Monday, February 26, 2007

GM pushes new plant work rules

Friday, February 23, 2007
GM pushes new plant work rules
Additional jobs for workers, outsourcing are among changes sought to increase competitiveness.
Sharon Terlep / The Detroit News

General Motors Corp. is pushing union locals across the country to accept money-saving factory work rule changes or risk losing future vehicle production work.

Working off a set of standards GM calls its "True North" practices, GM leaders have been visiting plants to push for changes that range from getting workers to take on more jobs to outsourcing work not directly related to building vehicles.

GM's goal is to make its plants fully competitive with those of its Japanese rivals in the United States.

"The corporation is telling the international and local unions that if changes are not made, they will be unable to compete with our competitors," United Auto Workers leaders in Lordstown, Ohio, wrote in a recent newsletter to members.

The strategy is not new, but in the midst of a massive restructuring, GM has stepped up its efforts in recent months, sending managers to meet with union locals about so-called competitive operating agreements.

GM loses $1,300 on average for each vehicle it makes in North America, while Toyota Motor Corp. makes about $2,100 on each car and truck built here, according to Sean McAlinden, chief economist for the Center for Automotive Research in Ann Arbor.

While more flexible factory rules won't eliminate that gap, they could save GM hundreds of dollars per vehicle.

It's a tough challenge

But changing long-accepted work practices is a delicate and politically charged task for automakers and union leaders.

Workers who once literally could not turn a screw if it wasn't in their job description are now being tapped to perform multiple tasks. They're being asked to take on a greater role in day-to-day operations and assume leadership roles for the first time. And the union is being pushed to surrender work not related to building cars and trucks -- such as custodial work and grounds keeping -- to companies that can provide cheaper labor on a contract basis.

While such concepts are commonplace in Japanese-run factories, they run counter to hard-won labor agreements that for decades have protected workers in the domestic auto industry.

"We're going to sit down and negotiate responsibly," said George McGregor, president of UAW Local 22, which represents workers at GM's Hamtramck assembly plant. "It's negotiable if both sides can get something out of it. Especially if it comes down to getting a job or not getting a job."

Where Ford Motor Co. has come out publicly pushing such agreements, GM is taking a more subtle, gradual approach.

Ford has about 20 factories operating under more competitive work rules, and has been straightforward about its desire to get the union to change.

GM doesn't talk much about its work rules, but the company over the years has compiled scrupulously detailed data laying out exactly how well each plant is meeting goals, which are based on benchmarks -- some set by GM, some by other automakers -- that are deemed the best practices in the business. Plants are graded on how closely they adhere to those guidelines. The data comes into play every time GM doles out new production work.

"We benchmark every part of the business, and each plant is at a different stage of the journey," GM spokesman Dan Flores said. "With the urgency of where we're at in our turnaround, clearly we have to look for ways to close the competitive gaps and to do it as quickly as possible."

Some plants adopt new rules

Some plants are further along than others. Two GM Lansing-area factories, both opened within the past six years, have among the most flexible rules in large part because GM was able to get a fresh start with the work force there.

At Lansing's Grand River Assembly plant, which builds the Cadillac CTS sedan, workers team up on the line and everybody knows how to do everybody else's job. They all cooperate to streamline the process.

"The fact is, you can't build cars like you did 30 years ago," said Fred Charles, a union official for the plant's Local 652. "It's a constant struggle. They have their ideas on how the business should be run. We want to protect the high-paying jobs in America."

Perhaps no GM workers are under greater pressure than those in Lordstown, where GM builds the Chevrolet Cobalt and Pontiac G5.

GM, which has long lost money making small cars in the United States, is positioned to move that work to another country. Already GM is building the new German-bred Saturn Astra compact car in Belgium. The car goes on sale in the United States later this year as a 2008 model.

Many analysts think Lordstown could be in line to build that vehicle eventually, if it can get the job done the way GM wants.

"GM can move production to Mexico or to off-shore and break the UAW," according to McAlinden, who said Lordstown is a plant to watch as an example of how well UAW locals can compete in an age of globalization.

Negotiations on a new local contract agreement got under way this week in Lordstown. Jim Graham, president of UAW Local 1112, which represents Lordstown workers, declined to discuss the specific terms being discussed with GM, but acknowledged that the plant's future is at stake.

"The key is to get a new car for Lordstown," he said Thursday. "It's not going to be an easy contract. The membership understands that. They also understand the importance of getting a new product."

New work rules in the plants won't save GM. Much of the profit gap the company faces is from health care and retiree costs not shared by foreign rivals. GM spends nearly $1,400 per vehicle on health care for retired and active workers.

But changes at the plant level can help, McAlinden said.

About 23 percent of GM workers fall into the highly paid skilled trades category. Getting that figure down to 10 percent would save GM up to $180 on each car it builds, he said.

McAlinden said GM will have a tougher time winning concessions than Ford because GM has already announced which plants it will close as part of its restructuring. Ford has said it will close plants, but has not specified which ones, giving the automaker more leverage among workers who fear their plant will make that list.

But, even at GM, workers know they're vulnerable and are willing to work with the company, said Harley Shaiken, a labor expert at the University of California-Berkeley. GM lost $91 million in the third quarter of last year and saw its sales drop nearly 17 percent in January.

"Workers read the balance sheets, too," Shaiken said. "You've got a work force at GM that is well aware of the severity of the situation and the need to improve. You've got workers who want to see a successful GM."

You can reach Sharon Terlep (313) 223-4686 at or

New factory work rules

Some types of changes GM, other automakers are seeking:

Fewer job classifications that allow workers to perform more tasks

Workers taking on leadership roles and helping find efficiencies in the production process

Relaxing of rules that make it difficult to hire contract workers for jobs not directly related to building vehicles

© Copyright 2007 The Detroit News. All rights reserved.

GM investigates leak of photos of possible Corvette supercar

Thursday, February 22, 2007
GM investigates leak of photos of possible Corvette supercar
The Detroit News

General Motors Corp. is investigating how photos of a vehicle identified as a top-secret, super high-performance Chevrolet Corvette showed up on several Web sites Thursday.

Several photos of the Corvette that showed both its exterior and engine began appearing Thursday on auto enthusiast Web sites such as, and It's unclear where the photos were first posted.

The car was identified as a prototype of the 2009 Corvette SS, a 600-plus horsepower supercar dubbed by some as the "Blue Devil" after GM CEO Rick Wagoner's alma mater, Duke University.

GM spokesman Terry Rhadigan confirmed that GM is investigating a possible "breech of security" but would not confirm the vehicle in the photos was a Corvette supercar prototype. "We don't comment on future products," he said.

He said GM believes the photos were snapped in Romulus by an employee of a transport company that was in the process of shipping the vehicle.

Rhadigan said GM could not confirm numerous Web reports that the employee was arrested Thursday by Romulus police. A Romulus police spokesman declined to comment Thursday night.

"We acted on what was an alleged breech of security," Rhadigan said. "We are still piecing it all together."

The Internet has been abuzz in recent weeks with speculation about GM's rumored development of a 600-plus horsepower Corvette supercar. GM Vice Chairman Bob Lutz hinted in January that such a car was in the works, but it has not been officially announced.

Automakers have struggled in the recent years to keep a lid on photos of cars in development as Internet sites aimed at auto enthusiasts have proliferated.

"We do take it seriously," Rhadigan said. "We are a car company that has a lot of confidential future products in various stages of development. We rely in security to keep those products confidential."

GM is asking some Web sites to take the photos down, Rhadigan said. said on its site it removed the photos out of fear of incurring GM's wrath.

© Copyright 2007 The Detroit News. All rights reserved.

AT&T gets GM networking pact

Thursday, February 22, 2007
AT&T gets GM networking pact
Tom Krisher / Associated Press

DETROIT -- Five years ago, General Motors Corp.'s worldwide telecommunications system was lagging its fledgling effort to globalize vehicle design, engineering and manufacturing.

It would take an hour or more for an engineer in Europe to send a large computerized design file to a manufacturing plant overseas.

And then it would take another hour for the plant to send the file back with any changes.

Now, as the company moves toward building more models in more places off the same underpinnings to save billions of dollars, GM and AT&T Inc. have a network in place that allows engineers and plant officials worldwide to simultaneously view data and discuss it.

On Wednesday, GM gave AT&T even more business, awarding it a five-year, $1 billion global networking contract that will prepare the world's largest automaker for whatever electronic breakthroughs lie ahead.

© Copyright 2007 The Detroit News. All rights reserved.

'Positive response' prompts GM to extend incentive campaign

Thursday, February 22, 2007
'Positive response' prompts GM to extend incentive campaign
Company adds Saturn Vue hybrid-electric vehicle to the discount program that runs through Feb. 28.
John D. Stoll / Dow Jones Newswires

DETROIT -- General Motors Corp. has extended until the end of February an incentive campaign as it works to recover from disappointing retail sales in January.

It is now including the Saturn Vue hybrid-electric vehicle in the discount program that was originally to end Tuesday.

The automaker will continue offering zero percent loans spanning as long as 60 months on vehicles and $500 cash back on certain vehicles.

The deals were initially offered under GM's annual Presidents Day sale.

They have been extended to Feb. 28 because GM has seen "a real positive response to the offers," GM spokesman John McDonald said in an interview.

McDonald said the company is now discounting its relatively new hybrid, known as the "Green Line" version, for "simplicity's sake."

He said some dealers had only hybrid versions of the Saturn Vue in stock, but were unable to give discounts on that vehicle.

GM sells relatively few hybrid vehicles in the United States but has plans to ramp up volume this year with new product offerings.

