.

But its facade of financial health began crumbling 18 months ago, in March 2005, when the company fired Dawes and said it had overstated its cash flow by $200 million in 2000 and 2001 and its earnings by $61 million.

Five more executives were broomed after the disclosures.

The SEC's complaint says that Delphi used a series of accounting tricks to boost its revenue, such as recording a $20 million loan from EDS as a rebate.

EDS said its controller, Scot McDonald, agreed to step down in July after he received notice that he likely would face SEC charges. He remains at EDS in another job.

The SEC complaint suggests that Battenberg and Dawes pointed the finger at GM, which some creditors and investors say had too much influence over its former parts unit. GM declined comment.

The SEC said Delphi concocted a scheme to minimize a $237 million warranty claim owed to GM.

Battenberg and Dawes said GM had suggested an "asymmetrical" accounting of the transaction to allow both companies to record it favorably, the SEC said.

Delphi earmarked $202 million of the money as pension obligations to minimize the effect of the warranty claims.

Payment restated

Had Delphi properly accounted for the expense, it would have reduced its third-quarter earnings in 2000 to $15 million instead of $148 million. In June 2005, Delphi restated the entire payment as a warranty charge.

In another transaction, Delphi boosted cash flow by purporting to sell Bank One $200 million in precious metals in December 2000.

In reality, the metals never left the factory floor, and Delphi had agreed to buy them back the next month at the same price. Delphi paid the bank $3.5 million for the transaction, which allowed it to overstate income by $54 million.

A separate $70 million transaction with Southfield-based turnaround firm BBK Ltd allowed Delphi to book $27 million as income in exchange for a $900,000 financing charge. It was listed in a memo as "off-balance sheet financing" to sell automotive batteries.

BBK Ltd's owner, B.N. Bahadur, agreed to forfeit the $350,000 he earned in the transaction in settling the SEC charge against him.

In the most recent transactions, Delphi hid up to $325 million in factoring -- sales of accounts receivable -- between 2003 and 2004 to boost its balance sheet. In another quarter, it boosted a cash flow measurement by $30 million.

In a statement, Battenberg said he cooperated with the SEC. Referring to the GM warranty transaction, he said, "I believed and continue to believe (it) was entirely lawful and proper."

Paul Free, Delphi's former chief accounting officer who was allegedly involved in several of the transactions, also denied wrongdoing. "We intend to vigorously defend the allegations," his lawyer Richard Rossman said.

John Blahnik also denied improper conduct. "Another side of story is to be told," said his attorney, Tom Cranmer.

David DuMouchel, a lawyer for former Delphi accounting executive Cathy Rozanski, said she did "nothing that she thought was contrary" to proper accounting.

You can reach David Shepardson at (202) 662-8735 or dshepardson@detnews.com.










© Copyright 2006 The Detroit News. All rights reserved.

American Muscle

Tuesday, October 31, 2006
2006 Specialty Equipment Market Association show
American Muscle
Show caters to carmakers' customizers
Larry Edsall / Special to The Detroit News




Flexing American automotive muscle may have lost its appeal to some when gas prices soared, but not to true power aficionados. And they'll get a supercharged dose of it this week in Las Vegas.

The Specialty Equipment Market Association's annual trade show, opening today at the Las Vegas Convention Center, will cater to America's first customizers, who raced Mustangs, Camaros and Challengers long before tuners was a noun.

"Power is universal," said Jamie Allison, program manager for Ford Motor Co.'s racing technology performance group, "and people always want more."

They'll have plenty to see at this year's show, jointly sponsored for the first time by General Motors Corp., Ford Motor Co. and DaimlerChrysler AG, which includes Chrysler. All three Detroit automakers have managed to cram big V-8s into some surprising sheet metal that will be on display at the show.

SEMA will not overlook the rest of the $34 billion custom and performance parts market, of course. The four-day event, which is not open to the public, will offer a 1-million-square-foot venue for 14 automakers and 2,000 custom and performance parts makers to show their wares and seek potential business partners.

Hundreds of refitted, decked out, totally made-over cars and trucks will be on display and about 120,000 people are expected to attend, said SEMA spokesman Peter MacGillivray. Think of it as "Pimp My Ride" meets "American Chopper" meets Steve Saleen.

