AD #1423 – SAAR at 17 Million? Former GM CEO Speaks Out, OEMs Ahead of EPA Curve

July 28th, 2014 at 11:55am

Runtime: 7:55

- Could July SAAR Hit 17 Million?
- Nissan’s Ghosn has the Golden Touch
- Ford: Buyers Willing to Pay Even More for Pickups
- Former GM CEO Speaks Out on Recall Issues
- Automakers Ahead of EPA Curve
- Recap of Automotive Fantasy Draft 2014

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Hello and welcome to a brand new week of Autoline Daily. In today’s show the EPA says automakers are running ahead of CAFE regulations, Nissan posts some pretty impressive financial numbers, and Ford thinks it can charge even more for its big pickups.

17 MILLION SAAR
Is the American car market on track to set a new sales record? Ward’s is forecasting that the seasonally adjusted sales rate, or SAAR, could hit 17 million vehicles in July, the highest in 8 years. And Ward’s says that sales could actually come in higher than that. Even more encouraging, the jump is coming on the retail side of the business, not from fleet sales. Ward’s expects Toyota to outsell Ford due to lost production from the F-150 model change, it says Hyundai-Kia will catch Nissan, and that Volkswagen will see the biggest slump of any automaker. We’ll know the actual numbers in about a week.

GHOSN’S GOLDEN TOUCH
Nissan announced its latest financial earnings this morning in Tokyo and it looks like Carlos Ghosn still has the magic touch. Nissan sold 1.2 million vehicles worldwide in the last three months, up 6 percent compared to last year. But its revenue jumped over 10 percent to $24 billion, its operating profit jumped over 13 percent to $1.2 billion, and its net profits soared nearly 37 percent to $1.1 billion. That’s really impressive when revenue and profits grow faster than sales of vehicles.

$70,000 PICKUP TRUCKS
Big pickup trucks are becoming more and more luxurious, but Ford thinks they can go even more upscale. Currently, the top of the line F-250 Platinum starts at $55,000 and pushes $70,000 with options, but Ford’s truck marketing manager, Doug Scott, says that he believes there’s even more upside opportunities above the Platinum trim with the Super Duty. Scott says there are enough high-end customers willing to pay over $70,000 for a big pickup.

AKERSON CHIMES IN
Former GM CEO Dan Akerson is chiming in on the Congressional hearings that Mary Barra just went through. He tells The Detroit News that Congress probably would have treated him better than the vicious grilling Mary Barra went through. Akerson says that’s because he had only been at GM for just over three years, while Mary Barra had been with the company over 30 years. They were asking her, “You’ve been with the company 30 years. Why didn’t you change things?” Akerson said. He says he could have pointed out all of that happened before he got there. He also says its ridiculous to think that he knew this was coming and that’s why he turned the job over to Mary Barra.

AUTOMAKERS AHEAD OF THE CURVE
As fuel economy standards in the U.S. continue to ramp up between now and 2025, some of you maybe wondering how automakers are doing at meeting those goals. Well, according to the EPA, automakers have been coming out with technologies faster than the agency thought they would and are also bringing out new technology that was not expected. As of June, the average fuel economy of light-duty vehicles sold in the U.S. is 25.5 miles per gallon and about 35 percent of those vehicles hit the 35.5 MPG standard set for 2016. Automakers have been using new techniques and materials as well as reducing engine size to help make improvements, but the EPA has been surprised at the amount of vehicles getting direct injection, CVTs and diesel engines. Volkswagen even has a 4-cylinder engine with cylinder deactivation that it offers in Europe. But even though automakers have done a good job up till now, we think it’s still going to be very difficult to reach that final goal. The short term goals that we are going through now have been ramping up slowly. The big increases don’t start until 2017.

Last Thursday was the Autoline After Hours Fantasy Draft, where journalists pick the best and worst executives in the industry to run their fantasy car companies. Coming up next, we’ll give you a taste of what that was all about.

FANTASY DRAFT RECAP
The annual Autoline Automotive Fantasy Draft ran last week, just in case you’re not familiar with it, here’s a short clip that will give you a taste of what it’s all about.

