Sunday, December 31, 2006

GM memo outlines comeback challenges

Saturday, December 23, 2006
GM memo outlines comeback challenges
Frank report identifies inflexibility, shifting demographics as threats to giant automaker.
Bill Vlasic / The Detroit News




Where General Motors Corp. once boasted of its size and strength in the U.S. market, GM has now turned an increasingly critical eye on the weaknesses that threaten its fledgling turnaround.

In an internal planning document obtained by The Detroit News, GM's global research unit takes an unusually candid and harsh look at the automaker's declining position and vulnerabilities in its home market.

The confidential study prepared for GM's top management describes the company as "big but outdated," and warns that "our advantages of size and economies of scale are eroding." It also declares that "lack of flexibility is GM's chief disadvantage."

And the document -- created by GM's influential Global Market and Industry Analysis division and marked confidential -- confirms what industry observers have said is the automaker's central challenge in trying to halt a decades-long slide in the U.S. market share.

"The biggest challenge GM faces is that more and more people, especially the young, are excluding us from their consideration list," the study said.

With GM in the midst of a huge turnaround effort after losing $10.6 billion in 2005, senior management is said to be more interested in frank assessments of the company and the marketplace than rosy projections of its future.

Paul Ballew, director of the analysis unit, confirmed the authenticity of the study and said it reflected "the brutal honesty" within today's GM.

"When you see documents such as this, it shows we are very realistic about the challenges of the marketplace and very realistic about what we have to do to meet them," Ballew said in an interview Thursday.

The document is one of several generated annually for countries and regions around the world where GM operates. Called an "environmental scan," the studies dissect specific markets and analyze GM's performance in them.

The U.S. study is used as a planning document by high-level executives responsible for GM's far-reaching turnaround plan. Troy Clarke, the new head of GM North America, was recently briefed on the study's findings, according to one company insider.

It's a reality check

One senior executive said Thursday that GM cannot afford to gloss over its long-standing problems in the U.S. market.

"In this business, you have to start out with reality," said Mark LaNeve, head of GM North American sales and marketing. "I call it 'situational awareness.' It needs to start with reality."

The reality spelled out in the U.S. study is hardly a revelation to outside observers.

The document shows how GM lost market share in all 50 states over the past five years, and is struggling to connect with "post-boomer" consumers born after 1964. It also outlines how U.S. population trends have not worked to GM's advantage.

"Population movements to the West and South define a long term trend and are expected to continue," the study said. "Most areas within these regions are weak markets for GM."

Ballew said the "brutal facts" are an important basis for discussion as GM plans its future products and market strategies.

"There is no naivete going on in this place at all," Ballew said. "We believe in honest discussion. It's healthy."

But he conceded that GM has not always cast such a critical eye on its own shortcomings.

"Twenty years ago, it was a completely different atmosphere in GM," said Ballew, who joined GM in 1999 after working for independent research firms such as J.D. Power & Associates.

GM faces uphill battle

One industry consultant said GM's dismal financial results in North America, where it hasn't earned a quarterly profit since 2004, have forced management to face some hard facts.

"They may not have done it before, but now they fully recognize that this is very much an uphill battle," said Joseph Phillippi of the consulting firm AutoTrends in Short Hills, N.J.

In the past 10 years, GM's annual U.S. market share has fallen from 31 percent to 24 percent, as of November.

While Asian automakers have gained share in the midsize passenger car and crossover utility segments, GM has focused more on maintaining its traditional strongholds in large SUVs and pickups.

That emphasis is changing, however, with the introduction of new models, including the redesigned Chevrolet Malibu sedan and Saturn Outlook crossover.

"They have got a lot of work to do," Phillippi said. "They're not going to suddenly regain a full point or two of share in a couple of years. It's going to be a brutal slog to get there."

While GM and other automakers have expanded rapidly in recent years in China and other emerging markets, the internal study said the U.S. market is still exceptionally vibrant and growing.

"The so-called emerging markets are really 'catch-up' markets," the study said. "They are merely closing the gap, not yet on the frontier."

The study forecasts the U.S. market for new-vehicle sales growing from about 17 million this year to 18 million vehicles by 2010 and 19 million by 2015.

However, the study notes that GM has lost market share since 1999 in every car-buying age group in the United States.

In a chart titled "GM's Share by Generation," the study said that the automaker's share of the "pre-boomer" market -- people born before 1946 -- fell from 32 percent in 1999 to 27 percent in 2005.

Similarly, the company's share of "boomer" buyers -- born between 1946 and 1964 -- dropped from 26 percent to 24 percent, and its share of "post-boomer" consumers -- born after 1964 -- slid from 25 percent to 21 percent.

LaNeve said GM is under no illusions about its need to develop more appealing products for older and younger consumers alike. "We have to improve consideration across all ages," he said.

Targeting the West Coast

GM is also placing a higher priority on building its share on the East and West coasts, where Asian rivals such as Toyota Motor Corp. are thriving. LaNeve said that GM's Saturn and Hummer brands have been particularly effective in luring consumers away from foreign makes.

A summary page of the internal study urges GM to anticipate, rather than react, to changes in the U.S. market, and closes with a quote from retired hockey great Wayne Gretzky. "The key to winning is getting to where the puck is going next," the study said. "Where is the next profit?"

Overall, Ballew said the purpose of such a self-critical report is to give GM another tool to improve itself.

"To paraphrase an old Confucius saying I can handle any problem that I know about," Ballew said. "It's the ones that I don't know about that get me in trouble."

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














© Copyright 2006 The Detroit News. All rights reserved.





GM-Europe projects higher profits on models for '07

Wednesday, December 06, 2006
GM-Europe projects higher profits on models for '07
Rising sales in Russia, expected to increase about 60,000 units, should help automaker.
Christoph Rauwald / Dow Jones Newswires






BOLOGNA, Italy -- The head of General Motors Corp.'s European division said Tuesday that the group is aiming for higher profits in 2007, boosted in part by rising sales in Russia and demand for its revamped Opel Corsa model.

"We want to earn more in 2007 and the new Corsa should help us to do so," Carl-Peter Forster told reporters at the Bologna Motor Show.

He said that sales in Russia -- a market that many European automakers, including DaimlerChrysler AG and Volkswagen AG, among others, are targeting -- are expected to increase to about 180,000 next year, up from the approximate 120,000 sold so far this year.

As for the rest of Europe, he said the western European auto market was likely to show "only little growth" in 2007.

Previously, Zurich, Switzerland-GM Europe has said that overall European vehicle sales are likely to hold steady at around 1.6 million this year.

The company is set to turn a profit, after six years of losses, with earnings of $196 million in the first nine months of 2006 compared to a $183 million loss a year ago. The increase is the result of lower costs and higher revenue per car.

GM revamps hatchback

Detroit-based GM lost $10.6 billion last year, but its losses are narrowing as it benefits from cost cuts and new products.

The company lost $115 million in the third quarter of this year.

The company is unveiling a revamped version of its Opel Hastra hatchback at the auto show, which boasts some design tweaks and updated powertrains.

The car is set to go on sale across Europe in February.

Speaking to reporters at the Motor Show, Forster said that key Asian currencies like the Japanese yen are currently significantly undervalued compared to the euro, which is beneficial for Asian auto exports to Europe.

Forster said he thinks that there are "also political motifs behind this," adding that some currencies "are kept artificially low."

As a result, Forster sees no need to reduce or even give up the current European import duties.

"We shouldn't let ourselves be lead around by the nose," Forster said.




















© Copyright 2006 The Detroit News. All rights reserved.

Delphi-GM talks moving forward

Saturday, December 02, 2006
Delphi-GM talks moving forward
Draft agreements between parts supplier, former parent company have lawyers optimistic.
David Shepardson / Detroit News Washington Bureau







WASHINGTON -- Delphi Corp. and former parent General Motors Corp. have exchanged "draft agreements" during intense negotiations to help the Troy-based auto parts supplier emerge from bankruptcy, court documents show.

A 110-page report filed late Thursday in U.S. Bankruptcy Court in New York sheds significant light on the mostly secret multibillion dollar negotiations between the companies and creditors that take place in a Manhattan law office.

"The parties have exchanged various draft agreements and term sheets, which taken together, have advanced negotiations considerably," Delphi lead bankruptcy lawyer Jack Butler wrote in the report. "The framework agreement remains a work in progress."

GM has been trying to reach an agreement with Delphi and the supplier's creditors over the size of the automaker's obligation to its former parts unit and its workers.

GM has said it could be between $6 billion and $7.5 billion. An agreement will likely include a guaranteed amount of GM business for Delphi for a fixed period. GM has also asserted billions in claims against Delphi.

GM, Delphi and Delphi's creditors' committee have met repeatedly at the Skadden Arps law office since Aug. 3 to try and reach a global settlement.

Skadden Arps lawyers have spent more than 3,000 hours on the negotiations and have billed Delphi about $2.5 million.

GM spokeswoman Renee Rashid-Merem said a resolution remains a top priority. "The parties are all working together" she said.

She noted as a sign of progress that U.S. Bankruptcy Judge Robert Drain has repeatedly delayed a hearing on Delphi's request to cancel its union contracts and its unprofitable contracts with GM in order to give the parties more time.

"These are very spirited and very productive negotiations and we're optimistic," she said.

GM CEO Rick Wagoner said last month that the company has already set aside $6 billion for settling its issues with Delphi, including pension obligations.

A deal with Delphi could help GM avoid getting caught in a labor strike at Delphi over the supplier's wage cut demands as it tries to reduce costs and emerge from Chapter 11 bankruptcy. A strike at Delphi could cripple GM plants.

Delphi is also at work on a 2006-2010 restructuring business plan looking at various scenarios.

Delphi wants to close 21 of its 29 U.S. plants and dramatically shrink its U.S. workforce.

It also needs "GM's financial support for Delphi's legacy and labor costs and to ascertain GM's business to commitment to (Delphi)," the filing said.