McDonald said GM's closely watched February incentive spending levels are about even with the same period in 2006. McDonald said the company is "getting the right balance" when it comes to discounting vehicles without losing too much margin in the process.

GM has said its 14-month drive to cut incentive spending has been successful. The initiative is designed to boost profit margins and increase the resale values of the company's vehicles.

In a conference call Wednesday with analysts and media, Earl Hesterberg, Group 1 Automotive Inc. chief executive, said GM's January sales were lackluster but that February discounts should inspire demand.

Group 1 is among the larger auto dealership groups in the United States.

GM will also offer a "March Madness" campaign that coincides with the national college basketball tournament that starts next month.

GM's retail sales, excluding deliveries to fleet customers, fell 8 percent in January. Top executives have characterized the performance as disappointing and pointed to the company's restraint on January incentives as a reason for the unexpected decline.

© Copyright 2007 The Detroit News. All rights reserved.

New UAW pattern: givebacks

Wednesday, February 21, 2007
New UAW pattern: givebacks
Negotiations will be defined by concessions as automakers target health care, other benefits.
Louis Aguilar / The Detroit News

YPSILANTI -- The upcoming contract talks between the United Auto Workers and Detroit's automakers could force the union to accept more job cuts, lower wages for new workers and more responsibility for retiree costs, a top auto industry economist said Tuesday.

It's even possible that Ford Motor Co., in the midst of financial "meltdown," could push the union for across-the-board pay cuts of as much as 20 percent, said Sean McAlinden, vice president of research of the Center for Automotive Research in Ann Arbor and a longtime supporter of organized labor.

"The value of what we produce in Detroit has been severely reduced," he said. "That's never been clearer."

McAlinden said the contract negotiations beginning this summer will be tough, but he sees no chance of a full-fledged strike that would devastate the already weakened union and auto companies.

Speaking before about 150 suppliers, bankers, state officials and auto executives at Eastern Michigan University, McAlinden said the traditional "pattern" agreement reached with one automaker and then imposed upon the others is in jeopardy due to declining market share and sales by Detroit's automakers. He said the unionized work force at Detroit's Big Three and suppliers Delphi Corp. and ACH, a Ford-owned grouping of former Visteon Corp. operations, has fallen to 178,000 from 316,000 four years ago. He predicted another 20,000 UAW jobs will be lost by 2011 on top of those announced in the Big Three's current restructurings.

No state is more vulnerable to those job losses than Michigan, where UAW-protected auto jobs have been the economic engine of the state for decades. Now the core values of the UAW and Michigan's way of life are being challenged like never before, McAlinden said.

The union's four-year auto contracts expire Sept. 14. The domestic automakers' declining market share, its aging work force and cheaper nonunion labor both abroad and in the South have eroded the union's power, he said.

At least one other leading economist disagrees with McAlinden's assessment, saying the union still has plenty of leverage.

"I think it misses the complexity of the situation," said Harley Shaiken, a labor expert at the University of California, Berkeley. "The paradox is the industry is weakened but the UAW is quite strong within the industry."

In past contract negotiations, the UAW has seen itself as defining -- and defending -- the middle-class standard. But this year, McAlinden argued, negotiations will be defined by concessions -- particularly in easing the automaker's enormous health care costs. Among the demands automakers may seek from the UAW, according to McAlinden:

Ford Motor Co. may need as much as a 20 percent cut in wages and benefits for hourly workers as an emergency concession, which could lower Ford's costs by $1.4 billion per year for four years.

GM may seek a reduction in health care costs for retirees and active workers, as well as cuts in the cost of the jobs bank in which laid-off workers receive most of their pay. GM could seek more buyouts for its hourly workers, which could make way for any Chrysler workers if GM were to buy Chrysler, he said.

DaimlerChrysler AG will seek to gain health care concessions equal to those already granted to GM and Ford.

"Benefits and pensions will dominate the discussions," McAlinden said.

Representatives for the Big Three said Tuesday it's premature to discuss the contract talks.

GM spokesman Dan Flores, who attended the presentation, did say "there are still competitive gaps that exist" that need to be addressed by the automaker and the union.

The automakers also may push for a permanent second-tier wage and benefit agreement for new hires as the Big Three seek to cap total labor cost increases at 2 percent a year, McAlinden said.

Most UAW hourly workers are paid an average of $28 an hour, compared to $26 an hour or less for nonunion workers at U.S. plants owned by foreign automakers, McAlinden said.

Detroit's automakers must reduce total labor costs for building vehicles in North America in order to compete with foreign automakers, he said.

"If these rates aren't matched by the UAW, the Detroit Three will replace very few workers. They will move capacity to Mexico or offshore," McAlinden said.

Last year, Ford's total labor cost in North America was $3,227 per vehicle. GM last year spent $3,289 per North American-built vehicle on labor, including $2,339 per vehicle for wages and health care for active workers and $950 for retiree health care.

Toyota Motor Co. has a huge advantage because it has few retirees and doesn't offer a UAW-style early retirement option after 30 years of service.

McAlinden also predicted employment levels will be set in plant-level agreements -- not the master labor agreement. The result is that UAW locals will compete with each other for jobs.

"The war of all against all -- the nightmare of every bargaining chair and local president -- is under way," he said.

You can reach Louis Aguilar at (313) 222-2760 or

Big Three goals

The Center for Automotive Research's Sean McAlinden said Tuesday that Detroit's automakers must gain labor cost parity with Asian rivals during this year's contract talks with the United Auto Workers union in order to survive. Some of the items the companies may seek:

General Motors Corp.: Reduce health care costs for retirees and active workers, as well as cut the cost of the jobs bank in which laid-off workers receive most of their pay.

Ford Motor Co.: Reduce health care and jobs bank costs and get unions at plant levels to ratify new flexible manufacturing agreements that eliminate some work rules.

DaimlerChrysler AG's Chrysler Group: Health care concessions equal to what Ford and GM have. The union did not grant Chrysler the same concessions it gave Ford and GM in 2005.

All three: Possible lower wages for new hires. Also try to match the labor costs of Asian rivals. Also try to replace retiree health care liabilities with trusts funded by equity or debt.

© Copyright 2007 The Detroit News. All rights reserved.

Chrysler, GM deal would hit area hard

Tuesday, February 20, 2007
Chrysler, GM deal would hit area hard
If purchase happens, thousands of white-collar jobs would be at risk.
Christine Tierney, Josee Valcourt and Sharon Terlep / The Detroit News

If General Motors Corp. takes over the Chrysler Group from DaimlerChrysler AG, the result is likely to be wrenching for Michigan: Thousands more jobs could be lost as a new auto giant eliminates redundant positions.

Talks between GM and DaimlerChrysler are still in the early stages, say people familiar with the situation, but industry experts are deeply skeptical about a pairing of two companies with such similar product lines.

"If the two combine, in my mind, it's insanity," Gerald Meyers, a business professor at the University of Michigan, said Monday. "With the exception of their international operations, the companies duplicate each other."

Such a deal is likely to cause hardship in the short run, some economists said, but it could result in a strengthened U.S. auto industry if more plants are closed to eliminate excess production capacity. That has been at the root of the U.S. auto industry's troubles.

"What Michigan needs at the moment is a strong domestic auto industry," said Lou Glazer, president of Michigan Future Inc., an Ann Arbor think tank studying work force and economic trends. "If this gets us there, that's more important than anything that will happen in the short term."

The ongoing talks began in December when DaimlerChrysler CEO Dieter Zetsche and GM Chairman Rick Wagoner met in Detroit, according to sources.

But with neither company confirming that talks are under way, Chrysler's employees, dealers and suppliers are struggling with rumors and uncertainty.

"Whether or not anything comes of the negotiations, Chrysler has been told it's in play. All 80,000 people [at Chrysler] know they're not wanted," said Meyers, former chairman of American Motors Corp., which was acquired by Chrysler in 1987. "That has a severe effect, not only on morale but on the whole operation."

Talks shake dealers

Carl Galeana, president of the Galeana Automotive Group, which has Dodge and Chrysler dealerships, says he felt like a part of DaimlerChrysler. "I've always been extremely loyal to Chrysler Corp. and DaimlerChrysler. It's kind of like being a kid and having your parents talk about getting rid of you," he said.

Together, DaimlerChrysler and GM have more than 10,000 U.S. dealerships. They employ nearly 130,000 hourly workers and around 50,000 salaried staffers. Nearly half their combined work forces, or around 94,000 people, are in Michigan.

David Cole, chairman of the Center for Automotive Research in Ann Arbor, said he did not believe a GM-Chrysler combination would affect the rate of decline in U.S. factory workers. He expects that number to keep shrinking.

"With or without these mergers, we'll see continued restructuring," Cole said. "We have to get better aligned between profitable sales and production."

On the other hand, a GM-Chrysler deal is likely to accelerate white-collar cuts. "That's where you get your economies," Cole said. For instance, "you don't need two economists."

Many seasoned auto executives in Metro Detroit risk losing their jobs if GM takes over Chrysler, said John Slosar, a head hunter and CEO of Triniti Executive Search in Novi. "You're going to have to pare out duplication in every function -- finance, human resources. An awful lot of people are quite concerned," he said.

But Slosar said "it's plum pickings for the transplant market" -- mainly Asian-based carmakers with growing U.S. operations.

With thousands of high-paying jobs and the Chrysler headquarters operation in Auburn Hills in jeopardy, the local housing market and business community could face more tough times.

People familiar with the GM-DaimlerChrysler talks said they expect Chrysler will interest other automakers and private equity firms.