The theme will be American muscle.

Back in the mid-1960s, the original muscle cars were family-style, midsize, hard-topped and two-door sedans into which some creative product planners and enterprising engineers planted huge and powerful V-8 engines. Thus was born the Pontiac GTO and Olds 4-4-2, Hemi-powered Dodge Chargers and Plymouth 'Cudas.

"In some ways, the original muscle car drivers were a lot like the tuners of today," MacGillivray said.

"They were working on improving the performance and looks of their vehicles."

For a modern look at muscle, Chrysler will have more than 60 vehicles at SEMA this year, including a 5.7-liter Hemi-powered Dodge Nitro, producing 360-horses, at the stand for its Mopar parts and accessories unit. Mopar will also unveil a Dodge Challenger SS concept car.

There will be eight vehicles from Chrysler's in-house Skunkworks team, a group of designers, engineers and others who work after-hours on projects coordinated by Ralph Gilles. Gilles designed the popular Chrysler 300 and now heads up truck design.

"These are like our children," Gilles said Friday while looking at the vehicles, which were still at Chrysler headquarters in Auburn Hills.

Concepts could see road

Gilles said while all of the vehicles are concepts, most are built with an eye toward eventually making it to the streets, either as a production model or through Mopar.

"These are the kinds of things we'd build in our garage if we had the chance," said product stylist Vince Galante. Galante designed the interior of a brawny 2007 Chrysler Sebring for display at SEMA that comes with a complete body kit, 20-inch tires and a Boston Acoustics stereo system that could make your ears bleed.

Not to be outdone, Ford will display a group of specially prepared Shelby GT500 Mustangs, as well as a supercharged Mustang GT in a California Special body kit.

Ford shows off kit

Ford will also showcase 3dCarbon body kits for the Ford Fusion and Lincoln MKZ sedans and the Lincoln MKX crossover, as well as a highly modified version of the Ford Edge crossover.

For a more complete power package, Ford will display a customized F-150 FX2 Sport Extreme pickup, which boasts a 450-horsepower 5.4-liter V-8 with an inter-cooled supercharger. The only thing more powerful than the engine on this truck is its high performance brakes.

GM's spin on American Muscle will focus on trucks, including a Chevrolet Silverado off-road concept designed with NASCAR racer Dale Earnhardt Jr., and a low-riding hauler concept done with the Teutul family, known for designing motorcycles on "American Chopper" TV show.

Yet another muscular pickup on the Chevy stand will be the Silverado 427. The historic 427 designation comes from the 427-cubic-inch, LS7 small-block V-8 engine under the hood that was borrowed from the Corvette Z06.

Some aftermarket designs for GM vehicles, such as a Cadillac Escalade EXT designed by DUB magazine, don't come from the automaker.

But Bob Walczyk, marketing and product manager for Chevrolet, said that isn't always a bad thing because the aftermarket can bring new life to production vehicles. "SEMA is where the aftermarket takes our product and extends our product. The vehicle is a canvas from an artist's perspective."

Automakers join show

Automakers have become big players at SEMA, essentially turning it into another auto show, because they see profit potential. A typical consumer spends up to $1,000 personalizing and customizing a car, said Christine Feuell, director of vehicle personalization and accessories at Ford. Truck buyers typically spend $1,500.

Detroit News Staff Writer Scott Burgess contributed to this report. Larry Edsall is a Phoenix-based freelance writer.











© Copyright 2006 The Detroit News. All rights reserved.

Black boxes spark uproar

Monday, October 30, 2006
Black boxes spark uproar
Safety advocates, automakers ask feds to rewrite the rules
David Shepardson / The Detroit News







Rule requirements

Automakers must tell consumers by 2008 whether a new vehicle is equipped with an event data recorder.

By September 2010, data recorders must record 15 essential data elements and up to 30 additional elements if the vehicle is equipped to record these elements. The items include speed, time of airbag deployment, change in speed, seat belt status, brake status and engine throttle.

Recorders must be able to record two events.

Automakers must make a retrieval tool for data commercially available.



WASHINGTON -- A new federal rule to standardize minimum requirements for "black boxes" in vehicles wasn't expected to be controversial, but it has ignited a firestorm of protests from groups that largely agree the information collected by the devices improves auto safety.