Delphi is in discussions with GM and others -- including hedge funds -- to help shore up its underfunded pension fund.

The talks include a group led by hedge fund Appaloosa Management LP and Harbinger Capital Partners along with several other hedge funds, which are private equity investment groups.

Delphi expects to freeze its pension fund for all hourly and salaried workers in the first half of 2007, the filing said

By Jan. 1, more than 20,000 hourly employees will have retired or accepted buyouts from Delphi, the company said. About 5,000 additional hourly workers were transferred back to GM. It also is eliminating 8,500 salaried jobs.

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

















© Copyright 2006 The Detroit News. All rights reserved.

Thursday, December 28, 2006

Toyota is poised to topple GM

Saturday, December 23, 2006
Itsuo Inouye / Associated Press
Toyota is poised to topple GM
Automaker is treading lightly as it creeps up on GM, saying it is more concerned with results.
Martin Fackler / New York Times






TOKYO -- Toyota Motor Corp. said Friday it plans to sell 9.34 million vehicles next year, a figure that analysts said would put it ahead of troubled General Motors Corp. as the world's largest auto company.

Toyota reported global group sales this year of 8.8 million cars and trucks, below GM's 2006 sales forecast of 9.2 million vehicles. But the figures released Friday showed the two rival car giants on starkly different trajectories, with Toyota expecting to add a half million vehicle sales next year, at a time when GM is shuttering plants and laying off workers.

Surpassing GM would be a crowning achievement for Toyota, a company that got its start in the 1930s by reverse-engineering GM and Ford cars, and that spent decades catching up with Detroit. It would also end GM's 81-year reign over the global auto industry, and mark another step in the rise of Asian carmakers.

However, becoming the global leader would also have its pitfalls for Toyota, analysts warned. The Japanese automaker could become a victim of its own success and follow GM's decline if it grows complacent, or lets quality control slip amid its rapid expansion, analysts said. Being at the top could also make Toyota a fatter target for critics, particularly in Congress, where the company's rise could fan a protectionist backlash, analysts said.

"Does being No. 1 matter? It matters for GM, and for America," said Hirofumi Yokoi, an auto analyst at CSM Asia. "It becomes a political issue when America gets passed in a core industry. Toyota will have to be even more sensitive and cautious in the U.S. market."

Toyota's emergence as No. 1 would also realign the global auto industry. The Japanese car company would become the new industry benchmark, say analysts, and one that would be tough to match. While GM's strength in recent years has been its finance arm, Toyota's success is grounded in its formidable manufacturing prowess. As the world's most profitable carmaker, it also has the cash to invest heavily in new technologies and products, analysts said.

Analysts also said reaching the top would not exhaust Toyota's opportunities for growth. They said Toyota will continue to gain in the American market, where higher gas prices have increased the popularity of smaller, more fuel-efficient vehicles. They said Toyota was expanding in developing markets, particularly China, and into alternative-energy vehicles, like hybrid and fuel-cell technologies.

Toyota's rise would also prove a victory of sorts for its unique corporate culture, the so-called Toyota Way, which is rooted in an obsession with craftsmanship and constant improvement, or "kaizen." Analysts said the Toyota Way would likely become enshrined as the industry's gold standard, and the model to mimic or surpass for new challengers from South Korea and China.

"This proves that the Toyota Way is more than just an odd, quirky theory," said Chester Dawson, author of "Lexus: the Relentless Pursuit."

"Being No. 1 means Toyota now sets the standards that everyone has to beat," he said.

For Toyota, the immediate concern appears to be avoiding any political fallout from passing GM. Friday morning, Toyota's president, Katsuaki Watanabe, treaded lightly around the issue of whether his company would overtake GM, while announcing at least one new factory in North America. At a press conference in Nagoya, near his company's Toyota City headquarters, Watanabe said passing GM "is just a question of results," and not a significant event for Toyota, according to Bloomberg News.

Watanabe said that Toyota will add a factory in Woodstock, Ontario, in 2008, its second in the town. He said Toyota is also considering another factory somewhere in North America, the company's ninth in the region. Toyota has been building plants in the United States since the 1980s, partly to blunt trade criticism.

Last month, Watanabe presided over the opening of a $1.28 billion pickup truck plant in San Antonio. The expanded production will help Toyota to meet U.S. sales gains without increasing exports from Japan, a Toyota executive vice president, Tokuichi Uranishi, said, according to Bloomberg News.

Watanabe also addressed Toyota's growing number of recalls this year, which have tarnished the company's reputation for sterling quality. In Japan alone, Toyota has recalled 1.2 million vehicles this year, prompting the transport ministry to order the company to improve quality control.

"There will be no growth without quality," Watanabe told reporters, according to the Associated Press. "We'd like to continue our efforts to make good products that win support from our customers."

Analysts say the growing number of defects could seriously undermine the company in the long run, especially if they are a symptom that Toyota is losing its grip on quality control as it charges forward with expansion.












© Copyright 2006 The Detroit News. All rights reserved.

phi's fraud settlement OK'd

Friday, December 01, 2006
Delphi's fraud settlement OK'd
Judge gives approval to agreement with auto parts supplier, former company executives.
David Shepardson / Detroit News Washington Bureau






NEW YORK -- A federal bankruptcy judge on Thursday approved agreements to settle accounting fraud charges against bankrupt auto parts supplier Delphi Corp. and six individuals, including the company's former chief financial officer.

U.S. Bankruptcy Judge Robert Drain said the settlement, which didn't require Delphi to pay any fine, was "fair and equitable and in the best interest" of the Troy-based supplier.

Under its agreement, Delphi is subject to contempt charges if it violates its decree with the U.S. Securities and Exchange Commission through 2010. The settlement may also require the company to submit to more stringent accounting reporting procedures than other companies, said Delphi bankruptcy lawyer Jack Butler.

Drain also ruled that former Delphi executives accused of wrongdoing by the SEC will get at least some of their mounting legal bills paid by Delphi insurance funds, which could also be used to settle lawsuits brought by shareholders and retirees because of the accounting issues.

Drain declined to order Delphi to directly pay legal bills for former executives, saying that is up to the supplier, but he capped the amount the executives can initially seek at $5 million.

"We're pleased with the judge's ruling," said Tom Cranmer, a lawyer for Delphi's former treasurer and senior vice president John Blahnik, who is among those charged by the SEC.

Separately, Drain delayed until February a decision on whether to approve nearly $100 million in legal, accounting and consulting fees and expenses racked up by Delphi in the first eight months since its October 2005 bankruptcy filing.

According to court records, the company's total fees through Sept. 30 are at least $114 million.

Execs named in SEC suit

Blahnik, former Delphi CEO JT Battenberg III, former Chief Financial Officer Alan Dawes and six other former Delphi executives were named in an Oct. 30 civil suit by the SEC.

They were accused of taking part in widespread accounting fraud that drastically overestimated the company's cash flow and income, especially in 2000 and 2001.

Also named were four other individuals, including three from EDS Corp., which had contracts with Delphi.

Six of the 13 people charged, including Dawes, settled and agreed to pay fines and costs totaling $1.4 million. Six former Delphi executives have not settled. The SEC will likely formally serve those executives with court papers this month.

Delphi also faces a number of shareholder and retiree lawsuits.

Lawyers for Delphi, former parent General Motors Corp. and Delphi's unions, including the United Auto Workers, met behind closed doors with Drain Thursday to update him on the status of the company's union contracts and other issues.

Delphi wants to void its labor contracts and impose concessions to help cut costs.

"We're continuing to make progress," Butler said.

Delphi shrank its losses dramatically in October as it improved its balance sheet.

According to its most recent monthly report, filed Thursday in U.S. Bankruptcy Court, Delphi lost $82 million in October, down from $673 million in September. The company has lost $4.4 billion so far this year.

Delphi hopes to emerge from bankruptcy next year after it sheds 21 of its 29 plants and more than 20,000 workers.

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














© Copyright 2006 The Detroit News. All rights reserved.

Court to consider Delphi's $98M bill

Thursday, November 30, 2006
Court to consider Delphi's $98M bill
Court to rule on legal, accounting fees supplier ran up in first eight months of Chapter 11.
David Shepardson / Detroit News Washington Bureau





WASHINGTON -- A federal bankruptcy judge in New York will consider today whether to approve most of $98 million in legal, accounting and consulting fees and expenses racked up by Delphi Corp. during its first eight months under Chapter 11 protection.

Through May 31, the firms want $92 million in fees and $6.1 million in expenses. At that rate, Delphi's bankruptcy could hit $200 million by the time it hopes to exit next year.

On Wednesday, Delphi said it would delay consideration of legal and accounting bills filed by two law firms and two accounting firms until March 22. But it will go forward with the bills for 28 outside firms.

Delphi has paid 80 percent of the fees and all of the expenses. Despite objections to some bills and expenses, Delphi's fee review committee asked that they be approved. The fee panel questioned whether continuing its review was worth the time and money.

U.S. Bankruptcy Judge Robert Drain will also be faced with several issues stemming from the civil complaint filed Oct. 30 by the Securities and Exchange Commission that found Delphi and nine former executives had committed accounting fraud in misleading investors and others about the company's financial shape, especially in 2000 and 2001.

Delphi settled the SEC's complaint without being required to pay a fine and a federal district court judge in Detroit approved in Nov. 14. Drain must decide whether to OK Delphi's settlement.

Drain must also decide whether to order Delphi's insurance carrier to continue to pay the legal bills of former executives accused of misconduct in the accounting fraud probe of the Troy-based auto parts supplier. The policy has a $5 million cap for advancements.

Five of the ex-executives have filed a request for legal payments.

Delphi, which objects to the requests, noted that on June 7 -- one day after The Detroit News reported that the SEC had formally notified former executives that they were likely to face civil charges -- Delphi's compensation committee halted the payment of legal bills to three former executives. In February, it had halted payment to seven others. Delphi board member John Opie denied that SEC or other governmental pressure was a factor in its decision.