DaimlerChrysler shares rose 3.6 percent Monday in Frankfurt, closing at $73.88, a six-year high. They have climbed steadily since Zetsche announced last week that DaimlerChrysler was considering all options for Chrysler, which it acquired nine years ago. J.P. Morgan, which is handling the sale negotiations, is expected to have a sale prospectus ready as early as this week.

Hyundai isn't interested

Several newspapers have reported that Hyundai Motor Co. might bid for Chrysler, but a spokesman for the South Korean automaker told The Detroit News that Hyundai was not interested.

Analyst Brad Rubin at investment firm BNP Paribas said he did not expect the leading Asian automakers -- Toyota Motor Corp., Honda Motor Co. or Hyundai -- to bid for Chrysler. "I don't see any Asian carmaker having that much interest because everything would be unionized," while their U.S. operations are non-union.

However, Rubin believes the Renault-Nissan alliance headed by Carlos Ghosn might be interested. "They were already looking to grow."

Ghosn, CEO of both Renault SA and Nissan Motor Co., has expressed a desire to add a North American partner to the Franco-Japanese alliance and held talks last year with GM.

But Renault-Nissan insiders say the alliance has not been approached by DaimlerChrysler.

The fact that GM and Chrysler are American companies may increase their compatibility, said Evaristo Garcia, president of U.S. headquarters of JATO Dynamics, an auto research firm based in Britain. "In Chrysler, you have an American company coming out of a German culture shock," he said. "Trying to meld that with a European and a Japanese company would be difficult."

A GM-Chrysler deal would cement GM's position as the world's biggest automaker, putting it far ahead of Toyota.

"Maybe this is (a) way for General Motors to go from 25 percent share to 39 percent share" of the U.S. market, said John Schenden, general manager of Pro Chrysler-Jeep in Denver, Colo., and head of Chrysler's national dealer council.

"Is this a tactic for UAW negotiations?" he said, referring to the upcoming contract talks with the United Auto Workers. "Like I told my people, it's out of our control. We have to just worry about our day-to-day of selling cars."

Industry specialists say a mega-combo might turn up the pressure on struggling U.S. auto suppliers, who already are dealing with high raw material costs and pricing pressure from automakers.

"I would think the merger would be disastrous for suppliers," said John Henke, president of Planning Perspectives Inc., a Birmingham firm that tracks automakers' relations with suppliers.

You can reach Christine Tierney at (313) 222-1463 or

© Copyright 2007 The Detroit News. All rights reserved.

GM, DCX talks serious

Monday, February 19, 2007
GM, DCX talks serious
Nation's top automaker could absorb Chrysler
Bill Vlasic And Christine Tierney / The Detroit News

General Motors Corp. has been in talks for two months with DaimlerChrysler AG about acquiring all of the troubled Chrysler Group and folding its operations into GM, according to people familiar with the discussions.

The first contact occurred in December, when GM Chairman Rick Wagoner and DaimlerChrysler Chief Executive Dieter Zetsche met in Detroit to discuss the blockbuster idea of GM buying Chrysler from its German parent company.

While a deal is far from certain, at least four meetings have taken place involving Wagoner and GM's chief financial officer, Fritz Henderson, and Zetsche and DaimlerChrysler's CFO Bodo Uebber. Talks are said to be ongoing, primarily between Henderson and Uebber.

Both companies declined comment Sunday.

The underlying rationale for the deal is the need for major consolidation in the intensely competitive American auto industry, said people with knowledge of the talks.

GM, the No. 1 U.S. automaker, is said to be interested in absorbing Chrysler's revenue, production volume and brands, while cutting duplicative labor costs, management and overhead.

DaimlerChrysler, for its part, is intent on dissolving the 1998 merger that brought together the former Daimler-Benz AG and Chrysler Corp.

A GM acquisition of Chrysler would essentially reduce the Big Three to a Big Two, with only GM and Ford Motor Co. surviving from the dozens of American automakers that once existed in the 20th century.

As the deal has so far been discussed, Chrysler would cease to exist as a company or a corporate subsidiary. Instead its factories, brands and products would become part of GM's organizational structure.

But industry experts say such a deal would be fraught with risk for GM, which is in the midst of its own turnaround.

"They're not far along enough, in my assessment, to take on something as gigantic as absorbing Chrysler," said Gerald Meyers, a business professor at the University of Michigan and former chairman of the AMC automaker acquired in 1987 by Chrysler.

Wall Street analysts also have been skeptical about whether this would be a good deal for GM, ever since last Wednesday when the talks were first reported in Germany's Manager magazine.

"GM already has too many brands that cannibalize each other," said analyst Brad Rubin at investment firm BNP-Paribas. "If you add three more, there's going to be more cannibalization."

The talks, according to one source, could take months to complete. Also, other bidders are likely to emerge for Chrysler, which lost $1.5 billion in 2006 on revenues of $62 billion.

But there is growing momentum in the discussions between GM and DaimlerChrysler.

At DaimlerChrysler, the negotiations are being handled in great secrecy, at the highest levels. Company insiders say the management concluded that it needed to sell Chrysler during the annual 10-year strategic review of its operations, which took place in the fall.

DaimlerChrysler sources said it would be beneficial to sell the Auburn Hills unit as a whole rather than in parts because of the health care liabilities, which are estimated at $18 billion. Without liabilities, Banc of America Securities puts Chrysler's value at $5 billion.

There are two crucial issues that could prevent a GM purchase from happening: what price GM would pay for Chrysler and how the United Auto Workers union will react to two of the Big Three automakers joining together.

After losing $10.6 billion in 2005, GM is in the midst of a historic turnaround that includes slashing more than 30,000 jobs and closing several U.S. plants.

Chrysler last week announced its own broad restructuring that will eliminate 13,000 jobs and downsize vehicle production to match its shrinking market share.

A combination of the two would lead to deeper cuts, according to Meyers. "If you think the layoffs you've seen today are large, well, it's going to be a bloodbath in Detroit and in the Midwest."

He said the Chrysler assets that would be most valuable to GM were the Jeep brand, which could be paired with the Hummer nameplate, and its minivans.

"You could make the case that it's a good defensive move (for GM)," Meyers said. "But it's a huge risk. There's a lot more to be lost than to be gained."

On Wednesday, Zetsche stunned the automotive world when he said that "all options are on the table" regarding Chrysler, including alliances with other automakers or a possible sale.

In fact, Zetsche had begun discussing the plan of selling off Chrysler with Wagoner in December, according to people with knowledge of the meeting.

The talks were said to be of a serious nature from the start.

Zetsche was coming under heavy pressure from German shareholders to dump Chrysler, which has ridden a roller-coaster cycle of profits and losses since it was acquired nine years ago.

The initial meeting with Wagoner established that GM was interested in a Chrysler deal.

While GM had hit bottom with its own losses and painful restructuring, Wagoner and his management team had growing confidence that its turnaround plans were on track.

Buying Chrysler would boost its volumes and revenues significantly, and ensure that GM remained ahead of Toyota Motor Corp. as the world's biggest automaker. In the process, Chrysler's management structure would be eliminated and much of its staff functions taken over by GM.

GM would add the Chrysler, Dodge and Jeep brands to its corporate lineup, and save money by spreading engineering and vehicle development costs over a larger and broader range of products.

Together, GM and Chrysler accounted for 11.8 million vehicles sold in 2006. Their combined U.S. market share would exceed 35 percent. And their status as American icons would make a combination of the two a historic event in the history of the U.S. auto industry.

GM's board of directors was said to be supportive of the discussions continuing. DaimlerChrysler's supervisory board has already publicly endorsed exploring "far-reaching strategic options" for Chrysler.

The wild card in any deal, however, will be the UAW. Bringing Chrysler into GM's organizational structure would likely require union cooperation on health care costs and staffing levels.

You can reach Bill Vlasic at (313) 222-2152 or

© Copyright 2007 The Detroit News. All rights reserved.

Sunday, February 25, 2007

GM cuts staffing agencies

Monday, February 19, 2007
GM cuts staffing agencies
The automaker will transfer work to fewer firms, putting others at risk of going under.
Sharon Terlep / The Detroit News

Dozens of companies that make their money providing contract workers to General Motors Corp. are becoming the latest casualties of the automaker's restructuring.

GM is eliminating 95 of 200 staffing companies located mostly in Metro Detroit that supply the automaker with workers ranging from secretaries to engineers.

GM wants to work with fewer contract staffing firms and weed out less efficient and redundant companies.

The most affected contract employees will continue to work for GM but will have to transfer to other companies. However, their employers are not only losing GM as a paying client, but also they are losing employees they hired and placed into jobs to their competitors.

The staffing firms say GM and Maryland-based Allegis Group, the company GM hired to manage its contract work force, are using their clout to poach workers and profits.

"CES has been supporting General Motors for 23 years," said Jay Miron, vice president of Computer and Engineering Services in Rochester Hills, which is losing 64 of its 300 employees in the shuffle. "I have friends in this business and, for some of them, it will close their company."

GM says it's treating the affected companies as fairly as possible as it moves to streamline its system for hiring contract workers.

For GM and other companies, contract labor provides flexibility in uncertain times. It allows the flexibility to bring in workers with key skills without adding them to the payroll permanently. It also offers the flexibility to downsize during slow periods without paying out expensive severance packages.

GM pays contract staffing firms, who in turn pay the workers' salary and benefits and retain a fee.

In recent years, Detroit's automakers and large suppliers have reduced their contract work forces by tens of thousands of workers, an often overlooked impact of the industry's downsizing.

Firms frustrated

Allegis Group, which was hired by GM in 2002 to consolidate the purchasing of its contract workers, recently sent letters to the 95 companies notifying them that their contracts will be terminated as of March 10.

The letters said GM-based employees will have the option of being reassigned to other temporary worker agencies.