All U.S. and foreign automakers have asked the National Highway Traffic Safety Administration to rewrite the rule because they say it's too vague and will cost too much to implement. Safety advocates say it doesn't go far enough.

A NHTSA spokesman said last week the agency will respond to the requests, but did not say when. If denied by the NHTSA, the petitioners can ask a judge to block the rule from being implemented.

The new rule is set to take effect in September 2010. Automakers have asked NHTSA to respond quickly -- by March -- because product planning for 2010 models will begin as early as next year.

The standoff comes a decade after the National Transportation Safety Board and NASA recommended using data from auto event data recorders, or EDRs, much like airlines use information from black boxes in airplanes.

The NHTSA has said standardizing black box data can help the auto industry and safety researchers study how and why accidents occur and how to prevent them.

The devices collect a variety of data in the moments before, during and after a crash, such as speed and acceleration, whether the driver was wearing a seat belt and whether the driver hit the accelerator or the brake.

In August, the NHTSA unveiled its final rule for standardizing EDRs, which are now installed in most new cars and trucks, paring back some mandates in its original 2004 proposal to acknowledge concerns raised by automakers.

The final rule reduced the number of data elements required from 18 to 15, said data recorders must be able to record two events in very serious crashes, rather than three, and required data to be retrievable for 10 days instead of 30.

The NHTSA did not mandate that the devices be put in all vehicles. Rather, it followed California's lead in telling automakers they must inform customers if their vehicle has one.

But the NHTSA's final rule ended up pleasing no one.

Automakers told the NHTSA this month that roughly 11 types of data required to be collected can be inaccurate in current recorders and that they may not be able to comply without installing more expensive sensors because the rule requires a closer margin of error than current sensors allow.

"Most of these other error sources are inherent to the current state-of-the-art EDR technology and cannot be eliminated without significant cost," Robert Strassburger, director of vehicle safety for the Alliance of Automobile Manufacturers, wrote to the NHTSA.

The alliance, which represents nine automakers including General Motors Corp., Ford Motor Co., DaimlerChrysler AG and Toyota Motor Corp., and the trade group that represents most foreign manufacturers are asking the NHTSA to increase the margin of error for acceleration from plus or minus five percent to 10 percent, among other revisions.

The automakers also asked that the requirements be phased in, with complete compliance in 2013. "It is not practical to implement these product changes across the entire product fleet by September 1, 2010," Strassburger wrote.

Automakers are not alone in asking for changes to the rule, which has many components.

Safety advocacy group Public Citizen said NHTSA's action will delay the potential benefits of black boxes for years.

"NHTSA has squandered an opportunity to fully realize the numerous safety benefits offered by EDRs," Public Citizen President Joan Claybrook wrote to the agency.

"With over 40,000 people dying on American roads each year, it is unconscionable for the agency to stumble on this issue and to prevent the maximization of EDR benefits."

Public Citizen is demanding that more data be collected from the devices. The group also wants stricter standards for the survivability of crash data and insuring that investigators can quickly access EDR data.

In the final rule, devices must only survive a 35 mph frontal crash. Public Citizen notes that about 75 percent of vehicles involved in fatal crashes are traveling faster than that.

AAA, with 48 million members nationwide, blasted the final rule for delaying until 2008 the requirement that the auto companies inform drivers of the devices.

"We believe motorists must know what data is being collected by their vehicles and how it can and cannot be used," AAA CEO Robert Darbelnet wrote in asking the NHTSA to reconsider its decision. "The public's right to know cannot be compromised."

Most automakers already inform consumers, since California mandated it in 2004. And most vehicles already have the devices.

For 2005, about 64 percent of new models had black boxes, a figure that likely is much higher now. Toyota installs them in all of its vehicles, while GM and Ford equip nearly all their models. DaimlerChrysler AG's Chrysler Group has the technology in more than half.

The data, collected beginning five seconds before a crash at the time air bags are deployed, can help determine who was at fault in an accident and the cause.

Unlike airplane black boxes, vehicle EDRs don't record voices. And without a crash being severe enough to prompt an air bag deployment, no data is recorded.