Lawyers for some of the executives haven't been paid in more than a year and others checks from Delphi have bounced.

Without getting reimbursed by Delphi's insurance carrier, some former executives may be unable to retain their lawyers. They also face the ongoing criminal investigation; The News reported last week that a decision on whether a criminal case will be filed could come by January.

Delphi's legal bills have only been disclosed through May 31.

By the end of today, all of Delphi's law firms, accountants and consultants to Delphi must file bills for the third four-month period -- through Sept 30. One consultant, FTI, submitted its $8 million bill for that period early.

Two more controversial measures have been again delayed until Jan. 31. Delphi wants to implement a "key employee compensation program" that the UAW and others oppose. Separately, equity holders want to authorize the filing of claims against GM for alleged improper pressure against its former parts unit.













© Copyright 2006 The Detroit News. All rights reserved.

GM boosts European Chevrolet production

Wednesday, November 29, 2006
GM boosts European Chevrolet production
Company wants to build on a 28% surge in sales outside the U.S. with a plant in Warsaw.
Chad Thomas / Bloomberg News





DETROIT -- General Motors Corp., the world's largest automaker, plans within two years to begin producing three Chevrolet models at a plant in Warsaw as the company seeks to boost European sales.

The Detroit automaker will hire UkrAvto, a Ukrainian company that owns the factory, to build the cars under license, Marc Kempe, a GM spokesman, said in a telephone interview Tuesday.

The plant will produce the Aveo sedan beginning next fall and two new hatchbacks in 2008. GM expects the factory to build 150,000 cars in the "mid-term," the company said in an e-mail.

Boosting sales outside North America is key to CEO Rick Wagoner's plan to overcome the 8.8 percent drop in U.S. purchases from 2000, when he became chief, to 2005. While GM was sliding in the United States, Wagoner engineered a 28 percent sales surge abroad.

Last year, for the first time, GM sold more cars and trucks outside the United States than inside it.

GM is introducing new versions of its European models, including the Opel Corsa small car, to counter falling sales and win back customers lost to competitors Volkswagen AG and PSA Peugeot Citroen.

GM also has used third-party contractors to build its cars at other European plants. A factory in Kaliningrad, Russia, is operated by the Russian company Avtotor, and produces the Hummer H3 and Chevrolet Aveo, Lacetti, Rezzo and Evanda models.

GM also broke ground on a plant near of St. Petersburg, Russia. Avtotor also builds cars for BMW AG and Kia Motors Corp.
















© Copyright 2006 The Detroit News. All rights reserved.

Wednesday, December 27, 2006

Toyota set to lift crown from GM

Toyota set to lift crown from GM
By Martin Fackler
Friday, December 22, 2006
TOKYO





Toyota Motor said Friday that it planned to sell 9.34 million vehicles next year, a figure that analysts said would be big enough to put it ahead of the troubled General Motors as the world's largest auto company.

Toyota reported global group sales this year of 8.8 million cars and trucks, below GM's forecast for 2006 sales of 9.2 million vehicles. But the figures Friday showed the two rival car giants on starkly different trajectories, with Toyota expecting to add a half million in vehicle sales in 2007, at a time when GM is closing plants and laying off workers.

Surpassing General Motors would be a crowning achievement for Toyota, a company that got its start in the 1930s by reverse-engineering GM and Ford cars, and that spent decades catching up with Detroit. It would also end GM's 81-year reign over the global auto industry, and mark another step in the rise of Asian carmakers.

But becoming the global leader would also have its pitfalls for Toyota, analysts warned. The Japanese automaker could become a victim of its own success and follow GM's decline, they said, if it grows complacent or lets quality control slip amid its rapid expansion. Being at the top could also make Toyota a fatter target for critics, particularly in the U.S. Congress, where the company's rise could fan a protectionist backlash, analysts said.

"Does being No. 1 matter? It matters for GM, and for America," said Hirofumi Yokoi, an auto analyst at CSM Asia. "It becomes a political issue when America gets passed in a core industry. Toyota will have to be even more sensitive and cautious in the U.S. market."

Toyota's emergence as No.1 would also realign the global auto industry. The Japanese car company would become the new industry benchmark, analysts said, and one that would be tough to match. While GM's strength in recent years has been its finance arm, Toyota's success is grounded in its formidable manufacturing prowess. As the world's most profitable carmaker, Toyota also has the cash to invest heavily in new technologies and products.

Analysts also said that reaching the top would not exhaust Toyota's opportunities for growth. They said the company would continue to gain in the American market, where higher gasoline prices have increased the popularity of smaller, more fuel-efficient vehicles. They said that Toyota was expanding in developing markets, particularly China, and into alternative-energy vehicles, like hybrid and fuel-cell technologies.

Toyota's rise would also prove a victory of sorts for its unique corporate culture, the so-called Toyota Way, which is rooted in an obsession with craftsmanship and constant improvement, or kaizen. Analysts said the Toyota Way would likely become enshrined as the industry's gold standard and the model to mimic or surpass for new challengers from South Korea and China.

"This proves that the Toyota Way is more than just an odd, quirky theory," said Chester Dawson, author of the book "Lexus: the Relentless Pursuit." "Being No.1 means Toyota now sets the standards that everyone has to beat."

For Toyota, the immediate concern appears to be avoiding any political fallout from passing GM. On Friday, Toyota's president, Katsuaki Watanabe, treaded lightly around the issue of his company's overtaking GM, while announcing it may open another factory in North America. At a press conference in Nagoya, near his company's Toyota City headquarters, Watanabe said passing GM "is just a question of results," and not a significant event for Toyota, according to Bloomberg News.

Toyota is also considering another factory somewhere in North America, Watanabe said. The company just opened a $1.28 billion pickup truck plant in San Antonio, Texas last month, and has another factory under construction in Woodstock, Ontario slated to open in 2008. Toyota has been building plants in the United States since the 1980s, partly to blunt trade criticism. The expanded production will help Toyota to meet U.S. sales gains without increasing exports from Japan, a Toyota executive vice president, Tokuichi Uranishi, said.

Watanabe also addressed Toyota's growing number of recalls this year, which have tarnished the company's reputation for sterling quality. In Japan alone, Toyota has recalled 1.2 million vehicles this year, prompting the Transport Ministry to order the company to improve quality control.

Analysts said the growing number of defects could seriously undermine the company in the long run.

"Now that it's Toyota's turn on top of the industry," said CSM's Yokoi, "Toyota has to figure out how to keep from following GM into decline."

So far, the defect problems have not slowed Toyota's pace of growth. The company said Friday that it and its affiliates expected to build 9.42 million cars and trucks next year, up from 9.04 million this year. The Toyota group includes two subsidiaries, the truck maker Hino Motors and a maker of compact cars, Daihatsu.

Toyota also gave a regional breakdown for its sales forecast for next year of cars built by the parent company that bear the Toyota and Lexus brands. The largest market will remain the United States, where sales are expected to rise 6 percent, to 2.68 million vehicles.

The company also said it expected a 9 percent rise in Europe and a 15 percent gain in Asia, including China.

Some analysts noted with irony that being No.1 had not helped the current title holder, GM, which posted $10.6 billion in losses last year.

"Being on top won't change anything in terms of share price or earnings," said Atsushi Kawai, an auto analyst at Mizuho Investors Securities in Tokyo. "In fact, if you look at who's been No.1 until now, you see that there really aren't many benefits at all."







Copyright © 2006 the International Herald Tribune All rights reserved

Delphi temps get hired

Wednesday, November 22, 2006
Delphi temps get hired
Under deal with UAW, workers employed to replace those who took buyouts will get permanent jobs.
Bryce G. Hoffman / The Detroit News




Thousands of temporary workers Delphi Corp. hired at lower wages and benefits to replace UAW members taking buyouts will become permanent employees under an agreement reached Tuesday between the bankrupt supplier and the union.

United Auto Workers President Ron Gettelfinger announced that a deal was finalized during the second of two live online question-and-answer sessions Tuesday with union members.

Gettelfinger also said the UAW will hold the line next year in contract negotiations with Detroit automakers, which are expected to be difficult as the struggling companies try to win more cost cuts and the union works to preserve jobs, wages and benefits.

"It's too early to predict the outcome of any negotiations, but it is not our intention to go backwards in the '07 bargaining," Gettelfinger said. "There is no use in publicly discussing the strategies we will employ."

The UAW must protect the controversial jobs bank programs, Gettelfinger said. The programs have become an icon for union excesses because they require General Motors Corp., Ford Motor Co. and DaimlerChrysler AG's Chrysler Group to pay idled workers after unemployment benefits run out, even if there is no work for them.

Thousands of employees have effectively been paid not to work, a practice Wall Street has ridiculed.

The contracts between the UAW and the Detroit Three expire in September 2007. Gettelfinger said Tuesday that talks on a new labor agreement will begin in July. The union will decide in August which automaker to negotiate with first, he said, adding that he will be seeking another four-year deal.

Gettelfinger said details of the new agreement on making temporary Delphi workers permanent will be released today. But the terms were outlined in a memo sent Tuesday to officials at UAW locals across the country.

Skip Dziedzic, president of UAW Local 1866 in Oak Creek, Wis., said temporary workers hired on or before Nov. 20 will become permanent, except for contract or temporary workers who accepted buyout offers from Delphi or GM, Delphi's former parent.

"We've already received a number of calls from temporary workers thanking us," he said. "We've been waiting for this a long time."

About 250 of 400 workers at his plant are temporary.

Thousands of temporary workers have been hired to replace some 12,400 Delphi employees who took buyout packages earlier this year. They have been ineligible for most of the benefits enjoyed by permanent workers the UAW represents. Most are making $14 an hour -- about half what permanent workers make doing the same jobs.

The new accord didn't stop Gettelfinger from lashing out at Delphi Chairman and CEO Steve Miller and vowing to continue the union's struggle against the supplier.

