Episode 278 – Slow Sales Expected Next Year, Toyota To Cut In CA, Aid To Opel Questioned

November 24th, 2009 at 12:00pm

Runtime 7:11

Car sales may not go up as much as initially thought in the American market next year. Toyota is considering moving a significant amount of employees out of California in order to cut costs. A German supplier executive says don’t give aid to Opel because it will hurt other European automakers. All that and more, plus a look at the all-new Suzuki Kizashi.

Transcript and Story Links after the jump . . .

Here are today’s top headlines. Car sales may not go up as much as we thought in the American market next year. Toyota is going to move a significant number of employees out of high-cost California. And a German supplier executive says don’t give aid to Opel.

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

This is Autoline Daily for Tuesday, November 24, 2009. And now, the news.

Most automakers and analysts have been predicting that new car sales in the U.S. market will rise by 1 million units in 2010, to roughly 11.5 million units. But the Associated Press quotes an analyst from Fitch Ratings who says the increase will be smaller than that and only reach 11.1 million, due to high unemployment, lower housing values and a higher savings rate. However, some suppliers have told me they think European and Japanese automakers will transfer more production to the U.S. due to the weakness of the dollar.

Very interesting article in Bloomberg today about Manfred Wennemer, the former CEO of German supplier Continental AG and a member of a German trust that was overseeing Opel. He says governments propping up Opel will hurt other European automakers, because all of them have to close outdated plants. Wennemer says Europe needs to cut 25 percent of its automotive workforce to get capacity in line with demand, and it better do it before Asian automakers build more low-cost factories in eastern Europe. He says he saw the same thing happen in the United States, when Asian automakers built low-cost plants in the south and the domestic automakers couldn’t compete with them.

Kia just introduced the Cadenza, a new large sedan to replace the Amanti. The vehicle is lighter and shorter than the Amanti but has a longer wheelbase. It’s equipped with a 3.5-liter V-6 which is mated to a six-speed automatic transmission. Fuel economy is 9.4 l/100km or 25 MPG. The Cadenza goes on sale worldwide next year except in North America and Europe.

Toyota is considering moving a “significant” amount of employees out of California in order to cut costs. According to Bloomberg, the company may move its product planning, accounting, travel and data services in LA to Kentucky or Michigan, closer to where its engineering and assembly plants are located. In addition the company may also encourage about 200 managers at the same facility, to retire early.

BMW just revealed its brand-new, sixth-generation 5 Series. For 2011 the Munich middleweight now shares a platform with the company’s 7 Series flagship. Besides giving it the longest wheelbase in its class, this also results in a body structure that’s 55 percent stiffer than its predecessor. It will be built alongside the 7 in BMW’s Dingolfing, Bavaria plant.

To keep weight down, aluminum is used extensively in the doors, hood, front fenders and suspension. BMW offers dizzying number of engine choices. The gasoline-powered options include one V-8 and three inline-sixes. If diesel gets your motor running, the company offers two straight sixes and a four cylinder. An eight-speed automatic transmission is available with all engines.

As expected in this price range, the new 5 Series offers just about every high-tech gadget and electronic doo-dad you can think of, from driver-adjustable suspension to night vision to rear-wheel steering.

Design-wise, the new 5 looks like it’s finally starting to break with BMW Bengal influence. Inside and out the 2011model borrows heavily from the 7 Series, which isn’t a bad thing.

Coming up next, a look at the all new Suzuki Kizashi. We’ll be back right after this.

Nearly every automaker in the American market has seen its sales slide. But Suzuki has been one of the hardest hit, through October sales are down a whopping 55 percent for the company in the U.S. That’s why the timing for the release of its new sedan, the Kizashi, couldn’t come at a better time.

Not only does Suzuki need it to be a sales success they’re hoping it will change people’s perception of the company. It’s the company’s first mid-size sedan and was completely designed and engineered by Suzuki as well.

While developing the vehicle, the company used the Alfa Romeo 159, Acura TSX, and the Volkswagen Passat as benchmarks. In addition the vehicle was tuned on European and American roads. The result is a well handling car that features a rigid chassis.

The Kizashi is equipped with a 2.4-liter four-cylinder engine that is equipped with a six-speed manual and a CVT is also offered. All-wheel-drive is an available feature and can be turned on and off by the driver. Fuel economy comes is in the low twenties in the city and up to the low thirties on the highway, depending on the configuration.

