Episode 390 – Ferrari Idles Maranello, Toyota to Cut in Japan, The Fastest Porsche Ever
May 12th, 2010 at 11:19am
Runtime 7:59
Ferrari idles its Maranello plant and lays off hundreds of workers. Toyota will permanently reduce production capacity in Japan for the first time ever. Porsche introduces the fastest production car in its history. All that and more, plus John answers your questions and comments in “You Said It!”
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Transcript and Story Links after the jump . . .
This is Autoline Daily for Wednesday, May 12, 2010. And now, the news.
GM WANTS GMAC BACK
General Motors is looking at starting its own captive finance arm again the Wall Street Journal reports. Remember, GM sold GMAC to Cerberus in 2006 to raise cash, which at the time I described as the biggest blunder in the history of the automaker. And here’s why I said so. GM started GMAC, the General Motors Acceptance Corporation in 1919. You see, dealers have to buy their cars from a car company and they need financing to be able to do that. Then they turn around and sell those cars to customers who also need financing. So as a car company, you get to finance the sale twice, and then you can take all that money and invest it to make even more money. It’s the best racket in the business. So when GM sold GMAC it was worse than shooting itself in the foot, it was like shooting itself in the head. And no wonder they want to get back into financing.
NISSAN POSTS PROFIT
Nissan reported its year end results today. Company CEO Carlos Ghosn said that Nissan sold 3.5 million vehicles worldwide, a 3% increase over the year before, but revenues dropped 10% due to currency exchanges, meaning a stronger yen. Even so, Nissan managed to post an operating profit of $3.5 billion.
FERRARI IDLES MARANELLO
But while the future is looking brighter for Nissan, it’s not looking so good for Ferrari. Bloomberg reports that the Italian automaker is going to idle its factory at Maranello and lay off 600 employees, out of a total workforce of 3,000 people. A key reason why Ferrari is slashing production: it makes engines for Maserati, and sales at Maserati have fallen in half over the last two years. Also, Ferrari knows the value of only building just enough cars to barely meet demand. Otherwise it can destroy the margins that it can command for its cars. But this didn’t go down well with Ferrari’s unionized factory workers. They walked off the job today, which ties in perfectly with this next story.
UAW WANTS MORE
Bob King, the who will take over as president of the UAW in June, said that union workers should be rewarded for the sacrifices they made as the Big 3 automakers recover. According to the Detroit Free Press, King claims that concessions cost the average union worker between $7,000 to $30,000 in lost wages and benefits. King specifically called out Ford, for restoring benefits to its salary workers but not its hourly. The union filed a grievance over this which could end up in arbitration.
TOYOTA TO CUT IN JAPAN
And Ferrari is not the only one cutting back. Toyota announced that it will permanently reduce production capacity in Japan. According to Bloomberg, the company will slash production 20% by 2015 and move output to emerging markets. The Japanese factories will specialize in building vehicles with new technology and low cost production systems. But here’s my take. This is a bombshell. Toyota has never reduced production capacity in Japan and I believe could be the tip of the iceberg. I would not be surprised to see Honda and Nissan make similar moves.
FASTEST PORSCHE EVER
Porsche just introduced its fastest and most powerful street legal vehicle it has ever offer for sale, the 911 GT2 RS. It’s powered by a 3.6 liter gas engine with two turbochargers and mated to a six-speed manual transmission. This model is 154 pounds, that’s 70 kilograms, lighter than the 911 GT2 and has 90 more horsepower for a total of 620hp. Thanks to power to weight ratio of 4.9 pounds per horsepower it will hit 0 to 100km/h is just 3.5 seconds. It’s rated at 19.7 MPG or 11.9 l/100km. The vehicle goes on sale later in the year. Only 500 will be made, with a base price of merely 199,500 euros which is only $253,000.
Hey, when automakers talk about day’s supply in the field, what do they mean by that? I’ve got an answer coming up, right after this.
And now it’s time for “You Said It!”
D saw our report on how a BMW executive caused a bomb scare in New York, when he parked a camouflaged prototype of an X3, left the engine running, and strolled into Central Park. A passerby notified police who evacuated the area. Anyway D asks: “How do you “accidentally” leave a prototype vehicle running in NYC, while you go frolicking in the park?”
D, that is a great question. And I have another one. How did this guy and the other bomber ever find a parking spot in the city?
The prolific Nick Stevens wrote in to say, “That pathetic Transit Connect has 181 days, SIX months of inventory. Ford obviously miscalculated, and the so called expert auto journalists that voted for it over the best-selling, excellent Equinox have egg all over their faces.”