"The battle with Delphi is far from over," he declared. "In the final analysis, our membership will have the last word. Eventually, this process will require them to meet with our union."

Delphi is operating under Chapter 11 bankruptcy protection and has asked the bankruptcy judge to void its contracts with the UAW and other unions. Bankruptcy Judge Robert Drain has scheduled another meeting between the parties on Nov. 30 and says he will rule on Delphi's request on Jan. 31.

Gettelfinger urged Delphi workers to keep the faith.

"I know this is very frustrating and has been since Miller and his cronies came on board July 1, 2005, with the sole intent of putting this company in bankruptcy," he said. "I hope you find some comfort in knowing that without a union these greedy executives could and would trample on workers with no concern."

Delphi did not respond to requests for comment on the temporary workers agreement with the UAW. The company said earlier Tuesday that it would not comment on discussions between union members and their leaders.

Delphi, the UAW and GM have been trying to work out a deal to lower wages for workers who did not sign up for buyouts or take early retirement.

"We are still committed to reaching a consensual agreement," Delphi spokeswoman Claudia Piccinin said Tuesday.

Gettelfinger said the company has been unwilling to engage the union. "Our union has been available to meet with the corporation at any time, day or night," he said. "But honestly, at this time, there has been very little discussion."

Gettelfinger was quick to dismiss recent comments by GM Chairman Rick Wagoner that suggested progress is being made.

"The discussions Mr. Wagoner is referencing are just that -- discussions between Delphi and GM," Gettelfinger said.

However, Troy Clarke, president of GM's North American division, insisted progress is being made on the Delphi front.

"We're moving forward and all parties are addressing the issues with an appropriate sense of urgency," Clarke said Tuesday.

Staff Writer Sharon Terlep contributed to this report. You can reach Bryce Hoffman at (313) 222-2443 or bhoffman@detnews.com.








© Copyright 2006 The Detroit News. All rights reserved.

GM credit talks boost price of Delphi shares



Tuesday, November 28, 2006
GM credit talks boost price of Delphi shares
Investors believe the bankrupt auto parts supplier will be able to limit in liabilities.
Steven Church / Bloomberg News






NEW YORK -- Delphi Corp. shares have climbed sevenfold this year because of speculation the bankrupt auto supplier will limit billions of dollars in claims by former owner General Motors Corp., two consultants said.

Appaloosa Management LP, a hedge fund, has become Delphi's biggest shareholder since the October 2005 bankruptcy filing. The shares, now trading at around $2, might top $14 if Delphi were to succeed in shedding GM's claims entirely, bankruptcy lawyer David M. Powlen said Monday at a conference in New York.

"Appaloosa has bet that GM's claims are not legitimate," Shaun K. Donnellan, chief executive officer of turnaround company Glass & Associates, said at the Distressed Investing 2006 Conference. Appaloosa President David Tepper didn't immediately return a call seeking comment.

Delphi shares have climbed from 29 cents at the start of the year, the biggest gain among the five major U.S. auto-parts makers that have filed for bankruptcy since the start of 2005. The companies, including Dana Corp. and Dura Automotive Systems Inc., blamed rising raw-material costs and slowing production by U.S. automakers GM and Ford Motor Co.

Delphi spokesman Lindsey Williams declined to comment. GM officials didn't immediately return messages seeking comment.

Shares of Troy-based Delphi fell 1 cent to $2.16 in over-the-counter trading Monday, valuing the company at $1.21 billion. Appaloosa, based in Chatham, New Jersey, said in a regulatory filing in August that it owned 52 million Delphi shares, or 9.3 percent of the total outstanding.

Delphi and GM have been trying to negotiate a restructuring plan for months. A lawyer for Detroit-based GM, the world's largest automaker, said in April that Delphi owes the company more than $4 billion. Delphi creditors have claimed GM should pay Delphi, its largest auto-parts supplier, $26 billion.














© Copyright 2006 The Detroit News. All rights reserved.

Tiger rolls out Enclave at L.A. bash

Wednesday, November 29, 2006
Tiger rolls out Enclave at L.A. bash
Golf great helps GM introduce new crossover in L.A.; vehicle is set to hit showrooms in June.
Sharon Terlep / The Detroit News






PASADENA, Calif. -- With Tiger Woods behind the wheel and General Motors Corp. CEO Rick Wagoner riding shotgun, the vehicle that's supposed to revive Buick made a much-anticipated debut Tuesday night in advance of the L.A. Auto Show.

The Buick Enclave is one of the first tangible returns of $3 billion GM committed to new products two years ago.

The automaker is counting on the crossover vehicle to revive a brand that has been losing customers for years.

"This is a revitalization of the Buick brand," Wagoner said at a media event to introduce the Enclave.

Wagoner said the Enclave is part of Buick's overall strategy to cut back the number of models it sells and the number of vehicles it sells to high-volume fleets, in favor of a smaller, more profitable and higher-priced inventory.

Buick pitchman Woods said he knew GM was developing a vehicle like the Enclave and that played into his decision to pitch the brand.

Wednesday's bash was all about symbolism. Playing host was the Art Center of College of Design, just outside of Los Angeles, one of many design schools that help make the L.A. area a hotbed of trendy vehicle design.

L.A. is one of the coast cities where GM is looking to gain ground from foreign rivals.

In the cavernous auditorium where the event was held, floor-to-ceiling images of the Enclave's gear shift, serpentlike mirrors and bold grille surrounded the room. Woods drove the Enclave through a video wall emblazoned with the Buick emblem.

It was Woods' first showing at a vehicle debut.

"This was part of the reason I wanted to sign on to Buick," Woods said.

GM has not yet set a price for the Enclave. Production starts in April at the new $1 billion Delta Township plant near Lansing. Buick General Manager Steve Shannon said the vehicle will likely hit showrooms by June 1.

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





















© Copyright 2006 The Detroit News. All rights reserved.

Tuesday, December 26, 2006

Carmakers win trade battle

Friday, December 15, 2006
Carmakers win trade battle
Lifting of steel tariffs could mean bigger profits
David Shepardson / Detroit News Washington Bureau




WASHINGTON -- Automakers won a surprise victory Thursday as the U.S. International Trade Commission lifted most of the 13-year-old tariffs on imports of a high-grade steel used in cars -- a move that should boost ailing Detroit automakers by lowering prices. In a 4-2 vote, the commission lifted tariffs on flat-rolled corrosion-resistant steel from Canada, France, Australia and Japan, but sided with the steel industry and kept them on imports from South Korea and Germany for another five years.

In an unusual display of solidarity, General Motors Corp., Ford Motor Co., DaimlerChrysler AG, Toyota Motor Corp., Nissan Motor Co. and Honda Motor Co. jointly worked to end the duties, which they argued had cost them more than $3 billion since 2003.

"This takes the cork out of the bottle," said Stephen E. Biegun, Ford's vice president for International Governmental Affairs, who noted the action will lead to a more competitive market.

"All of these duties are outdated and hurt American manufacturing competitiveness and U.S. jobs, while needlessly helping a steel industry that is now profitable and healthy," Biegun said.

Automakers make case

In making their case, automakers pointed to steel shortages in the United States and a 68 percent price increase over the past two years, fueled by tariffs as high as 35 percent on imports, depending on the country of origin.

Automakers also noted the 12 percent average profit of the largest steel companies after they underwent restructuring. In contrast, GM and Ford have been losing money and are cutting jobs and plants. Because of tight competition, automakers have been unable to pass on higher steel prices by raising vehicle prices.

The tariff rollbacks will especially help smaller auto parts makers, who have often faced shortages, forcing them to pay higher prices on the spot market.

Corrosion-resistant steel is primarily used in auto bodies, said Mark S. McConnell, a trade lawyer for the auto companies. "That's why cars don't rust the way they used to," he said.

In 1993, the commission, a quasi-federal U.S. agency that regulates trade, slapped anti-dumping duties on corrosion-resistant steel from the six countries to stop a flood of low-priced imports into the U.S. market that was driving prices so low U.S. steelmakers could not compete.

There are 160 U.S. tariffs on different types of steel, but corrosion-resistant steel is by far the most important to the auto industry, McConnell said.

The average automobile uses about 1,000 pounds of corrosion resistant steel for a per-vehicle cost of about $400. A 10 percent price cut could save the auto industry $850 million annually.

Ford buys about 5 million tons of steel worldwide each year, about 60 percent of it corrosion-resistant steel for U.S. operations. GM buys about 10 million tons.

Debate gets heated

The steel and auto industries have been in a war of words since an October trade commission hearing on whether to lift the duties, lashing out at each other in print, over the airwaves and in conference calls.

Steelmakers argued the tariffs are needed so they can remain competitive. They said a price cut would only marginally reduce the cost of building a car but could bankrupt steelmakers.

An ad-hoc industry group called "Stand Up for Steel" ran ads headlined "Don't Let America's Steelworkers Get Run Over by the Auto Companies." Automakers insisted they want a healthy steel industry and have no plans to significantly increase the amount of steel they import.

Charles Rice, a spokesman for U.S. Steel, said the industry likely will appeal the commission's ruling, and praised the decision to leave duties in place for South Korea and Germany.

The countries where tariffs on corrosion-resistant steel were lifted "said they have no interest in flooding the market," Rice said. "We're going to have to wait and see if they keep their word."

Steelmakers pointed to the fact that the United States imported 3.8 million tons of all types of steel in October, up 45 percent over 2005.

"It's not a fair playing field," Rice said. "We can't compete with the government of China. We're just asking for the trade laws on the books to be enforced."

Korean and German steel imports amount to about 2 percent of U.S. steel.

Forming a united front

Michigan Republicans praised the tariff rollbacks, while Democrats sidestepped the issue, likely because it pits two powerful labor unions against each other -- the United Auto Workers and the United Steelworkers.

"We did succeed in removing several significant protectionist policies that pit steelworkers against autoworkers," said U.S. Rep. Mike Rogers, R-Brighton. "Making the change will make it cheaper to build cars in Michigan."