W. Scott Palmer, CEO of Injury Sciences in Texas that helps insurers collect black box data, said insurers will eventually be able to gather and evaluate millions of EDR data records. "NHTSA's ruling heralds a major, technology driven change in the way policies are underwritten," he said.

NHTSA estimates the rule will cost automakers $11 million to $33 million annually, depending on how many vehicles are equipped with data recorders and whether additional data elements are required in the future. The automakers say if the rule isn't changed, it will cost them far more than that.

Forty states haven't passed any legislation governing data recorders. Ten states -- Arkansas, California, Colorado, Maine, Nevada, New Hampshire, New York, North Dakota, Texas and Virginia -- have laws on the books.

The laws generally require manufacturers to disclose the presence of recorders in vehicles or clarify that the data is owned by vehicle owners and can only be accessed with their permission.

This year Colorado, Maine, New Hampshire and Virginia adopted regulations to clarify when law enforcement may retrieve data. States are split on whether police need a warrant to get the data.

Privacy advocates have voiced concern about data falling into the wrong hands or about "spying" on drivers. Hundreds have written to the NHTSA in recent months denouncing the devices.

You can reach David Shepardson at (202) 662-8735 or dshepardson@detnews.com.











© Copyright 2006 The Detroit News. All rights reserved.

GM's accounting subject of inquiry

Tuesday, October 31, 2006
GM's accounting subject of inquiry
SEC, grand jury, U.S. Attorney investigating errors in automaker's earnings reports.
David Shepardson / Detroit News Washington Bureau






WASHINGTON -- Accounting questions at General Motors Corp. still loom large, especially after the Securities and Exchange Commission leveled civil fraud allegations against 13 people, including nine former Delphi Corp. executives.

GM has disclosed it is the subject of several investigations into various aspects of its accounting, including a formal SEC inquiry stemming from the investigation into Delphi. A federal grand jury and the U.S. Attorney's Office in Manhattan are also looking into GM's accounting.

In March, GM was forced to restate its earnings from 2000 to 2005, and the company disclosed errors similar to some Delphi had acknowledged, especially those involving supplier credits.

In May 2000, GM told Delphi it owed between $350 million and $800 million for "purportedly defective parts" Delphi sold before the separation in 1999, the SEC said. Delphi didn't have enough in reserves to cover it.

GM said in March "a federal grand jury recently issued a subpoena in connection with supplier credits."

GM said it overstated income in 2001 by $405 million -- or 35 percent -- due to incorrectly recording supplier credits. GM also reduced income in both 2000 and 2002 by about $100 million due to credits.

GM also said it erroneously booked a $27 million gain on selling precious metals in 2000 that was actually a financing transaction.

In 2001, GM erroneously recorded a $55 million settlement as a credit and the company has since booked it as a warranty.

GM spokeswoman Gina Proia declined to comment as did the SEC and assistant U.S. Attorney Helen Cantwell, who is leading the criminal investigation into GM's accounting.

In May, GM said its controller was retiring and its chief accounting officer, Peter Bible, had resigned. GM also retained an outside financial advisory firm, Southfield-based AlixPartners, to assist in a broad range of accounting, financial reporting and related matters.

You can reach David Shepardson at (202) 662-8735 or dshepardson@detnews.com.











© Copyright 2006 The Detroit News. All rights reserved.

GM buys energy from own roof

Monday, October 30, 2006
Jill Donnelly / New York Times
A solar energy system atop a General Motors Corp. warehouse in Rancho Cucamonga, Calif., will provide half of the building's electricity.
GM buys energy from own roof
Big companies can get cheaper rates with solar systems installed on their buildings by others.
Claudia H. Deutsch / New York Times





General Motors Corp. liked the idea of using the sun to power its buildings. But until recently, one immutable economic fact held GM back: The upfront costs were simply too high to justify the ultimate payoff.

GM is not alone. Even solar energy's biggest fans concede that the high investment costs have kept companies from pursuing what is arguably the cleanest, most renewable and least politically sensitive energy source around.

But now, GM and a small but growing number of other companies and municipalities are getting solar energy from systems installed by others. Even though the installations are right on their own roofs, they buy the electricity much as they would from a utility's grid. And because the companies that paid for the systems will get a steady income, they can provide power from the sun at competitive electricity rates.