"It has been determined redundancies exist in our supplier base capabilities within the program," said the letter from James Mann, Allegis' director of finance.

"In order to streamline operations and maximize efficiency and performance, it is necessary for us to reduce the number of redundant suppliers."

There's little argument that GM has the right to make the changes. Staffing firms seeking business with GM as part of the Contract Services Program, which Allegis oversees, must sign a contract that stipulates GM can hire their workers or transfer them to another company.

"It's a provision vendors agreed to," GM spokeswoman Brenda Rios said.

But several of the companies losing workers say they never expected GM to essentially hand their employees to rival contract agencies. Especially frustrating is that one of the companies gaining business with GM in the shakeout is Allegis-owned Aerotek Inc., which has several offices in Metro Detroit.

"It's like they're walking in and stealing these people," said Brian Baker, new business development manager at PlanTech Inc. in Farmington Hills.

He said 10 of PlanTech's 60 employees work for GM. "They're going to steal $750,000 of revenue out of my pocket.

"We had to agree to those contracts or we would have lost the business."

The president of another contracting company, who didn't want his name used because he's hoping GM will reverse its decision, said he's losing 15 of his 200 employees. Over the past several years, he said, he's lost about 100 employees to GM through Allegis.

"They're pretty much eliminating all of us and passing all the business over to their own company," he said of Allegis. "They're pretty much stepping on us and bullying us."

A spokesman from Aerotek referred inquiries from The Detroit News to GM, but maintained that Aerotek didn't receive any preferential treatment in the changes.

One worker from EDS who spoke to The News said some workers at the Plano, Texas-based company learned last week they would be transferred to Aerotek. The worker, who asked to remain anonymous, said employees are concerned because the benefits package at Aerotek isn't as generous as the one provided by EDS.

GM: No bias in decision

GM's Rios also said the automaker showed no preferential treatment to Allegis or Aerotek. She said the decision to reduce suppliers was based on several objective measurements, including the size of the companies, whether the services they provided were redundant and how well the companies measure up to performance standards set by GM.

While Allegis helped shape and measure those metrics, it was GM, not Allegis, that ultimately made the decision, she said.

"There was absolutely no bias in how we made our decision," Rios said.

GM said contract companies receive monthly updates showing how well they are performing against the standards. However, four companies that spoke to The News last week said they haven't received such an update for at least eight months.

The pain the companies are feeling is an unfortunate result of GM taking the necessary steps to cut costs so it can return to profitability, Rios said.

Working with a large number of contract houses requires more time and resources from GM, she said. And about half of the companies that are being cut have no workers positioned at GM, Rios said.

GM's move to scale back the number of companies makes sense, said Joseph Phillippi of AutoTrends Consulting in Short Hills, N.J.

"Those are the kinds of cost items that add up," he said. "They end up flying well below the radar in terms of areas of focus. But they can add up."

You can reach Sharon Terlep at (313) 223-4686 or

© Copyright 2007 The Detroit News. All rights reserved.

Saturday, February 24, 2007

Will GM really buy Chrysler?

Saturday, February 17, 2007
Will GM really buy Chrysler?
Talk of sale heats up as DCX shops U.S. arm
Christine Tierney and Bill Vlasic / The Detroit News

Two days after DaimlerChrysler AG said it was considering all options for its Chrysler Group division, signs multiplied that the German company is actively trying to sell the troubled American carmaker.

Several published reports said DaimlerChrysler was in talks with General Motors Corp. about a possible sale of Chrysler. Industry sources said unidentified private-equity funds also have expressed interest in a Chrysler deal.

DaimlerChrysler and GM declined to comment Friday on the reports. Company insiders told The Detroit News that while some talks may be taking place, an outright sale of Chrysler to GM is not a likely scenario.

Clearly, though, the process of selling off Chrysler is heating up rapidly.

The News has learned that JP Morgan Chase & Co., DaimlerChrysler's investment banker, has tapped its London-based mergers-and-acquisitions specialist Lawrence Slaughter to spearhead efforts to sell Chrysler. JP Morgan officials were at Chrysler's Auburn Hills headquarters this week and the firm is expected to issue a prospectus to potential buyers fairly soon.

The possibility of a Chrysler sale has riveted financial markets since Wednesday, when DaimlerChrysler's supervisory board effectively put the Auburn Hills automaker on the auction block.

On Friday, DaimlerChrysler shares rose 4.4 percent to $73.33 in heavy trading on the New York Stock Exchange. The stock has gained 13.8 percent in three days and is at a seven-year high.

But the reaction to a possible GM deal was less enthusiastic. Shares in the No. 1 U.S. automaker slipped 10 cents to close at $36.34 Friday amid concerns that a GM-Chrysler combination would slow GM's own recovery effort.

Details remain sketchy

While reports have cited talks between the two automotive heavyweights, details were scarce.

Trade publication Automotive News reported Friday that DaimlerChrysler and GM were engaged in "high-level" talks. Dow Jones Newswires reported that the companies have "at least discussed the possibility of GM buying Chrysler."

The talks were first reported by Germany's Manager magazine, which said GM Chairman Rick Wagoner and DaimlerChrysler CEO Dieter Zetsche had discussed a Chrysler deal. It said Chrysler's huge health care liabilities were a key issue that would have to be resolved.

A DaimlerChrysler spokesman declined Friday to comment on the reports. Bob Lutz, GM's vice chairman, would not address what he called "rumors" of a deal.

"We won't even confirm or deny the rumors," Lutz told The News in an e-mail Friday.

While Chrysler and GM have been in talks to build a large SUV together, according to sources, a full-fledged combination of the companies would be fraught with challenges.

"It's an idea that comes from out of the blue, but it's not impossible," said David Cole, director of the Center for Automotive Research in Ann Arbor. "The biggest issue is the pension and health care liabilities."

Firms aren't well matched

Both companies also are struggling with overcapacity, shrinking market shares and high labor costs. Moreover, their overlapping product lines could cause federal anti-trust issues.

"The product redundancies are huge," said George Magliano of the research firm Global Insight. "They have very heavy dependence upon big trucks. They have similar deficiencies in the car lineup."

With GM's long-awaited turnaround just now gaining traction, analysts wonder how Wagoner could risk the major acquisition of a slumping domestic rival. "For GM -- which hasn't exactly shown great skill in managing its own business -- to go out and buy a struggling automaker doesn't get me all warm and fuzzy," said Craig Huston, an analyst with the Gimmer Credit bond research firm.

People close to GM said while Zetsche and Wagoner enjoy a good relationship, the impetus for any talks between the two was DaimlerChrysler's urge to cut Chrysler loose.

DCX drops a bomb

On Wednesday, as DaimlerChrysler was prepared to report its annual earnings, Zetsche dropped a bombshell when he said the company was considering "all options" for Chrysler.

The announcement was all the more surprising given that it came as Chrysler was unveiling a restructuring that will slash 13,000 jobs and cut North American vehicle capacity by 12 percent.

But the decision to push a Chrysler sale had been building in recent weeks. After Chrysler lost $1.5 billion in the third quarter last year, German investors stepped up pressure on Zetsche to undo the 1998 merger of Daimler-Benz AG and Chrysler Corp.

Still, as recently as October, DaimlerChrysler was officially saying that Chrysler was not for sale. Company sources say Zetsche and other top executives began considering a Chrysler sale or spinoff after a companywide strategic review in the fall.

It was about that time when GM and Chrysler launched informal talks about possibly building sport utility vehicles together. Sources familiar with the plan said it centered on building a large Chrysler SUV off GM's Chevrolet Tahoe platform.

The question is whether GM has the appetite for a wholesale acquisition of Chrysler, which has an estimated $18 billion in health care liabilities and won't be profitable until 2008 at the earliest.

One key labor leader at GM's Adam Opel AG subsidiary in Germany said a Chrysler acquisition is the last thing GM needs.

"These are rumors and I hope, by God, GM wouldn't do anything like this," said Klaus Franz, who serves as deputy chairman of Opel's supervisory board. "We are on the right way to come back on track with the right products."

Detroit News Staff Writers Josee Valcourt and Sharon Terlep contributed to this report. You can reach Christine Tierney at (313) 222-1463.

Why GM might buy

Adding Chrysler to its fold would ensure GM remains the No. 1 global automaker for the foreseeable future.

The Jeep brand has a strong image and could pair well with GM's Hummer division.

Chrysler would give GM a strong family of minivans.

Why GM might pass

Chrysler's legacy costs, excess manufacturing capacity, bloated dealer body and truck-heavy lineup would exacerbate similar GM issues.

The purchase would be a major distraction for GM's management.

Buying Chrysler would invite huge investment banking costs and anti-trust issues.

Many of their models overlap, reducing synergies.

GM needs its cash reserves to fund its turnaround.

© Copyright 2007 The Detroit News. All rights reserved.

Federal appeals court takes hard look at law requiring tire inflation monitoring systems.

Saturday, February 17, 2007
Judges balk at suit over tire pressure
Federal appeals court takes hard look at law requiring tire inflation monitoring systems.
David Shepardson / The Detroit News

WASHINGTON -- A three-judge federal appeals court panel Friday questioned the legitimacy of a lawsuit that challenges a new federal regulation requiring tire pressure monitoring systems on all new vehicles starting this fall.

Tire makers and auto safety group Public Citizen claim in their lawsuit that the National Highway Traffic Safety Administration's regulation falls far short of what Congress intended when it passed a 2000 law requiring that all vehicles be equipped with such monitors by Sept 1. The legislation came in the wake of a recall of 13 million tires on Ford Explorers and other vehicles that were linked to nearly 280 deaths.