The commission will issue a written opinion in January. The steel industry will then have 30 days to appeal to the U.S. Court of International Trade in New York.

Josephine Cooper, Toyota's global vice president and chief lobbyist in Washington, said the fact that all of the major automakers were on the same side made a "huge difference in the receptivity to our argument."

The united attack sent a strong signal that the tariffs had a major impact on all automakers, she said, and could spur a reconsideration of other tariffs, such as duties on Brazilian ethanol and auto parts such as bearings.

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












© Copyright 2006 The Detroit News. All rights reserved.

Hummer builder will cut 160 jobs

Wednesday, November 29, 2006
Hummer builder will cut 160 jobs
AM General forced to trim H2 production by GM, which wants to stress sales of the H3.
Associated Press







MISHAWAKA, Ind. -- A slowdown in production of the Hummer H2 is prompting AM General Corp. to cut 160 jobs by the end of the year.

The job cuts were needed because General Motors Corp. has ordered that fewer H2 vehicles be produced next year, said Craig Mac Nab, a spokesman for AM General. The layoffs will leave the H2 plant with between 300 and 400 workers -- less than half the work force it had a few years ago.

As AM General is cutting production of the civilian H2, it has had trouble keeping up with orders for the military Humvee that is built at an adjacent factory in the city just east of South Bend.

Mac Nab said some of the workers being laid off from the Hummer plant could be hired to build the Humvees.

"We will try to absorb them into the military business," Mac Nab said. "But as I sit here, we can't say when or how many."

Sales of the H2 SUVs by GM have fallen amid higher gasoline prices as well as the introduction last year of the more affordable Hummer H3, which is built in Shreveport, La.

Sales fell from 35,000 in 2003 to about 17,500 this year, said Alex Rosten, an analyst for the automotive Web site Edmunds.com.

Rosten said high gas prices might impact H2 sales to some degree, but what hurts the vehicle most is its market-limiting price tag. He said the average H2 sells for about $59,712, while the average price for a large SUV is $39,816 and the average price for a luxury SUV is $49,065.













© Copyright 2006 The Detroit News. All rights reserved.

Sell-off narrows focus to GM recovery

Saturday, December 02, 2006
Sell-off narrows focus to GM recovery
Stake sale sheds specter of Kerkorian, puts fate of automaker on Wagoner, turnaround strategy.
Ken Thomas / Associated Press






WASHINGTON -- Billionaire investor Kirk Kerkorian's decision to unload his large stake in General Motors Corp. removes -- at least for now -- the automaker's leading foil and focuses attention on the company's turnaround plan, analysts said Friday.

Kerkorian's investment company, Tracinda Corp., on Thursday reportedly dumped the last block of what was once a nearly 10 percent share of the world's largest automaker to Bank of America, a longtime lender to Kerkorian. Neither GM nor Tracinda would comment on that report.

Bank of America spokeswoman Melissa Fox on Friday confirmed the bank's completion of a transaction involving 28 million shares of GM stock, but declined to elaborate.

Kerkorian had tried to spur changes at the world's biggest automaker during the past 18 months and raised questions about whether its management was moving swiftly enough to restore profitability.

Analysts said his stock sell-off tempers a source of distraction for management and shift attention squarely on how the automaker executes its recovery. GM Chairman and Chief Executive Rick Wagoner has tried to gain some financial flexibility as the company struggles to compete with Asian automakers who have eroded its market share at home.

"Now it's live or die by Wagoner and GM's management plan," said Kevin Tynan, an automotive analyst with New York-based Argus Research. "So if it doesn't work ... now there's nobody to blame."

Jonathan Steinmetz, an analyst with Morgan Stanley, said in a note to investors that the removal of a "change agent" was a negative development for the company and it was not coincidental that "the pace of change at GM picked up concurrent with Tracinda's involvement."

"Having somebody chasing after you often prompts you to run faster than you otherwise would," he wrote.

GM shares rose 46 cents to close at $29.69 Friday on the New York Stock Exchange. Its shares have traded in a 52-week range of $18.33 to $36.56.

Kerkorian, the 89-year-old former owner of movie maker MGM, tried to foster changes at GM, where he helped install Tracinda adviser Jerome York, a former Chrysler Corp. executive, on the company's board of directors and successfully proposed the automaker cut its dividend in half.

But other concepts, such as selling the company's Saab and Hummer brands, were dismissed and Kerkorian's hopes to ally GM with Nissan Motor Corp. of Japan and Renault SA of France failed to materialize.

York resigned from the board in October shortly after GM jettisoned talks over a three-way alliance. The executive cited "grave reservations" about the company's ability to compete with Japanese automakers and cited a board room environment unreceptive to "probing much beyond the materials provided by management."

GM has been engaged in a sweeping turnaround plan, cutting production and costs by securing health care concessions from the UAW and persuading about 35,000 hourly workers to leave under early retirement or buyout plans.

The company is close to reaching a deal on its contribution to labor expenses at bankrupt auto-parts maker Delphi Corp. and completed its sale Thursday of a 51 percent stake in GMAC, its financing arm.

The GMAC deal gives the automaker a major cash infusion. Wagoner called it "an important step to further support GM's turnaround."












© Copyright 2006 The Detroit News. All rights reserved.

Monday, December 25, 2006

Chevrolet adds a little edge to its smallest SUV

Thursday, December 14, 2006
Chevrolet adds a little edge to its smallest SUV
Sharon Terlep / The Detroit News




General Motors Corp. on Wednesday showed off a sport version of its compact Equinox sport utility vehicle, expected to hit showrooms next summer.

The made-over Equinox will come equipped with a more powerful engine and six-speed automatic transmission, larger wheels and some cosmetic features designed to give the plucky vehicle a more aggressive look.

The original Equinox went on sale in mid-2004 with little fanfare and has been a solid seller for GM. But the SUV could use a boost with consumers. Sales this year are down 13 percent from year-ago levels, with 105,000 vehicles sold through November, according to Autodata Corp., a New Jersey company that tracks car and truck sales.

Giving car buyers a sport option, which Chevy has also done with vehicles such as the Impala, Cobalt and Malibu sedans, should help set the Equinox apart in the increasingly competitive market, Chevrolet Marketing Director Cheryl Catton said. About 1.6 million compact SUVs have been sold this year, she said, and the Equinox goes up against 23 other models.

"There's still a huge volume opportunity with the Equinox," Catton said.

She said the Equinox will compete with the Honda RAV4 and Mazda CX7 compact SUVs and also stacks up well against BMW's X3 luxury compact crossover in terms of engine power and options. Other U.S.-made compact SUVs include the Ford Escape and Jeep Liberty, both of which are outselling the Equinox so far this year.

The Equinox is gaining on Chevy's top-selling Trailblazer SUV. GM sold 58,000 more Trailblazers than Equinoxes through November of this year, down form 100,000 more during the same time last year

The sport features aren't likely to drive high-volume sales, but might help give the Equinox an image boost, said Brian Moody, road test editor with Edmunds.com. Compact SUVs have become sportier as the segment evolves, he said.

"This may just be more of an image building thing," Moody said. "This is something that looks different -- less like a family hauler and more like something a single person would drive. Everybody wants a minivan, but nobody wants to drive a minivan."

The 2008 Equinox will be available in front-wheel drive and all-wheel drive. GM is eliminating the roof rack to create a more streamlined appearance.

Buyers can still get the rack as an added option. Also unique to the sport will be 18-inch, five-spoke aluminum wheels, standard all-ebony trim and dual trapezoidal-shaped exhaust outlets in the rear.

GM says the Equinox sport will deliver 263-horsepower performance, compared with the 185-horsepower of the traditional Equinox, and hit the 0-60 mph benchmark in seven seconds.

Pricing has not been set, though Catton said the Equinox sport will likely go for about $10,000 less than the $38,000 BMW X3.

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










© Copyright 2006 The Detroit News. All rights reserved.

Ex-Delphi exec's mug no longer on display

Saturday, December 02, 2006
Steve Fecht / Bloomberg News
Business Insider
Ex-Delphi exec's mug no longer on display







J .T. Battenberg III has left the building.

Well, at least photos of him have.

While Battenberg left Delphi Corp. last year before the auto supplier filed for Chapter 11 bankruptcy, the former CEO's stern visage still graces a number of photos on display in the cafeteria and other areas of the company's Troy headquarters. Delphi officials recently asked the custodial team to remove the the photos, company sources tell Business Insider.

Why now? It's not clear.

But Battenberg has captured the attention of U.S. Securities and Exchange Commission investigators, who have been working out of Delphi headquarters and dining in the cafeteria for the past three months. In October, Battenberg was among nine former Delphi executives charged in an civil accounting fraud lawsuit brought by the SEC. Battenberg denied wrongdoing and said he will go to court to clear his name.

GM gets warm welcome in L.A.

Los Angeles already has balmy weather, movie stars and more luxury cars than almost anywhere in the country. That apparently isn't enough for Mayor Antonio Villaragosa. He'd like General Motors Corp., too.

The mayor introduced GM's Rick Wagoner before a speech at the L.A. Auto Show this week. Just before Wagoner took the stage, Villaragosa looked at the executive and said, "How about moving GM to L.A? Have I got a deal for you." When the two later shook hands, Villaragosa told Wagoner he was serious. Wagoner made no promises.

BMW keeps cool at auto show

If BMW wanted to drive home a point on global warming, it might have been wise to pick a warmer locale to do it.

The German automaker held a swanky event at the L.A. Auto Show to tout its new Hydrogen 7 no-emission luxury sedan. The event kickoff featured a panel discussion on the auto industry's role in protecting the environment.

The shindig was held at an airplane hangar during a late-fall cold snap. The kerosene patio heaters just didn't do the trick, though, and dozens of reporters sat shivering during the hour-long discussion. Most of the chatter for the rest of the night centered not on dazzling eco-friendly technology but on the chilliness factor.