Since June, the roof of GM's parts warehouse in Cucamonga, Calif., has been host to a photovoltaic array with the ability to generate as much as 1.5 million kilowatt hours of electricity a year. The installation, which GM expects will provide half of the building's electricity, cost GM nothing.

A solar developer called Developing Energy Efficient Roof Systems -- commonly called DEERS -- bought the equipment with money it raised from private financiers. DEERS and its investors own the cells; GM signed a long-term contract to purchase the solar-generated electricity from them at a discount to the prevailing rate for electricity in the region.

These days, with that rate at 9 cents to 10 cents a kilowatt hour, GM expects that the solar system will reduce its overall electricity costs by 10 percent a year.

GM is already negotiating with DEERS to put a similar solar array on a warehouse in nearby Fontana. "The savings are small, but it's exciting to create such an environmentally sound project without any need to shell out capital," said Kamesh Gupta, manager of planning and programs for General Motors Energy and Utility Services, which purchases all the energy used by GM.

Similar deals are cropping up elsewhere. Some specify that the users pay the solar developers a fixed rate for electricity, while others specify a fixed discount to the going rate.

Other factors are involved as well. The parties generally negotiate who will retain credits for reducing carbon emissions. When the developers and their backers keep the carbon abatement credits, they generally plan to sell them to companies that might otherwise have trouble complying with rules planned in California and expected elsewhere aimed at limiting global warming.

The electricity users could do that, too, but some of them might also use the credits to offset emissions from other parts of their operations.








© Copyright 2006 The Detroit News. All rights reserved.

Saturn sprouts green for Vue hybrid's debut

Friday, October 27, 2006
Saturn sprouts green for Vue hybrid's debut
David Shepardson / Detroit News Washington Bureau




WASHINGTON -- General Motors Corp.'s Saturn division is going to great lengths to tout its green credentials with the launch of a hybrid version of its Vue SUV.

At 10 p.m. Wednesday, workers began building 27-foot by 10-foot greenhouses at three locations in Washington. By 5 a.m. Thursday, they were open for business.

Through Sunday, Saturn expects to hand out 50 bushels of Virginia-grown Granny Smith green apples adorned with Saturn stickers to visitors to the greenhouses, where the automaker is displaying the Green Line Vue.

The four-day Saturn "Greenhouses" event, marking the launch of the Green Line Vue, is designed to introduce consumers to the idea of "going green." Saturn will give away fruit smoothies and seedlings. There will be lectures about gardening. And the automaker will pass out green flip-flops Sunday to finishers of the Marine Corps Marathon, which Saturn is sponsoring. Every automaker wants to be thought of as eco-friendly. And with today's volatile gas prices, being perceived as a maker of fuel-efficient models is an even bigger plus.

Saturn is introducing the hybrid Vue as part of an aggressive product offensive.

Alicia Turnbull, 47, a college counselor from Kansas City, Mo., in Washington on a business trip, said the Saturn greenhouse outside Union Station caught her eye because she's a gardener.

The owner of a creaky 1989 Toyota, Turnbull is looking for a new car. "I've been leaning toward a Toyota Prius," she said, referring to the Japanese automaker's popular hybrid. But after looking at the Vue parked outside the greenhouse, she said, "I'm going to consider it."

Saturn is calling its effort "Go Green without Going Broke" -- to promote the Green Line Vue as an affordable hybrid option.

The Green Line Vue is a mild hybrid, which means the battery assists the engine, but the SUV cannot run on the battery alone. In a full hybrid, a vehicle can run on battery power alone under some conditions. A mild hybrid is less fuel efficient but also less costly.

The starting price for a Green Line Vue is less than $23,000, making it the lowest-priced hybrid SUV on the market, according to Saturn. It will get 37 miles per gallon in the city and 32 mpg on the highway -- 20 percent better than four-cylinder Vue models.

Saturn General Manager Jill Lajdziak said the company is targeting Honda and Toyota owners. "There's been a sea change in attitudes about the volatility of gasoline prices," Lajdziak said.

Florian Zettelmeyer, a business professor at the University of California, Berkeley who has studied auto marketing, said Saturn's green campaign is a good effort.