During a hearing before the U.S. Court of Appeals for the District of Columbia, Judges David Sentelle, Brett Kavanaugh and A. Raymond Randolph questioned whether the tire makers and Public Citizen had the legal right or "standing" to file the suit. Friday's hearing came more than three years after another appeals court threw out NHTSA's first tire pressure regulation, issued in 2002.

The plaintiffs must overcome several hurdles. One is showing that there is a higher risk to motorists from the tire-monitoring regulation that NHTSA imposed versus the one they support. They also must show they have a legal right to file the suit.

Marc Machlin, a lawyer for Public Citizen, noted that more than 78,000 accidents yearly are caused by under-inflated tires. "It's a very serious issue," Machlin said, before he was quickly cut off by Sentelle.

Sentelle said if there is only a general risk for everyone, the matter is best decided by "the political branches" -- i.e. Congress and the White House. Sentelle said under the Public Citizen theory, drivers, passengers and pedestrians -- basically everyone in the United States -- would have a right to sue.

"If everyone has standing, than no one has standing," he said. "What has the (Transportation) department done to prevent the companies from making safer tires?" Sentelle questioned how federal regulators could be held to account by tire makers.

But Kavanaugh also asked some tough questions of Justice Department attorney H. Thomas Byron III. He said it was "odd" that NHTSA could "water down" or effectively eliminate some of the requirements that Congress set in its statute.

Byron said Congress couldn't have meant to mandate an "impossible" requirement, namely that automakers certify that their systems work with all replacement tires.

NHTSA acknowledges that up to 1 percent of replacement tires would make tire pressure systems inoperative -- or 2.25 million of the 225 million replacement tires sold annually in the United States, a figure Byron sought to downplay.

"That's still a lot," Kavanaugh said. Friday's hearing lasted about an hour. The appeals court will issue a written ruling later this year.

Public Citizen, along with tire makers Goodyear Tire & Rubber, Bridgestone/Firestone North America, Cooper Tire & Rubber and Pirelli Tire, and the industry trade group Tire Industry Association, filed the suit against the U.S. Transportation Department and NHTSA.

"NHTSA's watered-down standards will cause more tire failures, leading to more deaths, injuries and property damage than standards meeting statutory requirements," lawyers for Public Citizen, the safety advocacy group, wrote in a legal brief filed last month.

$1.2 billion annual cost

It has been estimated that the requirements will cost automakers up to $1.2 billion annually to fully implement, beginning in the 2008 model year. Car manufacturers argue the lawsuit is an attempt by the tire industry to shift their warranty costs onto them.

Tire makers say NHTSA's regulation puts drivers and passengers at risk because it fails to provide for warning drivers of low tire pressure soon enough, doesn't require the systems to work with replacement tires and allows the monitors to be tested under conditions that don't take into account cold weather extremes, which can alter tire performance.

The regulation being challenged mandates that tire pressure monitoring systems alert drivers within 20 minutes if any tire is 25 percent or more below the recommended inflation level. NHTSA's prior proposal had set the figure at 10 minutes.

When the systems are in place, a radio transmitter sends a signal to a computer that lights a warning signal on the dashboard.

The rule under challenge also says all testing on the system would be done on a test track in San Angelo, Texas, which critics said would not take into account cold weather.

The regulation was issued in April 2005, after an appeals court ruled in August 2003 that NHTSA's regulation, which set the alert level at 30 percent below recommended inflation, adopted "a standard that permits plainly inferior systems" and that was "arbitrary and capricious."

You can reach David Shepardson at (202) 662 - 8735 or

© Copyright 2007 The Detroit News. All rights reserved.

GM in talks to buy Chrysler Group

Reports: GM in talks to buy Chrysler Group
Sources say the No. 1 automaker may buy DaimlerChrysler's struggling auto unit, according to reports.
February 16 2007: 4:05 PM EST

NEW YORK ( -- General Motors is in talks to buy DaimlerChrysler AG's struggling Chrysler Group in its entirety, according to several reports.

According to the reports, sources in Germany and the United States said high-level talks between GM (down $0.14 to $36.30, Charts) and DaimlerChrysler (up $2.83 to $73.08, Charts) executives are taking place.

Its German parent confirmed Wednesday it is looking at strategic options for the North American unit. When asked if those options included a sale or spin-off of the unit, DaimlerChrysler Chairman Dieter Zetsche responded "this means all options are on the table."

Chrysler Group announced Wednesday it would be cutting about 13,000 workers and closing plants over the next three years as a part of a restructuring plan aimed to restore profits by next year.

Talks of an alliance between GM and DaimlerChrysler was first reported recently in Germany's Manager-Magazin.

Other unnamed sources said to be familiar with the discussions confirmed the reports Friday for Reuters and the industry newspaper Automotive News.

DaimlerChrysler employed J.P. Morgan Chase & Co. to consider options for the Chrysler Group, to help the automaker explore strategic options, according to trade newspaper.

But others are also skeptical on whether the discussions are real.

"This would be an at least $5 billion plus deal and GM is not that liquid right now," John Casesa said, an automotive analyst with Casesa Strategic Advisors, told CNN. "I'm not convinced at all and I think it's unlikely."

Other experts contacted by said that while a GM purchase of Chrysler appeared unlikely, they could see other buyers emerging.

"The challenge is who would be a buyer," David Cole, chairman of the Center for Automotive Research, said Wednesday of a possible sale of Chrysler. "Maybe a Chinese company that really wants entrance into U.S. market or Renault-Nissan would see it fit with its strategy. But it's tough."

Chrysler's Valentine's Day massacre

Carlos Ghosen, the CEO of both French automaker Renault and Japanese automaker Nissan (Charts), had expressed interest in finding a North American partner to join the alliance between his two companies. Talks between GM and those two automakers last year were abandoned without any agreement.

Kevin Tynan, auto analyst at Argus Research, said Wednesday he believes Chrysler will end up being sold due to pressure from DaimlerChrysler's shareholders to undo the 1998 merger, but he thinks a sale to a private equity group is more likely than a combination with another automaker.

"There's value to those brands," he said. "I think relative to Ford Motor (Charts), there's less dead weight. Nine years later, it's probably the right thing to do. I think there's a feeling in Germany that it's time to cut bait."

Officials for DaimlerChrysler and GM issued no comments on the reports.

DaimlerChrysler has long tried to reverse the drop in sales with previous cost-cutting moves but slipped into the No. 4 spot last year behind Toyota (up $0.21 to $136.98, Charts) in the United States.

Other reports have suggested that talks between Chrysler and GM were more limited in scope than a full merger. The Wall Street Journal reported Thursday that the two were in talks to jointly develop a large SUV that would be similar to the Chevrolet Suburban, a product that Chrysler Group doesn't have in its lineup. The New York Times had a similar report Friday. Neither publication had their own reports on the potential merger talks as of mid-day Friday.

CNN's Katie Byron contributed to this report

© 2007 Cable News Network LP, LLLP. A Time Warner Company ALL RIGHTS RESERVED.

Friday, February 23, 2007

GM turns up $200M in earnings

Saturday, February 17, 2007
GM turns up $200M in earnings
Carmaker, which is working to straighten out accounting issues, restates finances after reviewing '02, '06 statements.
Sharon Terlep / The Detroit News

General Motors Corp. has turned up an additional $200 million in earnings previously unaccounted for between 2002 and 2006 in a review of its financial statements that is almost complete, according to a Friday filing with the Securities and Exchange Commission.

The automaker, which has restated results seven times in the past two years, said it may request a 15-day extension of the March 1 SEC filing deadline. GM was initially expected to announce its 2006 results on Jan. 30.

Previous financial statements "should no longer be relied upon," GM said in its filing, attributing the issues to tax accounting adjustments. The review "is substantially complete," the automaker reported.

Meanwhile, GMAC, GM's former finance arm, said Friday it also will have to restate financial results back to 2001, attributing similar accounting complications.

GM has been working to straighten out accounting problems that, in addition to delaying its earning news, have made the automaker the subject of a half-dozen investigations by the SEC.

Investors seem undaunted and more focused on GM's expectation that it's on track to post a significant improvement in financial results for 2006 compared to 2005, including a profitable fourth quarter with record revenue.

GM's stock price has nearly doubled from a year ago, closing at $36.34 on Friday compared to just more than $18 in December 2005. Shares fell 10 cents, or 27 percent, in Friday trading.

"I don't think it's making people feel negative," said Frank Khoshnoud, a Southfield-based principal in the automotive practice of consulting firm Capgemini Group. "Looking at a company the size of GM and given the complexities we have dealt with, it's not what I would call an indication of any malpractice on their part."

Last year, GM reported a $10.6 billion loss for 2005 -- after restating the result it issued previously.

Analysts have been expecting strong results from GM for 2006, a year in which the automaker pared its work force and cut production costs.

The GMAC sale has complicated matters for the automaker, as the former finance arm was not able to supply information on time that GM needed for its fourth-quarter report, GM has said. The automaker sold 51 percent of GMAC on Nov. 30 as part of an effort to raise cash.

GMAC, in a filing with the SEC, said the restatement will have a "material impact" on net income for most of the periods between 2001 and 2006.

The changes are expected to add up to a decrease of about $230 million, but will not affect GMAC's liquidity or cash flow, according to the filing.

You can reach Sharon Terlep at (313) 223-4686 or

© Copyright 2007 The Detroit News. All rights reserved.

VW follows GM, pulls its suicide-themed TV ad

Friday, February 16, 2007
VW follows GM, pulls its suicide-themed TV ad
Sharon Terlep / The Detroit News

Politically correct it isn't.

But as an attention-grabbing marketing gimmick, suicide in ads is getting the job done in the auto industry.