"Kind of hard to make a case for global warming when you're freezing," said panelist Lawrence Benter, producer of former Veep Al Gore's global warming documentary, "An Inconvenient Truth," said afterward.

Tiger putts around question

Tiger Woods got just one question from the media during a General Motors Corp. event in Los Angeles where he helped the automaker introduce the new Buick Enclave crossover.

And it wasn't about the vehicle.

Someone asked the golf megastar to rate Wagoner's performance on the links. Woods thought about it for a moment.

"Ah, it's interesting," he said. "I'm going to leave it at that."

Volvo hits the ground running

Auto designers find inspiration in many places. Classic cars. Spaceships. Animals. And, in Volvo's case, tennis shoes. The new Volvo C30 two-door hatchback that made its North American debut in L.A. comes with a distinct brownish -- or java -- trim against a whitish exterior. During a press conference introducing the car, Volvo folks said the idea for the color scheme came from a snazzy pair of running sneakers.

Gasp! Delphi lawyers go off-line

It was standing room only Thursday at Delphi Corp.'s bankruptcy hearing -- its 13th -- in New York. Two dozen lawyers crowded into the aisles.

With lots of lawyers, of course, come lots of BlackBerrys.

But interference from the personal communication devices, sometimes called "CrackBerrys" because users seem almost addicted to them, caused static in the court room's sound system. Every time a BlackBerry-toting attorney stepped to the microphone to speak, U.S. Bankruptcy Judge Robert Drain was forced to ask that the device be turned off.

Finally, he told them all to power down, but he got a laugh when he did it. "I know it's like cutting off your oxygen," he said.

Contributors: Sharon Terlep, Scott Burgess and David Shepardson.













© Copyright 2006 The Detroit News. All rights reserved.

Buick line is hot seller in China






Tuesday, December 05, 2006
Buick line is hot seller in China
While slumping in U.S., brand is expected to increase sales by 40% in hot market this decade.
Sharon Terlep / The Detroit News






Americans drivers have been cooling on Buicks for years, sending sales spiraling downward.

The opposite is true on the other side of the world, where the vehicles' popularity has helped General Motor's Corp's Buick brand hit an unusual milestone.

The distinctly American brand has sold more vehicles this year in China -- the world's fastest-growing major automobile market -- than in the United States.

The landmark, reached this fall, is a good-news-bad-news for phenomenon for Buick and GM.

It's a clear sign of the brand's struggles in the United States, where sales have been declining for years and Buick has struggled to break out of the stereotype of a car for older people.

But slumping U.S. sales aren't the only factor behind the dynamic. The vehicles are beloved in China, where auto sales are expected to increase by a 40 percent by the end of the decade.

Buick dealerships in China are designed to look and feel like the cars they sell. Buicks are driven by chauffeurs carting around the Chinese upper class. Even the last Chinese emperor, Pu Yi, owned a Buick. "There's just an incredible feeling about the cars there," said Buick General Manager Steve Shannon said.

GM sold 241,632 Buicks in China through October, compared to 206,589 in the United States. Buick posted a 28 percent sales increase in China through October. Sales in the U.S. sales fell 15 percent over the same period.

In China, "there's an opportunity for brand revival, and Buick proved they could do it," said Michael Dunne, vice president of J.D. Power Asia Pacific.

Buick's best-selling vehicle in China is the Excelle station wagon. The brand has a 4.5 percent market share in the country and next year plans to launch two new models: the Excelle and LaCrosse sedan.

Shannon said Buick in North America could take some lessons from its overseas counterpart. Since many vehicles there are chauffeured, the company pays especially close attention to the quality and features found the vehicle interiors. It's an area where GM has struggled in the U.S.

"There's a big focus on interiors, spacious back seats, entertainment systems," Shannon said. "There's a big premium there on beautiful, beautiful cars."

Staff Writer Christine Tierney contributed to this report. You can reach Sharon Terlep at (313)223-4686 or sterlep@detnews.com.













© Copyright 2006 The Detroit News. All rights reserved.

Sunday, December 24, 2006

'07 Silverado wins Truck of the Year

Tuesday, December 19, 2006
'07 Silverado wins Truck of the Year
Associated Press




DETROIT -- The redesigned Chevrolet Silverado was named 2007 Truck of the Year by Motor Trend magazine, an award that could increase the already strong sales. of the popular vehicle.

The truck beat out three other General Motors Corp. contenders: the Chevrolet Avalanche, Cadillac Escalade EXT and GMC Sierra.

The Ford Explorer Sport Trac was also eligible for the title.

The vehicle of the year designation is important to automakers, who often use Motor Trend's endorsement in their advertising. The redesigned Toyota Camry, the hottest-selling car in America, won Motor Trend's 2007 Car of the Year award earlier.

The Silverado, released in the fall, offers a choice of cab and bed sizes, plus suspensions and drivetrains for a variety of uses.












© Copyright 2006 The Detroit News. All rights reserved.

GM to put rollover air bags in all models

Tuesday, December 05, 2006
GM to put rollover air bags in all models
Announcement expected as automaker unveils new $10M Milford crash testing center.
David Shepardson / Detroit News Washington Bureau







WASHINGTON -- With a heart-pounding launch of a dark red Buick Ranier SUV traveling 44 mph off a one-wheel ramp, General Motors Corp. today will unveil its state-of-the-art $10.2 million rollover testing facility in Milford.

If all goes well, the smashed-up $32,000 vehicle will come to rest just 55 feet away as news media and the top federal auto regulator, National Highway Traffic Safety Administration chief Nicole Nason, look on.

With a painted crash test dummy in the driver seat, the 1.3-second test is designed to help GM evaluate air bag sensors it is developing to protect people in rollover accidents.

GM also will announce today that by 2012, it will make rollover-enabled air bags standard on all retail vehicles. Currently, the air bags are on 43 percent of light trucks and SUVs. At the new testing facility at its Milford Proving Grounds, GM will perform 150 rollover tests next year in an effort to better understand rollover crashes, unpredictable events that account for less than 3 percent of all crashes but 25 percent of traffic deaths. Nearly 60 percent of SUV fatalities are the result of rollovers. In fact, a driver is twice as likely to die in an SUV rollover as in a car rollover.

To illustrate how unpredictable rollovers can be, several GM engineers, during the first of four practice tests last week in Milford, put tape on the floor to indicate their predictions of where the Buick Rainier would land. None of the engineers guessed correctly, said Bob Lange, GM's executive director of vehicle structure and safety integration.

"In the real world, rollovers are all over the map," Lange said, in explaining why researchers have much to learn about rollovers and how vehicles and passengers respond. "This will significantly increase our capacity and our understanding of rollovers."

During the practice tests, GM had a steel reinforced net in place to catch the careening Ranier, but the automaker took the extra precaution of parking a few junked cars behind the net to make sure the flying Buick didn't crash into the building.

The Ranier flew 55 feet in 1.3 seconds; the back window shattered, but the front window only cracked. That vehicle will be on display today.

New tests, upgrades abound

In 2002, GM began thinking about expanding its crash testing efforts, especially with an eye on rollovers. Then in 2004, the automaker decided to build the in-house facility in Milford.

Like many other automakers, GM had been using an Auburn Hills test facility at Autoliv, a Sweden-based automotive safety parts supplier that conducts nearly all U.S. rollover tests.

At the Milford site, GM will be able to conduct four main types of rollover tests. The first is the flying floor test -- used to simulate a vehicle sliding sideways in soil, gravel or a curb. Those types of crashes account for about half of rollovers. The second simulates a driver veering off of the side of a road onto a steep embankment and over-correcting, leading to a rollover.

The third is today's test, called the corkscrew ramp flip-over. In-house it's also known as the "Dukes of Hazzard" test, because of its similarity to chases in the 1970s TV show. The fourth test, the inclined dolly test, is a tethered rollover that doesn't cause vehicle damage.

GM also upgraded its crash test equipment. It has spent $3 million to upgrade adult crash test dummies and add new passenger dummies simulating 6-month-olds to 10-year-olds. It also spent $6 million for digital high-speed cameras and $6 million for a new sled, a hydraulic device used to simulate frontal and rear crash tests. The new sled is 2.5 times as powerful as two older sleds.

GM also will use new "wireless" dummies to monitor crash responses, instead of the lower-tech dummies with electronic umbilical cords.

In all, GM is spending $33 million to upgrade is safety testing facilities.

Including rollover tests in England, GM has conducted about 400 over the last half dozen years.

The new facility will allow GM to dramatically increase testing and publish the findings in an effort to find better ways to keep unbelted drivers from being ejected; and keeping belted drivers better restrained, Lange said.

Rollover crash tests are rare

Despite the seriousness of rollover accidents, there are surprisingly few rollover crash tests, relative to other crash tests -- in large part because they aren't "repeatable."

"There are a lot of variables: Did the vehicle hit a tree or a curb or another car first? Once a vehicle starts rolling, how do you keep the results repeatable?" said Adrian Lund, president of the Insurance Institute for Highway Safety.

The institute doesn't conduct rollover tests, but instead uses its resources to conduct side, front and rear impact crashes, Lund said, to try to prod automakers into making safety upgrades.

Lund praised GM's new test facility, saying more research may help automakers better design systems to keep people inside vehicles and protect heads during crashes.

Though NHTSA conducts rollover "resistance" tests to determine their likelihood of rolling over, the agency conducts few rollover crash tests.

NHTSA will conduct nearly 400 rollover resistance tests this year, mostly for research purposes. It has 68 planned next year for its new car assessment program. It conducts separate roof strength tests.

Roof strength at issue

In 1971, NHTSA first proposed a mandatory 30-mph rollover test for all vehicles, beginning in 1977. That mandate has been "temporarily" on hold ever since.

"They've essentially had a 34-year reprieve from a test they should be conducting," said Sean Kane, president of Safety Research and Strategies Inc.

He said electronic stability control is an answer, as are government-mandated improvements to roof strength.