The participants include Gary Vasilash from Automotive Design & Production magazine, Paul Eisenstein from The Detroit Bureau, Aaron Bragman from Cars.com and Jeff Sabatini from Car and Driver. The color commentators are Mark Phelan from the Detroit Free Press and Scott Burgess from Motor Trend. The announcer is Charlie Vogelheim, with Motor Trend audio. And you can watch that entire show on our website Autoline.tv right now.

And that wraps up today’s report, thanks for watching and we invite you to join us again tomorrow.

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25 Comments to “AD #1423 – SAAR at 17 Million? Former GM CEO Speaks Out, OEMs Ahead of EPA Curve”

  1. Chuck Grenci Says:

    Akerson……………..shut-up. Using the ploy that he wasn’t in the job (and could duck some of the investigative questions) is exactly the wrong thing to aspire to. Akerson, look what you failed to accomplish when you were head, and had you remained in the position and ducked the questions, the only thing you could brag about would be consistency (poor leadership).

  2. dcars Says:

    The darling of the press corps “VW” just dosen’t seam to know the US buyers.

  3. Bradley Says:

    Akerson…Who cares about you?

    VW…I love my Sportwagen, but I am not liking the changes you are making in the USA. Please redeem yourself by providing us another compact pickup.

    The Fantasy draft seems more interesting this year. I will have to check it out.

    Toyota surpassing Ford…OK..if Ford is still running their company where their # of sales is dependent on the output of the factory then something is still wrong. I thought the Detroit brands learned their lessons on Pipe Stuffing, etc.

  4. Jon M Says:

    I have to wonder about the profit margins on full-size pickups. While perusing a Toyota dealer’s lot recently, I noticed a 1794 edition Tundra with a $50K window sticker. Despite not having a keyless ignition, it was nicely appointed, but the price seemed rather high. I know an F250 Platinum at $70K offers more than a 1794 edition Tundra; even so, that too sounds outrageous. Certainly trucks are not anything like they used to be even 10-15 years ago, but it just seems like everyone is packing a hefty profit into their trucks.

  5. pedro fernandez Says:

    Hey VW, “Americanizing” your US sedans, how did that worked out for you, baby? Other foreign brands, take notice of this disaster before you try doing the same.

  6. buzzerd Says:

    John – wondering if you saw The Daily Show’s skit on the Highway Trust Fund situation and what you ” Autoline Insight” is?

  7. G.A.Branigan Says:

    The only trucks left that are reminiscent of the ‘old days’is the stripped down work trucks.For myself,I like having the option of a upgraded truck.But….not to the point of 70k,or even 50k,or even 40k.I also don’t like the fullsize half tons that are as big as their larger counterparts.I’m glad to see that GM is bringing back a reasonable sized truck with the soon to be released midsize Colorado/Canyon.

  8. Bradley Says:

    #4

    Profit margin is and always has been high on trucks. The perception of more for your money is held by consumers, but in reality the Trucks can be cheaper to make at times.

    #5

    Roget that, didn’t VW fire their head of American Operations.

    VW…Just because people are buying biggie size value meals with blah flavor doesn’t mean you’ll be a winner by selling them. There will always be those that gravitate to the American Stereotype, but there are also those that don’t.

  9. Bradley Says:

    Roger that

  10. Kit Gerhart Says:

    2, 3, 5
    I am one of those who has bought VW’s fairly recently, and might have one now, were it not of the sparse dealer network, and spotty reliability. I like some of their cars, because they sell something other than generic front drive sedans, and generic SUV/CUV’s of various sizes. They offer “affordable” diesels and wagons, while no one else does so in the U.S. market. You can even get manual transmissions in most of them.

    As far as VW becoming “mainstream” with the Passat and Jetta sedans, if they had as many dealers as Chevy, Ford, and Toyota, I suspect they would do ok with the “Americanized” offerings, though those are not the VW’s that appeal to me.

  11. pedro fernandez Says:

    Kit, not unless they improve reliability, the only satisfied VW owners I know, own Diesel engined models.