A week after complaints from suicide prevention advocates led General Motors Corp. to alter its now infamous suicidal robot commercial, German automaker Volkswagen AG agreed Thursday to pull a similarly themed spot.

The VW ad, titled "Jumper," features a man on the verge of throwing himself from a high ledge, complete with shocked crowd gathered below. A stranger dissuades the man by telling him it's possible to own a VW vehicle for less than $17,000.

Advocacy groups called both television ads callous and said they undermine the seriousness of suicide.

The folks at VW say they never intended to offend. The spot was meant to illustrate that "optimism over the VW brand can prevail over despair," spokesman Keith Price said.

Even so, the German automaker apologized Thursday and pulled the ad from airwaves.

Price argued that the VW ad is not the same as the GM spot, in which a robot, during a dream sequence, jumps from a bridge after being fired for making a mistake on the line. The ad was intended to highlight GM's five-year/100,000 mile warranty. "We see it as a very different portrayal," Price said of the VW spot.

Being like GM, however, might not be so bad in this case.

For as GM's marketing minds rework the robot ad, the original version is circulating widely on the Internet and generating mostly positive reviews. Rogue clips have been viewed more than 182,000 times on the video sharing Web site YouTube, generating an average rating of 3 1/2 out of five stars. Before GM pulled the ad it authorized on YouTube last week, it generated 300,000 views there.

The robot proved so popular, word is GM wants to bring it back for future commercials.

"They're bringing the robot back as an emblem of GM quality," said Greg Solman, West Coast editor of Adweek.

GM spokeswoman Ryndee Carney wouldn't confirm that, but did say it expects to air the ad, minus the suicide scene, during the Feb. 25 Academy Awards broadcast.

Solman said suicide has long been an effective and accepted comedic tool.

"Even though it's dicey territory, there's a long comic tradition that includes themes of 'woe is me' and contemplating suicide," he said. "To have made an entertaining commercial out of a 100,000-mile warranty is a creative coup -- not something to be condemned."

You can reach Sharon Terlep at (313)223-4686 or

© Copyright 2007 The Detroit News. All rights reserved.

GM and Chrysler eye partnership

Friday, February 16, 2007
GM and Chrysler eye partnership
If firms reach deal on making large SUV together, it would be first for U.S. automakers.
Josee Valcourt / The Detroit News

The Chrysler Group is in talks with crosstown competitor General Motors Corp. to jointly produce vehicles, including a large SUV similar in size to the Chevrolet Tahoe.

The maker of Dodge, Chrysler and Jeep cars and trucks has been in talks with GM for more than six months, said a person familiar with the plans, which have been described as advanced but not final.

"It's an example of a strategic partnership," the person said.

More strategic partnerships and joint projects were key ingredients in the restructuring plan that Chrysler CEO Tom LaSorda detailed on Wednesday in response to the automaker's $1.5 loss in 2006.

The Auburn Hills automaker is cutting production and 13,000 jobs.

If a deal is struck between Chrysler and GM, it would be the first joint effort between domestic automakers to build vehicles. There have been alliances with foreign makers. Ford Motor Co. once built Nissan Quest minivans for the Japanese automaker and Chrysler plans to build Volkswagen AG minivans at its plants.

GM and Chrysler also are exploring sharing small cars developed by GM's South Korea-based unit, GM Daewoo Auto & Technology, according to a report by the Wall Street Journal.

A GM spokesman wouldn't confirm Thursday any plans with Chrysler.

"We frequently discuss issues of mutual interest with other companies," GM spokesman Tom Wikinson said. "In many cases these discussions don't lead anywhere."

Though such collaborations help cut development and manufacturing costs, Chrysler's latest endeavor to add a large SUV to its truck-heavy lineup puzzled some analysts.

"I think it's crazy," said Erich Merkle, an analyst with Grand Rapids-based IRN Inc. "The reason why I say that is I don't have a problem with them maybe collaborating on a vehicle or maybe trying to combine some of their product developing resources to work on a common vehicle or common technology, but why a Suburban-type vehicle?

"Those vehicles have been so hard-hit. That's not exactly what the market is clamoring for."

Chrysler doesn't have a SUV in its lineup the size of a Chevrolet Tahoe or Suburban.

"It's missing, but is it necessary in today's auto environment," questioned Jeff Schuster, global forecasting analyst for Westlake Village, Calif.-based J.D. Power and Associates, which has an office in Troy.

Chrysler is in a joint venture with GM and luxury carmaker BMW to produce hybrid technology for the three companies. Chrysler also has a tentative deal with Chery Automobile Co. of China to build subcompact cars in China and sell them in North America and Europe.

© Copyright 2007 The Detroit News. All rights reserved.

Tuesday, February 20, 2007

GM in preliminary talks to buy Chrysler: source

GM in preliminary talks to buy Chrysler: source
Fri Feb 16, 2007 12:58 PM ET
By Megan Davies and Kevin Krolicki

NEW YORK/DETROIT (Reuters) - General Motors Corp. is in preliminary talks to buy Chrysler, a source familiar with the situation said on Friday.

The talks were first reported by the trade journal Automotive News. GM and Chrysler parent DaimlerChrysler AG declined to comment on the report.

Shares of DaimlerChrysler rose in reaction to the report. GM shares slipped at first but then moved higher.

Automotive News, citing unnamed sources in Germany and the United States, said the companies were engaged in high-level talks about GM buying Chrysler Group in its entirety.

The source who spoke to Reuters, however, said it was questionable whether GM would want Chrysler's finance business, having recently sold its own finance arm.

Speculation surrounding a possible sale or spinoff of Chrysler has built since DaimlerChrysler Chief Executive Dieter Zetsche said earlier this week that all options were open for its struggling North American unit.

DaimlerChrysler shares were up 3.5 percent to $72.72 in midday trading on the New York Stock Exchange. GM shares were up 19 cents at $36.63.

Analysts have questioned whether GM would benefit from a merger with Chrysler, since both automakers are struggling with excess production capacity, sliding sales and a heavy exposure to trucks and sport utility vehicles.

David Feinman, a fund manager who specializes in distressed debt with Havens Advisors, said he doubted that GM would complete a deal to buy Chrysler.

Feinman, who does not own GM debt, said both GM and Chrysler have too many overlapping models, and any merger would have to result in even deeper cuts to jobs and output.

"If they do merge, there would have to be massive streamlining and there would be hundreds of thousands of more jobs loss," he said.

He added, "The only one to benefit would be Daimler because they would get rid of Chrysler."

© Reuters 2007. All rights reserved. Republication or redistribution of Reuters content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Reuters. Reuters and the Reuters sphere logo are registered trademarks and trademarks of the Reuters group of companies around the world.

© Reuters 2007. All Rights Reserved

Reports: GM in talks to buy Chrysler

Friday, February 16, 2007
Reports: GM in talks to buy Chrysler
Christine Tierney / The Detroit News

DaimlerChrysler AG shares surged Friday on reports that the German automaker was in talks with General Motors Corp. about possibly selling its Chrysler Group division to GM.

Both DaimlerChrysler and GM declined comment, neither confirming nor denying the reports.

DaimlerChrysler shares closed up $3.80, or 4.4 percent, at $73.33 on the New York Stock Exchange, while GM shares slipped 10 cents to $36.34.

Trade publication Automotive News reported early Friday that high-level talks were taking place between DaimlerChrysler and GM executives, while Dow Jones Newswires reported that the companies have "at least discussed the possibility of GM buying Chrysler."

The talks were first reported on Wednesday by Germany's Manager magazine, which said GM Chairman and CEO Rick Wagoner and DaimlerChrysler CEO Dieter Zetsche had discussed a possible sale of Chrysler.

Zetsche announced Wednesday that DaimlerChrysler was considering all options for the ailing Chrysler division and no longer was ruling out a sale. Company sources said the management's change of heart followed a strategic review of the Stuttgart, Germany-based company's operations.

DaimlerChrysler announced a $1.5 billion 2006 loss at Chrysler on Wednesday, the day it outlined a restructuring plan for the Auburn Hills carmaker that calls for 13,000 job cuts. It will close one plant, cut production at others and pursue partnerships with other automakers.

Chrysler and GM have been in talks for more than six months about jointly producing vehicles, including a large SUV similar in size to the Chevrolet Tahoe, according to sources familiar with the talks.

You can reach Christine Tierney at (313) 222-1463 or

© Copyright 2007 The Detroit News. All rights reserved.

General Motors hints at positive 2006 results; financial statements not yet released

Friday, February 16, 2007
General Motors hints at positive 2006 results;
financial statements not yet released
Sharon Terlep / The Detroit News

General Motors Corp.'s most recent restatement of its financial results is "substantially complete" and has turned up an additional $200 million in earnings previously unaccounted for between 2002 and 2006, according to a Friday filing with the Securities and Exchange Commission.

The automaker, which has restated its results seven times in the last two years, said it may request a 15-day extension of the March 1 SEC deadline for 2006 financial results.

The world's largest automaker has said it expects its 2006 full-year results to reflect "significant" improvement over 2005, including a profitable fourth quarter with record revenue.

GM has said the changes are due primarily to tax accounting adjustments and some of the past restatements appear to be technical in nature, though the automaker is the subject of half a dozen investigations by the SEC.

Previously filed financial statements "should no longer be relied upon," GM said in its filing, attributing the adjustment to changes in hedge fund accounting.

You can reach Sharon Terlep at (313)223-4686 or

© Copyright 2007 The Detroit News. All rights reserved.