Suzuki is taking a similar approach like Hyundai/Kia in equipping the Kizashi with loads of standard equipment, like push-button start, steering wheel controls and sport seats in the front. Safety features like electronic stability control, eight airbags and ABS are all standard too.

Look for the Kizashi in showrooms next month with a starting price just under $20,000. And a fully-loaded Kizashi costs over $27,000.

Before we go we need to let you know there will not be an Autoline After Hours this Thursday night, since we’re all going to home eating Thanksgiving dinner. But we will be back next week, with Autoline After Hours coming to you live from the LA Auto show. In fact, we’ll be webcasting on Wednesday from 11:30 a.m. to 1 p.m. Pacific Time live from the floor of the show, so that you can get the absolute latest news, as it breaks.

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

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22 Comments to “Episode 278 – Slow Sales Expected Next Year, Toyota To Cut In CA, Aid To Opel Questioned”

  1. HtG Says:

    What a relief to look at the new 5 series. Smooth, elegant, and rich are back. Now, how to get those Banglebortions off the roads?

  2. G.A.Branigan Says:

    Looks like GM is batting a thousand….Konigsegg(sp) is backing out on their deal to buy Saab.Couple that with the long running problems trying to off Opel,looks like GM will close this year even further down in the dumps.What a soap opera.

  3. Pedro Fernandez Says:

    Wow, the Kizashi is lighter and smaller than its competitors, finally someone with the guts to break the mold, I hope buyers respond. And Gov Ahnold, looks like Toyota is leaving Califohnia and they wont “be baack”.

  4. Pedro Fernandez Says:

    Yep, GA, despite all the resuscitation attempts by the beleaguered taxpayers of this country, looks like the once world auto giant can not save itself from all the years of consistent mismanagement and screw ups. Looks like we’re gonna be a one horse town.

  5. paulstewart Says:

    Only time will tell.

  6. Bill Bowen Says:

    I’m not the least bit suprised that Toyota is going to move a lot of their staff out of California. Look at history – GM, Ford and Chrysler ditched California starting in the 70s and Nissan did it just recentoly. Toyota just recently decided to close NUMI in Fremont. Add that to the fact that Hewlett-Packard is moving more and more of its operations out of CA, as is Intel and a number of other high-tech companies. Mitsubishi Electronics left CA nearly a decade ago.

    The cost of doing business in this state is totally out of line, and the situation is getting worse by the day. The Governator and the morons in the Legislature couldn’t even buy a clue.

    Will the last one out of California please shut out the lights on the white elephant at 12th & M (the State Capital Building)?

  7. T. Bejma Says:

    Pedro – Although nothing would make you happier then to have your “chicken little” predictions for GM come true, SAAB is already in Administration (US Chapter 11) and if no one buys them, they will simply go away, just like Saturn and Pontiac, without GM spending a dime…

  8. Jim Sachetti Says:

    # HtG Says:
    November 24th, 2009 at 12:10 pm

    What a relief to look at the new 5 series. Smooth, elegant, and ..a clone of the new 7 series, say I. Which is good, but bad for the 7 to be mixed with the 5er. Audi apparently has a similar strategy and its A8 used to be hard to distinguish from the lesser A6, and it has hurt A8 sales.

  9. Jim Sachetti Says:


    Suziki should pack and go. Too little, too late, and the unpronounceable model will not save it, as it has many weaknesses as well. TOyota and Honda are more than enough, with Nissan being the poor man’s Japanese models, and Subaru the niche 4wd market. All other Japanese imports should get it that they will never make as dime here and leave. Overcapacity, anyone? Too many models chasing too few customers? No way to make a dime. Survival of the Fittest! is the only way.

  10. Jim Sachetti Says:

    John McElroy,

    Sales will not just be poior next year, at near this years dismal, rock-bottom, 25 year low levels, they will also be poor for November, further refuting your point that the CFC disaster was any good for anybody, especially the long-suffering taxpayer who coughed up the $3 billion to have people buy cars they would buy later anyway, and steal demand from the new model year (Nov sales!)

  11. Jim Sachetti Says:

    I looked at the INVENTORIES for cars and trucks as of Nov 1, and they are back to DISMALLY High levels, what a waste! And this further highlights what a DOG the cash for clunkers program was, and how the incorrigible Detroit 3, after the CFC cleaned up (long overdue) the inventories, started producing again cars people do not need!

