Episode 138 – BMW Posts Small Loss, Report Shows Big 3 Profit Gap, Nissan Seeks More Aid

May 6th, 2009 at 12:00pm

Runtime 6:09

BMW posts a net loss in the first quarter but performed better than analyst expectations. A new study of the product development process shows a $2,500 profit gap between the Detroit Three and their major Asian competitors. Nissan wants more money from the Japanese government. All that and more, plus John answers viewer questions in the “You Said It!” segment.

Transcript and Story Links after the jump . . .

Here are today’s top headlines. BMW posts a smaller than expected loss. The Vertare Report shows a $2500 profit gap for Big Three. Nissan wants more money from the Japanese government.

Up next, we’ll be back with the news behind the headlines.

This is Autoline Daily for Wednesday, May 6, 2009. And now, the news.

BMW reported a net loss for the first quarter. Automobile production fell 34 percent. Revenue fell 13 percent.  Working capital fell by 1 billion euros. And that translated into a net loss of 152 million euros. But that’s not much of a loss, and it beat analyst expectations, so BMW’s stock price rose. Even more impressive is that by reducing inventory and cutting cost, BMW actually increased its cash flow by 5.6 percent, or by more than a billion Euros, and positive free cash flow by 220 million. All I can say is wow, those guys know how to run a car company.

A new study of the automotive product development process came out today. Called the Vertare Report, it documents how the Detroit Three automakers have moved all their small- and medium-size car development outside of the United States. Moreover, it shows a $2,500 profit gap between the Detroit Three and their major Asian competitors. Vertare is calling for a new product creation infrastructure that can dramatically reduce the time and cost to develop new products. That report, a white paper and an assessment is available from Vertare LLC. Full disclosure here. I’ve been involved in helping to prepare that report.

We’ve reported on this before but now it looks official. Autoblog reports that in court filings Chrysler says its future lineup could include the Fiat Cincocento, Grande Punto, and Panda models, as well as the Alfa Romeo Mito. They could all be built in one of Chrysler’s underutilized U.S. factories. Along with these new vehicles, Chrysler is also likely to have access to Fiat’s 3.0-liter diesel V6, its “mulitair” engine lineup and its dual-clutch transmissions.

Reuters reports that the Penske Automotive Group has announced interest in acquiring the Saturn brand. The company already has 310 dealerships and is the exclusive retailer of Smart Car in the U.S. An acquisition of Saturn and its distribution network could significantly grow its operations. The company has not made a proposal to GM yet, but we’re including this story is because it involves Roger Penske, and that man makes news!

Nissan is seeking 100 billion yen, or $1 billion, in aid from the Japanese government. According to the AFP, Nissan already received 50 billion yen from the government as part of its lending program to help Japanese businesses deal with global economic downturn. I keep hoping the people opposed to the Big Three getting government loans hear these reports. It’s not just the GM and Chrysler who need bailouts.

And here’s one we just could not resist. Scientists at the University of Warwick in the UK unveiled a race car that can run on biodiesel created from vegetable oil and chocolate waste. Other parts of the body are made up of renewable sources. The steering wheel is made of plant fibers derived from carrots and other vegetables. And the seat is made of a flax fiber and soybean oil. The race car is built to Formula 3 standards. According to the AP, the scientists hope to get the car up to 145 MPH, or 233 km/h, when they test the car on a track in the next few weeks. So far they’ve driven it up to 60 MPH, or 96 km/h.

Coming up next, it’s time for me to respond to some of your mail.

And now it’s time for some of your feedback.

This is “You Said It!” where I get a chance to respond to some of your mail and comments. And you all sure had a lot to say about the new Ford Taurus SHO, mostly positive.

EAB wrote in to say that after a bad experience with the Ford Windstar he only bought Hondas and it would be a cold day in hell before he bought another Ford. But now he says,”It is getting cold in Hell right now. And the SHO, well, if I have the $$ in a year or two, I’ll have one. Keep going Ford, and it will be YOU, not Toyota, who’s the 21st century GM.”

But Don from Royal Oak wrote in to say: “I was thinking the SHO would be a bad a#$ sedan and then I lost all interest when they said automatic. For Shame.”

A number of you complained about the price of the SHO. paulstewart says: “That SHO should not be a Penny over 35K, Shame on Ford!!! And that’s too much. I’ll stick with my ’95 stick.”

We also got a number of props for Murray Feldman from Fox 2 in Detroit who filled in for me yesterday. And I agree with you all. What a pro! Murray, thanks for all your help.