In September, the National Highway Traffic Safety Administration proposed mandating electronic stability control on all vehicles by the 2012 model year. That anti-rollover technology uses sensors to help avoid loss of vehicle control and, subsequently, rollover crashes.

NHTSA said the regulation could reduce rollovers by up to 80 percent, save between 5,300 and 10,300 lives annually and reduce single-vehicle crashes by 35 percent.

"No one is going to solve the problem until the government requires them to," Kane said. "Government forces a change by the manufacturers in the way they do things."

Overall, rollover deaths increased 2.1 percent from 2004 to 2005 to 10,816.

But SUV rollover deaths actually decreased 1.8 percent, because of increased use of electronic stability control.

GM and Ford essentially drafted the roof strength regulation as it stands, leading an industrywide effort in 1971 to convince federal officials to adopt a minimum standard -- but only after their vehicle fleets failed the government's first proposed test.

In 1991, after SUVs became popular and rollovers increased because of the vehicles' high centers of gravity, Congress told NHTSA to address the problem. Finally, in 2005, Congress ordered NHTSA to rewrite its roof strength rules.

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













© Copyright 2006 The Detroit News. All rights reserved.

Monday, December 18, 2006

1.8 million GM autos to get XM next year

Wednesday, December 06, 2006
1.8 million GM autos to get XM next year
Automaker's addition of satellite radio exceeds firm's target; extends lead over rival Sirius.
Bloomberg News





WASHINGTON -- XM Satellite Radio Holdings Inc., the biggest pay-radio company, said General Motors Corp. will install its radios in more than 1.8 million vehicles built next year.

GM, the world's largest automaker, was the first to offer XM's factory-installed satellite radio in 2001, XM said Tuesday.

In August, GM cut the price for factory installation of XM devices to $199 from $352.

The gains may help XM extend its lead over smaller rival Sirius Satellite Radio Inc.

That company on Monday cut its year-end subscriber forecast by as much as 6.3 percent, saying holiday shoppers aren't buying as much as anticipated.

"GM's announcement highlights the long-term opportunity for growth in satellite radio," Morgan Stanley analyst Benjamin Swinburne said in a note to investors.

"The competitive pressure between auto manufacturers to gain or maintain market share" will encourage more to add extras such as satellite radio to appeal to customers.

XM's target is higher than the 1.65 million devices Swinburne expected from GM. He has an "overweight" rating on XM and doesn't own the shares.

The company also said last week that American Honda Motor Co. will install XM in more than 650,000 of its 2007 models, up from 550,000 installed in this year's vehicles.

Sirius has agreements with car companies such as DaimlerChrysler AG and Volkswagen AG.

Total subscribers will reach 5.9 million to 6.1 million by the end of the year, Sirius said Monday. The company had predicted 6.3 million on Nov. 8.

XM has forecast 7.7 million to 7.9 million customers over that period.













© Copyright 2006 The Detroit News. All rights reserved.

Sunday, December 17, 2006

A Time of Change for Lansing, GM, and the UAW

A Time of Change for Lansing, GM, and the UAW
Sat December 9, 2006
Community, union resize GM future
By Tim Martin
Associated Press Writer






LANSING, Michigan — Piles of crushed concrete and broken brick wait to be hauled away as bulldozers tear down old General Motors Corp. factories that have stood for a century on the banks of the Grand River in downtown Lansing.

Behind the demolition, a gleaming white Cadillac factory built five years ago with state-of-the-art technology greets the next generation of auto workers.

GM has a far smaller presence in the Lansing area than it had just a few years ago. But the automaker’s new factories here are more efficient and better-suited to survive in the hyper-competitive automotive industry.

Some see elements of a model GM could borrow from as it reshapes itself to compete with Toyota Motor Corp., Honda Motor Co. and other foreign companies that have cut into its market share the past few decades.

"This is the factory model that will turn GM around, put it back on the map,” says Marion Glasscoe, who helps assemble the Cadillac CTS and STS sedans and the SRX crossover vehicle in the Lansing Grand River Assembly factory just blocks from the state Capitol. "We just had some hard times. But I think with what we’ve got coming forward, it’s going to turn GM completely around.”

Just west of Lansing in Delta Township, a factory that makes the GMC Acadia and Saturn Outlook and soon will add the Buick Enclave .

The vehicle assembly plants are GM’s first to be built in the United States since Saturn began building cars in 1990 in Spring Hill, Tenn.

Meanwhile, GM’s older Lansing factories have been partially torn down or await potential buyers.

Were it not for innovative partnerships with the United Auto Workers and local government officials, the automaker might not have much of a presence left in Lansing.








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Community, union resize GM future

Sat December 9, 2006
Community, union resize GM future
By Tim Martin
Associated Press Writer






LANSING, Mich. — Piles of crushed concrete and broken brick wait to be hauled away as bulldozers tear down old General Motors Corp. factories that have stood for a century on the banks of the Grand River in downtown Lansing.


Behind the demolition, a gleaming white Cadillac factory built five years ago with state-of-the-art technology greets the next generation of auto workers.

GM has a far smaller presence in the Lansing area than it had just a few years ago. But the automaker’s new factories here are more efficient and better-suited to survive in the hyper-competitive automotive industry.

Some see elements of a model GM could borrow from as it reshapes itself to compete with Toyota Motor Corp., Honda Motor Co. and other foreign companies that have cut into its market share the past few decades.

"This is the factory model that will turn GM around, put it back on the map,” says Marion Glasscoe, who helps assemble the Cadillac CTS and STS sedans and the SRX crossover vehicle in the Lansing Grand River Assembly factory just blocks from the state Capitol. "We just had some hard times. But I think with what we’ve got coming forward, it’s going to turn GM completely around.”

Just west of Lansing in Delta Township, a factory that makes the GMC Acadia and Saturn Outlook and soon will add the Buick Enclave .

The vehicle assembly plants are GM’s first to be built in the United States since Saturn began building cars in 1990 in Spring Hill, Tenn.

Meanwhile, GM’s older Lansing factories have been partially torn down or await potential buyers. But GM’s downsizing could have hit Lansing much harder. Were it not for innovative partnerships with the United Auto Workers and local government officials, the automaker might not have much of a presence left in Lansing.

"General Motors was actually on the way out of Lansing,” said David Cole, an analyst with The Center for Automotive Research in Ann Arbor. "But the community came together. Lansing has really gone through a renaissance as far as GM is concerned.”

Former Lansing Mayor David Hollister was told in the 1990s that GM was going to close its main city assembly lines. Hollister started a regional committee aimed at salvaging GM’s presence, capitalizing on a history of positive relationships between the local UAW and company management.

"We came at it completely unified,” Hollister said. "And that made all the difference.”

Lansing and surrounding townships agreed to share the benefits and the costs related to the factories, putting aside political squabbling. GM ultimately was persuaded to build its Cadillac plant in the city. The automaker was impressed enough with the region’s effort to open its crossover vehicle factory in nearby Delta Township a few years later. Both plants allow the automaker to produce a variety of vehicles on the same assembly line, cutting costs and increasing productivity.

Production employees work in teams of four to six members on the assembly line, each cross-trained to do every job in the group. Each worker has the power to stop the assembly line if a problem arises. That gives UAW members a mix of responsibility and authority not present in most GM factories.







OTHER DEVELOPMENTS
•General Motors Corp. may further reduce its blue-collar work force by offering another round of buyouts, according to an industry analyst.
In a note to investors after a meeting with Troy Clarke, GM’s North American president, JP Morgan analyst Himanshu Patel wrote that GM has studied Ford Motor Co.’s buyout packages and may make an offer to workers in 2008 or later.

Ford’s buyout and early retirement offers drew 38,000 workers.

GM’s packages earlier this year enticed about 34,400 workers to leave the company. About 30,000 will have left by the end of this year, GM has said.

•GM is moving past the cost cuts of 2006 to transform itself into a company that puts car and truck design above everything, company officials said.

At GM’s Heritage Center in suburban Detroit, Chairman and Chief Executive Rick Wagoner said the automaker is focused on becoming the world leader in design.

"We want you to see first hand that we at GM are obsessed with, once again, making our cars and trucks leaders in design,” he said.

The Associated Press














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GMInsidenews.com is not affiliated with General Motors Corp.

Saturday, December 16, 2006

GM halts sales of Saturn Outlook, GMC Acadia

GM halts sales of Saturn Outlook, GMC Acadia




General Motors has temporarily halted sales of its critical Saturn Outlook and GMC Acadia crossovers. The company said in hastily put together communiqué to dealers it was issuing an "immediate stop" of all sales of the vehicles. GM did not specify a reason for the action, but said more details would follow.



The Message: "Attnntion ALL Saturn Retailers and GMC Dealers […] This is to advise Saturn Retailers and GMC Dealers that we are issuing an immediate stop sale on all Saturn OUTLOOK models and GMC Acadia models in dealer inventory as well as in transit to the dealer. In order to maintain our momentum and successful launch of these prodects, we are evaluating potential enhancement and inventory upgrade to the vehicles. More details will be forthcoming on Monday, December 11, 2006. […] Thank you for your immediate attention and cooperation in this matter."



Update: LLN reader David Roen reports the pseudo recall is the result of an exhaust system rattle. Stay tuned…











All contents copyright Leftlane News 2006.

GM will feature stars and cars at celebrity fashion show

Monday, December 11, 2006
GM will feature stars and cars at celebrity fashion show
Sharon Terlep / The Detroit News





General Motors Corp. will bring its L.A.-style celebrity car fashion show to the banks of the Detroit River next month in an effort to hype its vehicles just before the North American International Auto Show.

Several stars will accompany GM vehicles as they glide down an aisle set up inside a heated tent along the Detroit River. GM announced on Monday that the event will take place on Jan. 6, the night before the auto show's first press day.

GM has hosted a similar event in Los Angeles as part of the festivities surrounding the annual Oscar awards, but it will be the first time the automaker has done it in Detroit.