He noted that Saturn, unlike other GM nameplates, "never had a hulking gas-guzzler" and has more credibility as an environmentally friendly brand.

He said Saturn was created as a "different" car company, with no-haggle pricing and with customers making trips to Tennessee to see their cars made.

"GM had completely abandoned the brand before it began introducing some very competent vehicles," he said. "This (campaign) is kind of an attempt to reconnect with consumers in an unusual way that goes in part back to the original roots. The question is how much brand equity is left."

You can reach David Shepardson at (202) 662 - 8735 or dshepardson@detnews.com.











© Copyright 2006 The Detroit News. All rights reserved.

Big Three carrying excessive inventory

Friday, October 27, 2006
Big Three carrying excessive inventory
Head of AutoNation claims fleet sales give automakers unreliable count of vehicle supply.
John D. Stoll / Dow Jones Newswires





DETROIT -- The head of the largest U.S. auto-dealer group said Thursday that U.S. automakers and sales analysts need to "move into the real world" and recalculate vehicle inventory estimates in a way that better reflects how deep a hole Detroit's Big Three are in.

AutoNation Inc. CEO Mike Jackson said the current practice of calculating days' supply of unsold vehicles is "outdated" and "dramatically understates" how much excess inventory is being carried by dealers selling vehicles from General Motors Corp., Ford Motor Co. and DaimlerChrysler AG's Chrysler Group.

He said that automakers and certain analysts currently calculate days' supply based on both the pace of retail sales to actual consumers and fleet sales, such as deliveries to rental car firms and government agencies.

Jackson said fleet sales should be removed and automakers should only calculate days' supply inventory based on retail demand. The Big Three rely on fleet sales for at least 25 percent of total light-vehicle sales.

Automakers constantly strive to keep inventories in check in an effort to hold availability in line with demand. A glut of vehicles leads to high costs for dealers who pay interest on unsold vehicles, and forces automakers to dish out generous sales incentives that deflate vehicle profitability. GM, Ford and Chrysler have scheduled costly production cuts for the second half due to high inventory.

The Big Three U.S. automakers reported earnings earlier in the week and each posted losses in the United States, where falling market share and production cuts have pulled down overall results. Jackson said that a change in inventory-estimating practices would help GM, Ford and Chrysler be sure the inventory crisis is "fully understood and addressed."

Jackson said the current practice of estimating inventories dramatically skews the inventory picture at the domestic automakers. GM, according to auto-sales tracking firm Autodata Corp., has 76 days' supply of inventory. But AutoNation says the number, minus fleet sales, is actually 94 days' worth. Ford's reported inventory is 75 days' supply, according to Autodata, but AutoNation says it is actually 105 days. At Chrysler, AutoNation estimates retail inventory is 126 days' supply, not the reported 82 days.

Jackson said that a 60 days' supply is ideal.









© Copyright 2006 The Detroit News. All rights reserved.

GM technology going 'green' to challenge Toyota

Saturday, October 28, 2006
GM technology going 'green' to challenge Toyota
Automaker will make hydrogen-powered fuel cell and hybrid-electric vehicles in near future.
Jeff Green / Bloomberg News





DETROIT -- General Motors Corp., losing sales to Toyota Motor Corp., will use some of the $9 billion in savings from cost cuts this year to make vehicles that match the Japanese automaker in technology and fuel efficiency, according to people familiar with the strategy.

GM's plans include a hybrid-electric vehicle with a battery that recharges at any outlet, improved gasoline engines, hybrid versions of its Silverado pickup trucks and hydrogen-powered fuel cell models that emit only water vapor, according to sources, who didn't want to be identified because the plan isn't public.

Chief Executive Officer Rick Wagoner will outline the strategy in a speech before year's end, one of the sources said.

"GM has to change the rules of the game through new technologies because they are simply fighting to not lose share now," said Pete Hastings, a fixed-income analyst at Morgan Keegan & Co. in Memphis, Tenn. "The first and best to market will be critical for future share dominance."

Wagoner, 53, is under pressure to return the world's largest automaker to profitability after he shunned an alliance with Renault SA and Nissan Motor Co.

GM reported a third-quarter loss of $115 million this week and said it was spending more cash on its automobile business than it was generating through vehicle sales. GM lost $1.66 billion in the year-earlier quarter.