Don’t forget that all this week you can enter our trivia contest. All you have to do is sign-up for our free e-mail newsletter. I’ll be picking the winner Friday on “Autoline Daily” so sign-up today!

And that’s it for today’s top news in the global automotive industry. Thanks for watching, we’ll see you tomorrow.

11 Comments to “Episode 138 – BMW Posts Small Loss, Report Shows Big 3 Profit Gap, Nissan Seeks More Aid”

  1. Ron Harrington Says:

    Hope Fiat brings the CINQUEcento here indeed.

  2. Dan Bruckbauer Says:

    John; I heard through an OEM supplier that a group of Pontiac dealers and investor’s in the Detroit area were going to try and buy Pontiac, any info on that?

  3. Salvador G. Says:

    Welcome Back John.

    1. Does anyone know, Is it legal to kidnap BMW executives?

    2. Who would like to bet that NISSAN will get their money from the govertment in Japan and the Japanese will love it?

    3. I do have to ask….
    I wonder what a race car taste like???
    I’m not crazy about the calories… Hummn and I really dont like soy and carrots.
    :P

    When they decide to make race cars out of hamburgers, I’ll considerate.

    -

  4. craigerzgt Says:

    The “bailouts” for other car manufacturers is poorly reported on by the mainstream media, and it is a shame that the only brands being mentioned are GM and Chrysler, who are taking a wicked beating for it. Thanks John for being a source to find out all of this good info.

    As for Penske purchasing Saturn, how would that work? Would they be able to contract the current models out from GM and possibly its European brands to be sold here, or would Penske create and engineer models himself? Sounds like a great idea, and Penske seems to be a current and modern force that could drive Saturn into what it should have been.

  5. pedro Fernandez Says:

    Craig, they’ll most likely import Chinese cars, which the Chinese would be only too happy to dump, er, sell here at a very attractive price. And there will be people that will buy them, of course, just like they bought the Yugo and are now buying the Smart (stupid) car.

  6. Bill Mohrbacher Says:

    There is a lot being said about shuttering US plants, building Fiats in US plants, Roger Penske buying US plants, etc. What is happening to the Mexican plants the US automakers have built? GM’s foundries, the Buick Rendevous plant, the Chrysler engine and transmission plants, the truck and Jeep assembly lines, etc,etc?

  7. Steve Says:

    Like the comments about the SHO but your reporting of the horsepower number is a bit short of the real numbers. From the people I know working on it they are saying more like 440 horses. With that kind of power under the hood it may well justify the price. But I do agree with comments that it should have a stick. Too bad the car was never designed to provide one. I should know, I worked on it.

  8. craigerzgt Says:

    Boy the people that buy the first Chinese products are going to be in for a shocker. Did anyone see the ones on display in Detroit this year? From ten feet they looked okay, but the gaps were abysmal at best, and underneath the doors were unpainted, and panels (mind you, this is a brand-new car that people couldn’t get in!) that didn’t line up. And that’s the stuff you COULD see on a NEW car!

    I’m with Jeremy Clarkson: sure we laughed when the Japanese first brought cars over in the ’70s, but they were built in a capitalist country. As Clarkson pointed out, the Russians have never been able to make a proper car, as well as other communist nations. The Chinese will never be able to build a proper car because of their communistical culture because a communist country has never made a proper car.

  9. Dave E. Says:

    Concerning the Vertare Report, I’m wondering if the cuts have gone to far at GM. It appeared that the plan at GM was to have Daewoo design small cars ie Aveo. Cobalt and Cruze design in the US, Opel to design the mid size Malibu, Australians to design the Camaro and I assumed that the Impala would go away. Losing Daewoo and Opel will take a big bite out of GM, witch doesn’t bode well for their future.

  10. Brentton Says:

    All I keep thinking about is the Penske consideration of purchasing Saturn.

    I am dying to know if Hendrick is looking into purchasing Pontiac. It would be a revival for NASCAR to see a major player in the points to own his own car company. I would buy something that Rick Hendrick would put his drivers in. And to see a G8 going around the track would have me happy!

    Props to BMW…keep it up!

  11. Christophe Gaillard Says:

    John,
    you mentioned about the Vertare report and I am interested in reading it. I visited their site but could not find that specific report. Could you please specifically mention where and how this report is available? Is it free? Is there a cost? Does it require membership?
    Thank you
    Regards,
    Christophe Gaillard