Nick, be careful and don’t read too much into one month’s report on day’s supply. Automakers calculate those numbers based on how well a vehicle is selling, and how fast they’re shipping them to dealers. The numbers can vary quite a bit from season to season, and in some cases from month to month. Ford has some big fleet sales coming on the Transit Connect and that day’s supply could drop fast over the next couple of months.
Jim Thykeson also wrote in. He says, “John: The question on the Volt, or any of the other electrics, is this: What happens when you go to the end of your electric-charge plus you have run through the gas powering the small 3 cylinder that charges the electric motors?
Jim, in the case of the Volt it’s actually a small 4-cylinder engine, but when you run out of gas, or actually before you run out, you simply drive into a gas station, fill up the tank and keep on driving. That’s the beauty of the Volt. You get 40 miles of EV driving, and after that it’s just like any other car with a gas engine.
Don’t miss Autoline After Hours tomorrow night when our guest will be Mark Ragsdale, a former car dealer who’s written a book called “Car Wreck,” all about the auto industry from a car dealer’s point of view. He also gets into why the car companies have no idea of what it takes to sell a car, and why you should lease a car with the shortest lease possible. That’s tomorrow night at 7PM eastern.
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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Comments (27)
May 12th, 2010 at 12:38 pm
Love this show.
With regards to the UAW, they are probably right that they will want to cash in on the future improvements of profitability, I do hope they allow the companies to rebuild their cash reserves and retire debts in equal measure, or they may find themselves right back in the same quagmire…and that WON’T be giggity.
May 12th, 2010 at 12:43 pm
On the question of how do you park you BMW prototype in front of the Natural History Museum in NYC, I can attest that there are plenty of spots right in front of the museum, except you can only stop momentarily rather than park. As for the BMW exec going for a stroll in adjacent Central Park, I’d have to wonder if permaybe he was going for a brief cruise in the woods, if you catch my drift.
May 12th, 2010 at 12:47 pm
anyone who says the 2010 equinox is excellent, is deaf. the unibody/strut/road noise syndrome is driving me back to something with a real frame,probably an Envoy.
May 12th, 2010 at 12:50 pm
The Envoy is exactly the same height width & length as eekweenoks,just oldschool,heavier & thirstier.
May 12th, 2010 at 12:59 pm
I seriously doubt Bob King will ever get the UAW back into a position that they were in during the late 90′s.
The UAW has been weakened and will not be bargaining from a position of power. This is essential for the big 3 to get costs and market share back to a level that ensures profitability.
May 12th, 2010 at 1:01 pm
Re GMAC. Didn’t GM only sell controlling interest(51%) in GMAC to the decerebrates over at Cerberus? If so, then GM also offloaded the subprime business at its peak value, and also kept partial ownership of the cash flow. And when the Financial system shattered GM would have still been in the wrong spot since GMAC itself needed to borrow in the credit markets to first get the capital to do business. If the markets will now lend money to a new GM finance company then OK.
May 12th, 2010 at 1:04 pm
len, the Envoy is no longer offered; you can get an Acadia or a Terrain (but this is the same as the Equinox).
May 12th, 2010 at 1:18 pm
I agree: GM selling controlling interest in GMAC is probably the most stupid thing any company has ever done. Remember who was running the Gm when they dd that? Rick Wagaoner. That’s what happens when arrogance rules.
May 12th, 2010 at 1:28 pm
got to ride in the X6M last month … didn’t park in front of a museum, but in Charleston at the Harbour during the air show … more people googling the car than the Blue Angels, and it’s almost as fast – though the 911 would win … new styling for the X6, almost as high as our wingman in the X5
http://4.bp.blogspot.com/_FoXyvaPSnVk/SdZxWnghsdI/AAAAAAABovM/RcHiCz-AP50/s1600-h/BMW-X6M-13.jpg
May 12th, 2010 at 1:39 pm
“len Says:
May 12th, 2010 at 12:47 pm
anyone who says the 2010 equinox is excellent, is deaf”
I said it, and my hearing is outstanding. In fact, if it is really quiet, I can hear an insect crawl!!!!.
And what I meant of course is that the Equinox PROVED it is excellent by its STELLAR sales, when GM is now forced to make it in OTHER plants as well, having run out of shifts, AND its STELLAR 32 MPG highway fuel; economy, for a 4,000 lb crossover, where little sedans brag when they barely make 30!!!