The Detroit automaker has assigned a team of engineers to help develop plug-in hybrids, according to one of the sources. The project -- known internally as I-car, for Icon car -- is meant to be the centerpiece of the new strategy, the sources said. Plug-in hybrids recharge when the vehicle isn't in use and switch to the gasoline engine when the batteries are drained.

GM is playing catch-up in "green car" technology. Toyota sold 235,000 hybrids worldwide last year. GM's first true hybrid, the Saturn Vue Green Line, went on sale this month.

Demand for Toyota's hybrids has helped the Toyota City, Japan-based company boost U.S. sales 12.5 percent this year through September.

GM sales have dropped 11 percent.









© Copyright 2006 The Detroit News. All rights reserved.

Bush sets mid-Nov. meeting with Big 3

Wednesday, October 25, 2006
Bush sets mid-Nov. meeting with Big 3
David Shepardson / Detroit News Washington Bureau




WASHINGTON -- President Bush will meet next month with the CEOs of General Motors Corp., Ford Motor Co. and DaimlerChrysler AG's Chrysler Group after more than six months of delays, a senior Bush aide said Tuesday.

Karl Rove, the president's chief political adviser, told WJR Radio that a meeting was set for next month at the White House. He did not cite a specific date, but auto industry officials said it would likely be Nov. 14, although that could slip a day or two to accommodate the CEOs' schedules. Bush leaves the country Nov. 18.

On the agenda: soaring health care costs, alternative energy and trade.

Rove offered some conciliatory comments on what role the government should play in reining in the auto industry's health care costs a day after Bush rejected the notion of federal intervention.

"We need to find a way to help moderate their dramatic increase in health care costs," Rove told WJR's Paul W. Smith in an interview from the White House. "We need to expand markets. We need to have a level playing field so they can sell their products abroad."

Rove's comments were in contrast to Bush's remarks Monday during an interview on CNBC, when he was asked how far the government should go "in terms of bailing out the autos."

Bush rejected any suggestion that the federal government pick up health care costs. "To the extent that they made commitments, they've got to keep their commitments," he said. "There's a lot of people saying, 'Well, you need to take their, take their health, their benefits that they promised off their hands.' No, I don't think that's a proper role of government. They made a private contract with their employees. They need to keep it."

But Bush said he would talk with the auto CEOs generally about health care costs and ways the government could help to reduce them.

The auto companies have insisted they aren't seeking a bailout.

The frequent delays for the meeting, initially set for May, have turned it into an election-year political issue in Michigan as Democrats strongly criticize Bush for paying little attention to the struggling U.S. auto industry.

A spokeswoman for Gov. Jennifer Granholm, Liz Boyd, dismissed Rove's assurances about a meeting next month. "Tell us when they will meet. There was no date," Boyd said Tuesday. "This is an industry that is reeling from the effects of globalization and from failed Bush trade policies."

Dick DeVos, the Republican candidate for governor, chided the White House in August for not holding the meeting.

"He went out on a limb, and that didn't make him too popular at the White House," DeVos spokesman John Truscott said Tuesday.

If Democrats take control of the House or Senate, the Big Three CEOs would likely head up to Capitol Hill as well as the White House, two auto officials said.

In July, GM CEO Rick Wagoner appeared on Capitol Hill asking Congress for a number of reforms to help businesses cope with runaway health care costs. In August, he chastised the federal government's failure to do anything.

The Big Three spend more than $10 billion annually on health care costs, and GM and Ford have a nearly $100 billion accumulated health care liability.

GM is the largest private provider of health care in the United States, spending $5.3 billion to cover 1.1 million people in 2005. The company expects its health care costs to rise to $7.4 billion by 2009 -- despite an agreement with the United Auto Workers that will reduce costs by $1 billion a year.

Ford spent $3.5 billion last year to cover 590,000 people, including employees, retirees and dependents. Its health care costs have soared 67 percent since 2000 and the company now spends $1,100 per vehicle on health care -- more than it spends on steel.

Ford has negotiated a deal with the UAW to cut health costs. Only Chrysler has been unable to secure concessions from the union. The automaker is expected to report a $1.5 billion loss when it releases third-quarter earnings today.