Sunday, February 18, 2007

Government investigates engine fires in Pontiac Grand Prix

Government investigates engine fires in Pontiac Grand Prix
12:35 p.m. February 2, 2007

WASHINGTON – The government has opened an investigation into engine fires in Pontiac Grand Prix passenger cars, officials said Friday.

The investigation involves 1999-2002 versions of the Grand Prix GTP with supercharged V6 engines. The National Highway Traffic Safety Administration said it received 21 complaints from consumers, including 16 involving fires that started five to 15 minutes after the vehicle was parked and the ignition was switched off.

The safety agency estimated that the preliminary evaluation involved nearly 72,000 vehicles.

Alan Adler, a spokesman for General Motors Corp., said the company was cooperating with the investigation.

© Copyright 2007 Union-Tribune Publishing Co. • A Copley Newspaper Site

GM to cut robot's jump from TV ad

Saturday, February 10, 2007
GM to cut robot's jump from TV ad
Automaker heeds outcry from advocacy groups to remove suicidal scene from Super Bowl commercial.
Eric Morath / The Detroit News

General Motors Corp. will retool its lonely robot ad after all.

The automaker on Friday bowed to pressure from advocacy groups to remove suicide references from the ad, and took the spot off its Web site,, and its YouTube channel.

The commercial, which hasn't run on television since the Super Bowl, will remain sidelined until it's re-edited, GM spokesman John McDonald said. The company had planned to run the spot again during Sunday's Grammy Awards, but will replace it with another ad.

Intended to highlight GM's commitment to quality, the ad features a cute yellow robot that drops a bolt while working the factory line.

The robot is fired for the mistake and left to seek service jobs such as being a speaker at a fast-food drive-in. In despair, the robot jumps off a bridge, then wakes up and realizes it was all a dream as an announcer says, "Everyone at GM is obsessed with quality."

The American Foundation for Suicide Prevention on Wednesday demanded that GM get rid of the ad, calling it insensitive to those with mental illness and suicidal depression. As late as Thursday, GM officials said they would not alter the spot, and it remained a centerpiece of its Web site.

After a discussion with the foundation Friday morning, the automaker changed course.

"We're going to edit the ad to take the robot falling off the bridge scene out," McDonald said. "We listened to the (foundation) and responded to their concerns."

The foundation's executive director, Robert Gebbia, applauded GM's decision, saying he hopes to talk with the company in the future about raising awareness of mental illness and suicide.

"I am pleased they reached out to us," he said. "I'm glad that there has been more discussion about the issues around suicide and hope other companies will follow in GM's leadership."

Copies of the ad still populate YouTube, but GM officials note it's impossible to control that content. The GM-authorized version of the ad had been viewed by more than 319,000 times on YouTube before it was pulled Friday afternoon

A carefully re-edited version of the ad could let GM capitalize on the controversy, said Dave Regan, a Michigan State University advertising instructor.

Newspapers and broadcast reports nationwide referenced the ad in stories.

"They could swing the needle in their direction," he said, "with smart re-editing that shows they listen to the public."

Regan said GM should consider also reworking a portion of the ad where the robot takes service jobs such as selling condos and hamburgers.

He said those portions could be insulting to workers who lost their jobs at GM and other automakers, and may have been forced to sell their homes.

GM's McDonald said he didn't anticipate those scenes being removed.

You can reach Eric Morath at (313) 222-2504 or

© Copyright 2007 The Detroit News. All rights reserved.

Engineered overseas, Astra and G8 may bring boost to U.S. brands

Thursday, February 08, 2007
Scott Burgess: GM's global vision comes into focus
Engineered overseas, Astra and G8 may bring boost to U.S. brands

CHICAGO -- General Motors Corp.'s vision of a boundaryless global company that melds the strengths of its far-flung operations came into sharp focus Wednesday at the Chicago Auto Show.

GM used the stage to unveil its German-made Saturn Astra and Pontiac G8, developed in Australia -- two cars designed to breathe new life into lagging American brands.

Imported from GM's Opel division, the small and sporty Saturn Astra is a symbol of the increasingly global auto industry. It's not an American car with European styling. It's a European car coming to America, made by Detroit's General Motors Corp.

GM buyers could be the winner. European engineers have spent decades perfecting small vehicles that sip $5 gas but are far more refined than the typical American econbox. This is one reason why Ford Motor Co. CEO Alan Mulally is talking about bringing the European Ford Mondeo to the states.

The Astra, which comes in three- and five-door versions (which is to say two- and four-door hatchbacks) brings to mind another vehicle with sensible European manners and performance to Saturn's portfolio -- the midsize Aura. The Astra provides Saturn with a real competitor to the Honda Civic.

Best of all, Saturn didn't muck up the Astra, now in its third generation in Europe. The front and rear ends were adjusted to adhere to American safety standards, and the Opel badge was changed to a Saturn one.

GM's Opel Astra performs well on the Autobahn and the showroom. Since its redesign in 2004, Opel has sold more than 1.3 million Astras in Europe. It's powered by a 1.8-liter, four-cylinder ECOTEC engine, which pounds out 140-horsepower. Its interior fit and finish is excellent. It's an exciting car -- especially the five-door model, which I prefer over the three-door coupe.

The coupe's back seat feels more cramped, in part, because the extremely small back window cuts too sharply toward the back of the vehicle. All of the Astras should hit U.S. dealer showrooms by the end of the year.

From Australia with torque

GM's second introduction Wednesday -- the Pontiac G8 sedan -- is another creation in GM's increasingly global product development strategy.

It was designed in Australia, where powerful rear-wheel drive cars are as popular as Foster's lager. The GT version shown in Chicago should be a blast to drive. The performance sedan will be Pontiac's new flagship, replacing the Grand Prix next year.

Its 6-liter, 362-horsepower V-8 may not win you environmental points, but your Woodward Dream Cruise street cred will be off the charts. The exterior of the G8 is menacing. Its dual hood scoops and honeycomb grille provide a machined look and its flared fenders highlight a broad, brooding stance. The beltline rises toward the rear of the vehicle and its high, short deck give it a forward-pitched stance profile that suggests this thing is fast. I can't wait to find out.

We can dream, can't we?

The international flair in Chicago didn't stop with GM's offerings. The supercharged BMW Alpina B7 is simply a dream that few will get the chance to live.

BMW will only bring about 200 of the 7-Series rockets to America. But those who get the chance and have $115,000 to spend on it will relish every minute.

Pushing more than 500-horses through its 4.4-liter, supercharged V-8, this car meshes pure luxury with high performance. What's not to love about this car?

A bull market for Ford?

One word not common to the German language -- but still center stage all day -- was Taurus.

Ford introduced the set of vehicles formerly known as the Five Hundred, the Freestyle and the Mercury Montego. They have now been bestowed the titles 2008 Ford Taurus, Taurus X crossover and Mercury Sable.

Despite some harsh media criticism, I like the trio, especially the crossover formerly known as a station wagon. The two-toned Taurus X Eddie Bauer edition shown in Chicago looks sharp. The three-bar grille and new front end conforms with Ford's styling.

More importantly, all three vehicles will receive Ford's new 3.5-liter engine mated to a six-speed automatic transmission that will be a huge improvement over the groaning and heaving 3.0-liter V-6 in the current version.

While the new Taurus and Sable still have bland profiles, they look better with their new names than they did with their old ones.

Another German standout from the show was the Volkswagen 2008 R32. Think of it as a Volkswagen GTI on Red Bull. The small R32 will have a 3.2-liter V-6 pushing 250-horses.

The performance tuning and all-wheel drive (another feature not offered on the GTI) should make this car a pure performer. Its brushed aluminum grill and one-piece front fascia will draw appreciative glances from aficionados but little from the untrained eye -- until it blasts past an unsuspecting commuter.

You can reach Scott Burgess at (313) 223-3217 or

© Copyright 2007 The Detroit News. All rights reserved.

GM urged to pull suicidal robot ad

Thursday, February 08, 2007
GM urged to pull suicidal robot ad
Eric Morath / The Detroit News

The American Foundation for Suicide Prevention isn't amused by General Motors Corp.'s Super Bowl ad depicting a despondent robot leaping off a bridge in a dream sequence, and demanded Wednesday that the automaker pull it off the air.

Calling the ad insensitive, the organization also wants GM to remove it from its Web site.

The "ad is insensitive to the tens of millions of people who have lost loved ones to suicide," said Robert Gebbia, executive director of the foundation. "The ad also suggests a troubling and potentially dangerous message that suicide is a logical and rational decision should one experience failure or lose their job."

GM officials said they won't pull or change the ad. It's "a story of GM's commitment to quality … It is not intended to offend anyone," spokeswoman Ryndee Carney said.

The commercial opens with a cute, yellow robot dropping a bolt in the factory. The robot is fired for his mistake and left to seek service jobs such as a speaker at a fast-food drive-in. In despair, the robot jumps off a bridge, but then wakes up and realizes it's a dream as an announcer says, "Everyone at GM is obsessed with quality."

On Wednesday, the robot and a video of the ad were prominent atop GM's Web site,

This week, Snickers pulled its Super Bowl ad after several groups called it homophobic.

Art Reyes, president of United Auto Workers Local 651 in Flint, said, "(The ad) is absolutely disgusting." Local 651's membership has been cut in half in the past 18 months because of job cuts. "Their way of life was destroyed. This just completely glosses over their hardships," said Reyes.

"What General Motors has been doing by tapping people on the shoulder to get rid of them, whole plants at a time, it wasn't because of a dropped bolt."

© Copyright 2007 The Detroit News. All rights reserved.

Saturday, February 17, 2007

Big Three try harder than ever to make customers happy

Thursday, February 08, 2007
Chicago Auto Show
Big Three try harder than ever to make customers happy
Sharon Terlep / The Detroit News

CHICAGO -- Never before have consumers been so courted by Detroit's automakers.