As for the ENVOY (!!>??) it is an irrelevangt DINOSAUR. Nobody buys these POS any more (their sales are 10-20% of what they used to be. Look also at the Expedition and even the Explprer. wise up.
May 12th, 2010 at 1:42 pm
Hi John,
Re you rcomments on my colorful comments on the transit connect.
We have already heard about some major fleet sales for the Connect, but they were merely 1,000-2,000 total. The Equinox sells 10,000 every month, and not at discount to fleets really.
ALso, re your comments on days supply, I do not get them from Ford but every month from Autonews, and in fact the 181 is DOWN from even worse 235 days in MArch, and even more in Feb.
One thing you could say, though, is that Ford is building up the COnnect inventory since it is a new model. We will have to wait a year to see if its sales will even be close to the 10,000 Equinoxes a month, or will they remain at less than 2,000.
May 12th, 2010 at 1:44 pm
Cutting production in Japa nmakes a ton of sense when most sales of JApanese mamkers are overseas, they did thi swith the US 30 years ago when they built transplants here, it makes even more econ sense for Toyota to build transplants in China, and even India and other future growth markets today!
May 12th, 2010 at 2:12 pm
“Finlandia,Finlandia” cue Groucho Marx.
May 12th, 2010 at 3:05 pm
This is the cure for UNINTENDED ACCELERATION.
http://wheelstv.tv/mygarage/blog/2010/05/05/putting-foot-to-mouth-once-again/
May 12th, 2010 at 4:41 pm
every review I’ve read on both the Equinox and the defunct Saturn Vue have praised them for their quiet cabins.
May 12th, 2010 at 4:54 pm
The UAW . Seems to me those folks need to start getting a grip on the fact that they’re just darned lucky to have a job , never mind wanting more money . Especially when its me , Joe Tax Payer who’s made it possible for the UAW members to keep those jobs .
You’ve got to love those Italians though . ” Hey a the company she’s a no make a the money and a lay off a the 20% of a the work force . And a to top it all off a they shut a the plant a down . So I tell a you what a we’sa gonna do . We’sa gonna go on strike . ”
Do I perhaps see an ad in the future that will go something like this ?
FOR SALE ; One slightly used Wind Tunnel and Manufacturing Facility designed by renowned architect Renzo Piano . Seller is very motivated . Cash only .
May 12th, 2010 at 5:08 pm
Once and for all, did GM pay back the govt loan or not?
May 12th, 2010 at 5:15 pm
Pedro Fernandez ;
Oh they paid back the loan all right . With the money they received from another loan ( paid for by you and I ) So in essence we’ve given them two loans so they could pay back one .
Nice Shell Game don’t you agree ?
May 12th, 2010 at 5:17 pm
Willi B
Sorry to be the one to inform you of this but the reason everyone was Googling the X6 you were in is because the things is so _____ed ugly .
Comparing the X6 to the South end of a North bound mule is an insult to the South end of a mule !
May 12th, 2010 at 5:36 pm
then we should all get a new GM vehicle for our troubles, except it will be paid for by taxpayers anyway. So we get the shaft regardless. Did anyone see Top Gear’s piece on the X6?
May 12th, 2010 at 6:27 pm
Wow, the decline of Japan is happening faster than I thought.
May 12th, 2010 at 6:33 pm
Perhaps Japan might be surpassed by the super excellence of things Korean and shiny, HS.
May 12th, 2010 at 7:47 pm
The new GMC Terrain may be the new Pontiac Aztec…look at the horrible looking squared-off bulging fender wells….looks as if they were super-glued on..man is that thing UGLY!!!
May 12th, 2010 at 8:24 pm
You’re so right Drew, I think the Terrain was designed by Jeep!!!
May 13th, 2010 at 8:14 am
The Terrain has absolutely nothing in common with the Aztek. You both need new glasses, Drew and Bill.
While I much prefer its twin, the Equinox, to the Terrain’s styling, the Terrain is far more trying to ape the smaller HUMMERS than any AZTEK. I thought that would be obvious, but apparently it is not!
May 13th, 2010 at 8:40 am
http://www.thetruthaboutcars.com/quote-of-the-day-the-case-of-the-missing-mahindras-edition/#more-356347
PS you want UGLY? look at these pathetic Mahindra Truck grilles. THAT’s Ugly. AZTEK ugly.
May 17th, 2010 at 3:58 am
Wow did you really have to read that question about what to do when you run out of gas in a EV car? Makes you guys look as dumb as the person asking it.