Rove said the administration is in regular contact with the auto industry. "We talk to the auto boys all the time," Rove said. "(The auto industry's) important to America."

Last month, Bush called Ford Chairman Bill Ford Jr. to assure him that the meeting would go ahead after the November election.

Chrysler spokesman Jason Vines said Tuesday that the automaker isn't upset by the delays.

"The guy's got two wars going, and we've got a war of our own," Vines said. "It'll be good to sit down with the president."

You can reach David Shepardson at (202) 662-8735 or dshepardson@detnews.com.













© Copyright 2006 The Detroit News. All rights reserved.

Automakers: End steel tariffs

Friday, October 06, 2006
Automakers: End steel tariffs
The 1992 taxes ended the dumping of cheap, foreign steel, but prices have risen 68 percent.
David Shepardson / Detroit News Washington Bureau





WASHINGTON -- The six largest automakers joined forces Thursday to call on the U.S. International Trade Commission to end 13 years of tariffs on imported steel.

General Motors Corp., Ford Motor, Co., Toyota Motor Corp., DaimlerChrysler A.G., Honda Motor Co. and Nissan Motor Co. argue that the duties artificially increase by 30 percent the price of corrosion-resistant steel from Australia, Canada, France, Germany, Japan and Korea.

Automakers, facing steel prices that have jumped 68 percent over the past two years, are now in price negotiations with the steelmakers, who vigorously oppose ending the tariffs.

"This marks the first time that these six companies have united on a trade issue," said Mustafa Mohatarem, chief economist at GM, which buys 10 million tons of steel annually.

"Further protection for the steel industry is simply unjustified. Continuing these outdated duties hurts American manufacturing competitiveness and U.S. jobs."

The tariffs were established in 1993 to prevent foreign countries from dumping cheap steel into the U.S. market at a time when the U.S. steel industry was in turmoil. Since then, automakers say the steel industry has recovered.

The trade commission, the federal agency which regulates U.S. trade, is holding a two-day hearing beginning Oct. 17 in Washington to consider ending the tariffs, and will hear testimony from the automakers.

"American manufacturers have taken a back seat in this process for far too long. The competitiveness of our manufacturers relies on fair-priced raw materials, and it is time the ITC realizes the negative effects these tariffs have on our jobs and on our economy," said U.S. Rep. Joe Knollenberg, R-Bloomfield Township. "Steel-consuming industries employ more than 50 workers for every one worker in the steel-producing industry. The ITC must balance their decisions to reflect this reality."

Knollenberg noted that the U.S. auto and auto parts industries have lost 200,000 jobs since 1999, more than the entire U.S. steel industry employs -- about 150,000. The auto industry employs about 2.4 million people.

Thomas Danjczek, president of the Steel Manufacturers Association, blasted the automakers.

"For many years, automobile producers demanded multiyear contracts at extremely low steel prices, during periods when there was persistent and pervasive dumping of steel imports into U.S. steel markets," he said.

Danjczek said "automakers would rather have access to unfairly priced dumped and subsidized imports, no matter what the effect is on their domestic suppliers. This shortsighted approach in unfortunate and should be rejected."

"A surge of steel imports would harm the domestic steel industry without providing any real benefit to automakers. The average automobile contains about 1,000 pounds of corrosion resistant steel, valued at about $400 total," said Danjczek adding that a 5 percent price drop would cut the cost of building a car by just 1/10th of a percent.

All six automakers, who buy the overwhelming amount of the steel used in their U. S. operations from U.S. steel mills, said the tariffs should be lifted to create a more open market.

"With record profits, high prices and industry consolidation, the domestic steel industry is enjoying unprecedented prosperity that its own executives have publicly stated is sustainable for the long term," said Mark S. McConnell, a lawyer for the six auto manufacturers.

"A great deal has changed in the steel industry since the duties were put in place 13 years ago," said Jo Cooper, Toyota group vice president. "There is no longer an economic basis for keeping these duties. The steel industry benefits from unnecessary protection while the duties hurt a much wider sector of the U.S. economy."

You can reach David Shepardson at (202) 662 - 8735 or dshepardson@detnews.com.












© Copyright 2006 The Detroit News. All rights reserved.