    And it is not just Detroit, Honda also has a dismally high 80 day sof inventory. And I know Honda are major league cheapskates and do not do incentives even at 20% of what GM Ford and Chrysler give out, so how will they sell all these vehicles? It seems the Koreans are eating everybody’s lunch!

  12. T. Bejma Says:

    Jim Sachetti Says:
    November 24th, 2009 at 3:26 pm
    I looked at the INVENTORIES for cars and trucks as of Nov 1, and they are back to DISMALLY High levels

    What are you spewing now Jim?!?


    60 days is the industry target…

    General Motors has a total of 70 days
    Ford has 75
    Chrylser has 68

    Compare that to the 168 days that GM had in May and I’d say they are doing fine…

    So many glass half empty guys around here… Sheesh…

  13. Tony Gray Says:

    Overall the 5 doesn’t look too bad, but the hood looks like it already underwent some European Pedestrian Crash Standards testing. Loads of creases on that bonnet.

  14. Pedro Fernandez Says:

    @ Jim: how can sales do anything but go down, just about every single person I meet is struggling, either having lost their job, working less hours or fearing of losing what ever job they now have. The outlook is dismal despite what all these clueless, glass tower dwelling economist may think, sometimes I wonder if this is the liberal media attempting to make their American Idol look better than his predecessor. Just about every body I know of that has bought a car in the last year has bought a used one. This is gonna be a very loooong recession.

  15. Pedro Fernandez Says:

    Well, weren’t these factories closed for most of the summer? Imagine if they had stayed open the supply would a lot bigger. Let’s face when you go from an annual volume of 16 mill to 10 mill something has to give, especially since Hyundai/Kia have gained market share.

  16. Salvador G. Says:

    Have to say, BMW does not have any new ideas as to how design a new car??? -that’s probably one of the uglies front hood on a car… do people realize that’s the only part of the car that does not match the rest of the car, we should call it the 5-Scarface Series.

    What I don’t understand, is why Suzuki spended all that money on designing a car from top to bottom and didn’t bother to come up with a better name, well; it’s not going to be sold in N.America so I guess doesn’t it doesn’t matter.

  17. Pedro Fernandez Says:

    Salvador: it is going to be sold here, I just don’t know how many will actually be sold! People are afraid to buy cars from companies that may not stay in business long

  18. Jim Says:

    Last month Suzuki sold about 1250 total cars and small suv’s but when I read the totals broken down it stated they only sold THREE cars total the rest were small suv’s so if that total is correct then Suzuki does even sell cars here they just haven’t figured it out yet.

  19. Salvador G. Says:

    Thanks Pedro, your right – I just confuse the Kia news with Suzuki.

  20. Jim Sachetti Says:

    T. Bejma Says: “60 days is the industry target…”

    How old are you, 95???? 60 days was considered ideal LONG before Toyota took the incompetent big 3 to the cleaners, today NO self-respecting maker wastes BILLIONS of dollars in invewntory like that, the science of inventory control, taught in Induatrial and Operations Engineering departments for 50 YEARS now, has helped all kinds of companies, but especially Toyota, and other automakers, make BIG proifits and satisfy their customers with FAR FAR LESS than the DINOSAUR voo-doo rule of the thumb from the previous century…

    But even using your own numbers, they are way above even the bloated 60 days:

    “General Motors has a total of 70 days
    Ford has 75
    Chrylser has 68″

    And Honda has 80, I have no clue why, but TOyota and Nissan and Subaru are lean annd mean, and so are BMW and MErc, BTW!

    Ever heard of LEAN Manufacturing?


    BTW, the THINKING, RATIONAL Engineer never considers the glass half full NOR half empty.

    Instead, he correctly points out that the glass is, very wastefully, twice the size it should be.

  21. paulstewart Says:

    Had to look at the site, 20 replys to the show. Noticed it was Jim Sachetti again telling us all about his concept of what lean manufacturing should be for the Global Six. Remember people he knows all !!!

  22. HyundaiSmoke Says:

    The American Suzuki website advertises the Kizashi (KIZZ-AH-SHI) “as the beginning of Suzuki’s new Luxury Marque.”

    So, I guess Suzuki is Following Hyundai and VW upmarket?