  12. Kit Gerhart Says:

    7,
    You can’t get a manual transmission, even in the “work trucks,” nor can you get crank windows. Pickups have mostly turned into “lifestyle vehicles” in America, and those who actually use them for work are probably keeping the ones they have longer and longer.

  13. Kit Gerhart Says:

    11, I know a satisfied owner of a Passat wagon with a 2.0 gas turbo. I think it has about 150K miles. He’d like to replace it with a new one, but they no longer sell Passat wagons in the US. I think he is going to check out a Jetta wagon, which has grown enough that it might have almost as much cargo space as his Passat, or nearly so.

  14. Bradley Says:

    VW in my opinion was building their reputation nicely in the United States. Sure they added SUVs/CUVs for the US market, but they weren’t vanilla’d cars.

    I bought a VW Sportwagen last year. I really like it, but it isn’t a “vanilla’d” VW.

    A guy I work worth likes the American Stereo type of vehicles. He drives a F-150. I have done a lot of travelling with him and we had both the Americanized Jetta and the original Jetta as rentals.

    He preferred the Original German Jetta, even though it was a little harder for him to ingress/egress with it. He isn’t a small guy. It looked better, rode sportier and seem better built.

  15. Victor West Says:

    I watched the draft show. It was more of a comedy farce than in previous years when I learned about serious executives in the business. This year’s show was really a big waste of time.

  16. dcars Says:

    Building a car that’s over priced, unreliable and expensive to repair won’t win you many buyers.
    VW ridiculed their dealers/mechanics and blamed them for the problems that they engineered into their vehicles. In addition with declining sales, it’s no wonder they have a smaller dealer network.

  17. William Schultz Says:

    Wouldn’t seasonally adjusted sale rate be SASR?

  18. Kit Gerhart Says:

    16, You are thinking of BMW, Jaguar, and Lexus, not VW in regard to overpriced cars.

    Yeah, I suppose VW’s checkered reliability reputation results in people with money not waiting in line for VW dealerships, but you need a good dealer network to sell a lot of cars. Ford wouldn’t sell nearly as many cars if they had VW’s dealer network.

  19. cwolf Says:

    How can anyone complain about increased profits, yet I am not so optimistic about the near future. Like GM, I can see the others burdened with more recalls; Nissan air bags and Toyo’s break problems will effect them in the next quarter, despite sales. Nissans China sales were considerably larger than the US, but those dealers have become over-stocked. They have cut back on their rebates, but it is forseeable they will have to offer them again to match others and control inventory.

  20. cwolf Says:

    Added to the last post: The probability the SAAR will continue to increase is doubted by some. The US market is over-valued by 30%. It is driven by greed from those who have felt their employment stabilize and those who have had raises. Once the govt. stops funding the ecomomy and bonds begin to become attractive, some stockeholders will loose and others more uncertain, as interest rates rise. At this point in time, I think projecting future car sales is a crap shoot. This will happen sooner than later. And for those wanting a new car, this will be the time to pull the trigger.

  21. HtG Says:

    I’m holding on to my ‘umble Civic, Cbuddy. These new computer cars? I’m holding out. (Though I read today about a new quad core processor from Allwinner that will cost only $4. Sheezus what a time in tech)

  22. Kit Gerhart Says:

    21,
    Cars with knobs for the radio, and rotary controls for the HVAC are great. Unfortunately, even my 25 year old minivan has “tabs” for volume and tuning. Oh well.

  23. M360 Says:

    #1 – I think you are correct. It’s a good thing for GM that Ackerson is out of the way. Maybe now they really can make some needed changes to their corporate culture and move on. Let’s hope so.

  24. C-Tech Says:

    I do wonder why congress has not called Ackerson to testify? If you are brought in as CEO to turn around a company, shouldn’t you know about problems such as these and address them?

  25. C-Tech Says:

    My take on VW: 1.) too much plastic in the dull interior of the latest Jetta. Time for a redesign. 2.)Because of the bad reputation of VW engines for expensive oil leaks and other repairs, match the Hyundai-Kia warranty. 3.)Expand the dealer network. You can’t have a 200-300 mile gap between outlets if you want to be number 1. 4.) Improve customer service. You’ll get more repeat customers.