Celebrities already signed on for Motown event in Motown include: Cheryl Hines, from the HBO's comedy "Curb Your Enthusiasm"; Vivica A. Fox, who's been in several films and movies including the most-recent edition of "Dancing With The Stars"; supermodel Petra Nemcova. Danny Masterson from "That 70's Show" will DJ the event.

GM will show off 17 vehicles during the event, called GM Style.

"Not to be eclipsed by the star power in the room, Style's pristine fleet of GM vehicles will captivate the audience with the world debut of a concept vehicle," Mike Jackson, GM North America vice president, marketing and advertising said in a statement.

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













© Copyright 2006 The Detroit News. All rights reserved.

Wednesday, December 13, 2006

How General Motors supercharged a vital truck launch

Tuesday, December 12, 2006
How General Motors supercharged a vital truck launch
Engineers beat clock to ready pickups 3 months early
Bill Vlasic / The Detroit News








DETROIT -- The marching orders came down from the top management at General Motors Corp. in March 2005.

With GM burning through cash and facing unprecedented losses, the No. 1 U.S. automaker needed a shot of product adrenaline as soon as possible.

It was Vice Chairman Bob Lutz who put the challenge to Gary White and the 20-person team responsible for the next generation of GM's full-size Silverado and Sierra pickups due to arrive in 2007.

"Could we pull this ahead by several months?" Lutz asked. "Tell me the reasons why it can't be done. Then tell me what it would take to make those reasons go away."

GM had already accelerated the development of its new large SUVs. White, a GM North America vice president, knew the pickups were even more critical to the company's turnaround prospects.

"We can do it," White said. "It's like conducting the orchestra. Everybody is just going to have to play the song faster."

In one of the most concerted efforts to fast-forward a product in its history, GM rolled out the new Chevrolet Silverado and GMC Sierra pickups in early November -- a full 13 weeks ahead of schedule.

With the new pickups in showrooms early, GM now has a fighting chance to actually make money in North America in the fourth quarter of this year -- something the troubled auto giant has not accomplished since 2004.

Moreover, the success of the new pickups could be a watershed event in GM's long road back from its devastating $10.6 billion corporate loss in 2005.

While GM is rooting out $9 billion a year in North American structural costs by slashing jobs and closing factories, the company badly needs hot, new products that don't require expensive incentives to sell.

The pickups are GM's top-selling vehicles, and traditionally its most reliable source of profits. Analysts estimate that a brand-new model can earn anywhere from $5,000 to $10,000 in profit per vehicle -- and GM needs that boost now like never before.

"The trucks have had to carry a lot of weak sisters on the passenger-car side for a long time," said David Cole, chairman of the Center for Automotive Research in Ann Arbor. "The new models are crucial to the turnaround."

Officially, GM executives decline to comment on how soon the company's core North American operations will be back in the black. But in an interview with The Detroit News, Lutz conceded that pickup profits are essential to hitting that elusive target.

"I would say pickup trucks would be a major player in any profitability scenario for General Motors North America," he said.

Remaking America's truck

With their sculpted good looks, meticulous interiors and industry-leading fuel economy, the new Silverado and Sierra are, in Lutz's biased opinion, "the best truck that's out there right now."

But the full-size pickup segment faces a tough economic environment in the months ahead. The volatility in gas prices, combined with a slump in housing starts, is expected to take a toll on pickup sales in 2007.

"We see the full-size pickup market dropping off by 4.7 percent in 2007 from the 2.56 million units projected in North America this year," said David Terebessy, an analyst with the auto research firm CSM Worldwide.

CSM said GM will sell about 1 million full-size pickups in North America this year, or 39 percent of the market. Ford Motor Co. ranks second with 36 percent, followed by DaimlerChrysler AG with 16 percent, Toyota Motor Co. with just under 5 percent and Nissan Motor Corp. with 3 percent.

However, Toyota will gain considerable ground in 2007 with the introduction of its larger, redesigned Tundra pickup built at a new assembly plant in Texas.

Terebessy said the new Tundra could nearly double Toyota's share of the full-size pickup segment in its first year on the market.

While GM and Toyota will go head to head with their new pickups, Ford and DaimlerChrysler's Dodge division will fight back with heavy sales incentives on their older models.

"You have two new products coming out and that tends to take share from the other players," said Terebessy. "While Ford's model is older, that's when automakers tend to raise the incentives to keep competitive."

Introducing a new model in a hypercompetitive segment can reap immediate financial rewards. Currently, GM is offering cash rebates of $4,000 to clear out inventory of its 2006-model Silverados and Sierras.

By contrast, the new 2007-model pickups will likely sell at full sticker prices for several months to come. With each sale generating profits of up to $10,000, the new pickup could be the impetus to restore GM North America to profitability.

Restoring profits at home

Making money in its home market represents more than a financial goal for GM Chairman Rick Wagoner and his executive team. It would also be a much-needed validation of Wagoner's leadership and turnaround strategy.

"There is still a lot of unease about GM's ability to get the business fixed in North America," said John Casesa of the automotive investment firm Casesa Shapiro Group.

Casesa called the new pickups "the most important products in a long time" for GM and "immensely important" to cementing the automaker's comeback.

Still, he said a successful launch of the Silverado and Sierra is only a start in the revival of GM's product portfolio. Just as crucial are the introductions next year of GM's new "crossover" vehicles and revamped versions of the Chevrolet Malibu and Cadillac CTS passenger cars.

"I'd be very surprised if the success of the new pickups will be enough to sustain profitability in the North American business," he said. "GM is already strong in trucks and needs to perform in growing segments like crossovers."

However, the new pickups rolling off the assembly lines in Fort Wayne, Ind., and Oshawa, Ontario, are like the cavalry arriving when the battle hangs in the balance.

Since early 2005, GM has endured a losing streak that ranks among the ugliest in automotive history.

Delphi Corp., its largest supplier, went bankrupt. Tens of thousands of blue-collar workers were paid to quit the company, casualties of GM's shrinking market share. Kirk Kerkorian, one of GM's major shareholders, challenged Wagoner's leadership by pushing GM -- unsuccessfully -- to consider an alliance with foreign rivals Renault SA and Nissan Motor Co.

By pulling the launch of the pickup -- code-named the T-900 -- forward by more than three months, GM underscored the urgency of its condition. No single product means more to its bottom line or to healing its battered corporate psyche.

"What it means is that we are going to build and sell tens of thousands of T-900s this year that would have been (older models) with a high incentive level," said White. "From a profit standpoint, that's just a huge difference for us."

Embracing risk

The decision to fast-track the pickup was a radical move for a company known for its regimented, risk-averse culture.

But in early 2005, GM's senior executives were bracing for disaster.

"We didn't know quite how bad 2005 was going to be," said Lutz. "But we certainly knew that our profitability was going to be negative, and we knew that GM North America was under incredible pressure."

Initially, management ordered the development of GM's new full-size SUVs -- the Chevrolet Tahoe, GMC Yukon and Cadillac Escalade -- moved up by six weeks. Then Wagoner upped the ante by asking if the pickups could be done even faster.

Thirteen weeks may not seem like much in the context of the 30 months required to bring a vehicle from clay-model concept to the assembly line. But with dozens of product programs delicately synchronized in the organization, pushing up a project as large as the T-900 was almost unheard of.

"It would have been a lot harder if (the trucks) didn't share a lot of common parts with the SUVs," Lutz said.

But the organization had to make on-the-fly adjustments to accommodate the pickups' revved-up schedule.

Functions such as durability analysis, quality checks, crash-testing, and emissions and safety compliance are "gated" within the GM system -- meaning products in various stages of development are rigorously scheduled for their turns in the testing labs.

Because the pickup push was ordered directly by the powerful North American Strategy Board headed by Wagoner and Lutz, the waters parted whenever the pickup needed to clear another checkpoint.

"It's kind of like when you go to Disneyland in a wheelchair," Lutz joked. "You always get to go the head of the line."

Hitting every target

White's team had to ensure that no matter how fast the T-900s moved through the system, no shortcuts were taken. "If we ever missed one of the quality targets in a part, we stopped the whole process," he said.

Suppliers prepared for quicker, just-in-time deliveries. The five pickup assembly plants -- three in the U.S. and one each in Canada and Mexico -- retooled on the fly and launched aggressive training programs for their assembly line workers.

The fast pace extended to GM's sales and marketing divisions. Hundreds of Chevrolet and GMC dealers were flown to special two-day seminars across the country to be briefed on the selling points of the new models.

GM broke new ground in offering different configurations designed to appeal to the broadest range of customers. There were three cab styles, eight power-train combinations and five distinct suspension packages.

An avalanche of new features were added to differentiate the GM models from the competition -- side-curtain air bags in the roof, standard OnStar navigational systems, larger DVD video screens, even heated windshield wiper fluids.

"We benchmarked every area of every competitor, and even anticipated as much as possible the Toyota Tundra and tried to go as much as possible beyond that," said Lutz.

Early returns are strong

The final effort came in the advertising component, when GM's ad agencies cooked up stirring, patriotic-themed TV and print ads featuring new music by heartland rocker John Mellencamp and a memorable tag line: "This is our Country. This is our Truck."

The new Silverados began hitting showrooms in small numbers last month, with a limited supply of 4,900 models selling in November.

Early returns have been strong from the first buyers.

"I wanted to get one right away because of the all improvements," said Jack Frost, a landscaper in Flint.

"It has everything from the heated seats to the mirrors that fold by pushing a button."

By February, GM will be churning out Silverados and Sierras at full volume from five plants. The expected sales blitz should buoy GM's profits considerably in the first half of 2007.

But how long can the pickups carry the fortunes of the automaker, particularly when they lose their new-vehicle luster and Toyota storms the market with the Tundra?

"For the next six months, the conditions will be as good as they can be for GM and they should do sensational," said Casesa. "After that, things will get very tough again."

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















© Copyright 2006 The Detroit News. All rights reserved.