Now more than ever, the companies that once ruled the American car market almost by default have to fight to win over shoppers being wooed by a fast-growing legion of foreign rivals.

That competition is grinding away at Detroit's Big Three, evidenced by the financial turmoil engulfing General Motors Corp., Ford Motor Co. and DaimlerChrysler AG's Chrysler Group.

But if there's a bright side to the troubles, it's that people in the market for a new car or truck will find themselves deluged with attractively priced options better tailored to meet their specific needs.

This consumer-minded strategy is on display this week at the Chicago Auto Show, where Detroit automakers have announced everything from the revival of a once-beloved brand name to the launch of a sales strategy that includes letting potential buyers test drive a vehicle from their home.

New tactics tried

More broadly, automakers are employing technology and new tactics to find out exactly what it is that buyers want. Chrysler, for example, sends researchers out to watch how real people use their vehicles to gain insight into how to make improvements.

"The standard that used to satisfy people 10 or 12 years ago is completely unacceptable today," GM product czar Bob Lutz said on Wednesday in an interview during the auto show's media preview. "And if consumers aren't happy, there's plenty of places they can go."

Domestic automakers, while making major strides in fixing quality problems that helped drive consumers to foreign makers, still battle image problems. Executives at each of the Detroit automakers have said they can't just match product being churned out by Japan's Toyota Motor Corp. and Honda Motor Co. -- they have to do better.

Striking a chord with potential buyers is a key part of that strategy.

Appealing to customers is important enough to GM that the company on Wednesday rolled out an entirely new customer service strategy at its Saturn brand.

Saturn dealers will now deliver a vehicle to a consumer's home or office so it can be taken for a test drive. Some individual dealers have already adopted the practice, but Saturn will be the first brand to do so on a large scale.

Help available 24 hours

Saturn also will now have representatives available to chat online 24 hours a day with anyone looking to buy or with questions about a vehicle they already own.

"We really looked at what great brands are doing to differentiate themselves in the marketplace," Saturn General Manager Jill Lajdziak said, pointing to industry giants such as Starbucks Coffee Co. and Apple Computer Inc. Flawlessly aligning their product with consumer demands is a strength of both companies, she said.

More Saturn-like approaches are likely on the way from Detroit carmakers, said Joseph Phillippi of AutoTrends Consulting in Short Hills, N.J. The fact that the U.S. car market is relatively stagnant means competition between brands is likely to heat up.

"How do you win back market share?" he said. "You continually have to throw new ideas into the market to at least have a shot.

"This is the classic case of the oft-noted axiom, 'It takes one bad car to lose a customer but it takes you massive amounts of money to win that customer back.' "

Winning over customers has always been a goal for automakers, but it's getting more difficult as the competition increases. More than 350 models are sold in the United States today, a 50 percent increase in just seven years.

"This hypercompetitive environment, it's going to make you do things you wouldn't have done before," said Cisco Codina, head of marketing, sales and service for Ford in North America.

Keeping its customers happy was part of the motivation behind Ford's decision, announced Wednesday in Chicago, to rename the Five Hundred sedan Taurus.

The decision was partly fueled by auto dealers who said their customers missed the Taurus.

Ford did a market study and found that more than twice as many people recognized Taurus than the Five Hundred, and most had a positive impression.

"When you have such a crowded marketplace, you have to have a more articulated message," Codina said. "The problem is, how far do you go?"

At Chrysler, the company is trying to be hyper-sensitive to customers. Last year it began having people watch unwitting drivers in their vehicles -- someone trying to load groceries into a trunk, for example. It also sends engineers and marketing staff to speak with owners about what they like and don't like about their vehicles.

"As there's more competitors and more market segmentation, you've got to be more precise," said Frank Klegon, Chrysler's vice president of product development. "It's not just 'I think blue is the favorite color' anymore. You've got to get objective data and apply that."

You can reach Sharon Terlep at (313) 223-4686 or

© Copyright 2007 The Detroit News. All rights reserved.

NHTSA fuel bill may cost Big 3

Tuesday, February 06, 2007
NHTSA fuel bill may cost Big 3
Agency poised to push economy credit system domestic automakers say will favor competitors.
David Shepardson / Detroit News Washington Bureau

WASHINGTON -- The head of the National Highway Traffic Safety Administration said Monday the agency will submit a bill to reform vehicle fuel economy mandates that could be costly for Detroit's Big 3.

NHTSA administrator Nicole Nason told reporters Monday during a conference call "we expect to send legislation very soon … as soon as this week we hope."

The announcement was unexpected since her boss, Transportation Secretary Mary Peters, said last month it would be "several months" before a bill was hammered out.

Last year, the Bush administration proposed a bare-bones three-page bill that gave the administration authority to rewrite passenger car fuel economy rules without input from Congress and called for concrete targets. Many in Congress -- including some conservative Republicans -- want a specific numerical mandate. Some would require vehicles to average 40 miles per gallon within 10 years.

In March 2006, NHTSA reworked light truck rules, creating a size-based system. The rules aim to save 10.7 billion gallons of fuel, raising average fuel economy from 21.6 mpg to 24 mpg by 2011. It will cost automakers an estimated $6.2 billion, according to a government estimate, for just a 1.2 percent increase in fuel economy per year.

Nason said the bill will be "similar to last year's proposal" but will also include language to create a "credit trading system," which would allow automakers to buy and sell credits among themselves to meet requirements.

Domestic automakers -- which have lower fuel economy averages than Toyota and Honda -- have strenuously opposed a system, saying they could be required to give their competitors millions of dollars to comply. "Why would we take cash they don't have and give it to their competitors?" asked U.S. Rep. Mike Rogers, R-Brighton.

In his State of the Union address, President Bush proposed cutting gasoline usage 20 percent by 2017 -- in part, by improving the fuel economy of the cars and trucks.

Bush also proposed automakers increase fuel economy an average of 4 percent yearly -- beginning in September 2009 for passenger cars and 2011 for light trucks.

Those improvements, Bush said, could save the nation 8.5 billion gallons of gasoline annually by 2017. Bush also wants to increase the use of alternative fuels seven-fold by 2017.

Automakers have long opposed and successfully blocked increases in fuel economy rules for passenger cars, though publicly said they support "technically achievable" fuel economy increases.

Foreign and domestic automakers also have called Bush's proposal "very aggressive," but haven't opposed it.

Nason is to testify later this month in front of Dingell's committee. Several other climate change hearings are in the works, including an appearance by former Vice President Al Gore before Dingell's committee on March 21.

Nason said to complete congressionally mandated rule making, it proposes to spend $500,000 more. NHTSA has several major rule makings, including side-impact protection and roof strength, to finish by 2008.

© Copyright 2007 The Detroit News. All rights reserved.

2008 Saturn Astra XR 3-door

Sunday, February 04, 2007
2008 Saturn Astra XR 3-door
Saturn revamp continues with Astra
Sharon Terlep / The Detroit News

LAS VEGAS - Saturn's smallest new vehicle debuts this week at the Chicago Auto Show, where General Motors Corp. will showcase efforts to reinvent the brand it started nearly 17 years ago.

GM is so eager to start selling the Saturn Astra in North America that the automaker will initially ship the cars into the U.S. from Belgium, where the virtually identical Opel Astra is already being built.

The automaker today released details on the vehicle, which is set to hit showrooms late this year.

"The Astra rounds out our portfolio with a smart-driving, well-equipped small car that shares the European designs evident in all our new vehicles," said Jill Lajdziak, Saturn general manager.

The once-feisty Saturn brand is making a comeback after nearly a decade of losing money and customers and getting virtually no new products.

The Astra is part of GM's strategy to share engineering and design resources between the Saturn and Opel brands - an approach designed to save money as well as create vehicles popular in both Europe and North America.

"This is a dramatic renaissance for Saturn and the Astra really does fit with where they're headed as a brand,"said Joseph Phillippi of AutoTrends Consulting in Short Hills, N.J.

The Astra will be available as a three-door or five-door hatchback

Electronic stability control system with traction control is standard on all three-door Astras and available on five-door models. A 1.8 liter, four-cylinder engine will deliver 140 horsepower.

Safety features include six standard air bags, active head restraints and collapsible pedals that help protect occupants in a front-end collision.

Optional features include a large, two-panel sunroof available on five-door only, heated cloth or leather seats and seven-speaker sound system

The Opel Astra, not available in the United States, is a strong seller around the world, with sales of about 400,000 units annually.

Other examples of Opel-Saturn sharing include the Saturn Sky roadster and its sister vehicle, the upcoming Opel GT, and the Opel Antara and 2008 Saturn Vue sport utility vehicle.

The Astra, which will replace the Ion, will be the fifth new product out of Saturn recent years. Once it comes out, no Saturn will have been in the market more than 20 months.

The revamping of Saturn began with the Sky roadster in March 2006 and continued with the Aura sedan, Outlook crossover and a redesigned Vue sport utility vehicle. Saturn also will debut hybrid and performance versions on the Vue in Chicago.

Saturn was the only one of GM's eight brands to post an increase in sales last year. Saturn sales were up 6 percent from 2005, to 226,375 from 213,657.

Saturn needed a complete overhaul to survive, Phillippi said, and is well-positioned to compete even in the crowded compact and mid-size car segments.

"The products they had before were not very good, they were just different," he said. "They're no longer these inexpensive, kind of quirky cars with the plastic panels."

GM's North American Chief Troy Clarke said GM picked Chicago for the Astra's debut in part because the vehicle is expected to be popular among Midwesterners.

© Copyright 2007 The Detroit News. All rights reserved.