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Episode 252 – More Opel Drama, Kia Unveils New Sedan, Workers Protest AvtoVAZ

October 19th, 2009 at 12:28pm

Runtime 7:15

The European Union has questioned the Opel bidding process and is suggesting GM may be allowed to give it another go. Kia has officially unveiled its new top-of-the-line sedan. Hundreds of workers protested Russian automaker AvtoVAZ in the country over the weekend. All that and more, plus Jim Hall shares his thoughts on the current auto industry “news vacuum.”

Transcript and Story Links after the jump . . .

Here are today’s top headlines. More news about the GM/Opel deal. Kia unveils its new flagship sedan. And Russian auto workers reenact the October revolution.

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

This is Autoline Daily for Monday, October 19, 2009. I’m Jim Hall of 2953 Analytics, taking the reins today, filling in for my good friend John McElroy. And here’s the news.

Our lead story sounds like it could’ve been pulled from one of our summer shows. GM–Opel–keeping, selling or shutting down. The Wall Street Journal reports this morning that the European Union–or EU– has questioned the Opel bidding process and is suggesting GM may be allowed to give it another go. Now that’s not exactly what GM wants since it already has a deal with supplier Magna. But if it’s determined that EU state aid and market rules were violated by Germany who linked its 4.5 billion euro aid to Magna winning, then General Motors may be right back where it started with Opel some five months ago. Again, right now things are still on track with Magna but we’ll have to see what the EU ends up recommending and what GM wants to do.

Our friends at Autoblog report that Kia has officially unveiled its new top-of-the-line sedan. Known as the K7 in Korea and the Cadenza elsewhere in the world, it looks very similar to the KND-5 concept the company revealed at the Seoul Motor Show last April. Its stylish body, penned under the supervision of Kia design chief Peter Schreyer, advances the brand’s new design theme and banishes memories the snoozy-looking Amanti to the scrap yard. Look for the car to make its OFFICIAL debut at several Middle-Eastern auto shows late this year.

It’s getting tougher and tougher to make a living stealing cars. According to USA Today, reported vehicle thefts have fallen to a 20-year low, even though the number of cars on the road has DOUBLED. The FBI estimates that about 960,000 vehicles were stolen in 2008, less than half the number in 1991. And it’s no wonder, today’s cars feature space-aged technology far beyond simple alarms – like ignition immobilizers and GPS tracking systems. Beyond the tech, law enforcement has really cracked-down on theft rings and auto traffickers. The chances of having a car on the road stolen today are about a third of what they were in 1989.

GM is having trouble finding a new Chief Financial Officer (subscription required), to replace current CFO Ray Young, due to pay restrictions imposed by the Treasury Department. According to The Wall Street Journal, the company is finding it hard to find qualified executives willing to work for less than they would normally make and with a company that’s future is uncertain. The federal government imposed pay limits on top executives of firms that received bailout money and will allow GM to offer stock options but not more than $1 million in annual salary for a new CFO.

Hundreds of workers protested Russian automaker AvtoVAZ in the country over the weekend. According to the AFP, workers protested job cuts and demanded that management resign and give them a pay raise. Last month, the struggling automaker announced it would cut over a quarter of its workforce due to the economic slump.

Coming up next, some of my thoughts on today’s “news vacuum,” we’ll be back right after this.

News, like nature, abhors a vacuum.  In an absence of information, the 24/7 monster that is the Internet demands content, and cares little from where this content issues.

- Ford-Volvo buy

- Chrysler/Daimler deal

- Chrysler dumping Dodge as a car nameplate

Those who know, don’t talk. Those who talk, rarely know.

And that’s it for today’s top news in the global automotive industry. Again, I’m Jim Hall from 2953 Analytics, thanks for watching.

Thanks to our Partners for embedding Autoline Daily on their websites: Autoblog, The Auto Channel, vLane, WardsAuto.com and WWJ Newsradio 950

22 Comments to “Episode 252 – More Opel Drama, Kia Unveils New Sedan, Workers Protest AvtoVAZ”

  1. Nick Stevens Says:

    I am getting tired of hearing about the Opel Soap Opera.

    I heard stories today that OPEL will go chapter 11.

    If it goes extinct, few will notice, and nobody will really miss its products.

    it is probably a necessary step towards a HEALTHY World Auto industry, with LESS Overcapacity and a chance to be profitable!

  2. Tony Gray Says:

    Good show.

    Jim’s piece on Dodge after the break is the kind of analysis and insight that I appreciate.

    I agree with him that keeping Dodge is a no brainer. With GM keeping three car divisions, Toyota three and most others two, Chrysler-FIAT cannot hope to compete across the spectrum with just one brand.

    There would be too many niches for one nameplate to fill, diluting the overall image.

  3. Nick Stevens Says:

    I strongly disagree, Tony. The thinking is the opposite, that even BEHEMOTHS like Toyota only have two divisions, TOyota and Lexus, and when they tried the Scion, it is recently really really lame and they wish they had not. Ford likewise should dump the useless, loss-making Mercury even before it sells VOlvo! It offers nothing but costs and losses! And GM needs to get rid of both Buick and GMC!

    There is HUGE overcapacity, and Darwin will hopefully eventually prevail, the fittest will survive, for the good of both the consumers and the survivors who will finally be profitable.

    Fiat-Chrysler does not have a chance anyway, that’s why we dumped Chrysler on Fiat and did not ask a dime for it, but it will do far worse if it drags three underperforming divisions to Fiat, indesd of its Strengths, which are only two, Jeeps and Minivans.

  4. Jim Sachetti Says:

    I fully agree with Nick here. You need a minimum volume to make any profits in this business, and more models and divisions is NOT the way to increase sales per model.

  5. Tony Gray Says:

    Nick/Jim: We will obviously disagree here. It starts with a strategic plan of what you want to accomplish and then decide what resources you have or need to make it happen.

    I’m not talking capacity here whatsoever. I am talking about developing an image of a brand that will sustain itself over time.

    Scion itself is not necessarily a failure. It was designed to build an entry level brand for the corporation. However, Toyota did not take the TOYOTA brand out of the low cost market, thereby competing against itself. This is similar to the issues GM had when it had Saturn and Chevy (nee Geo) essentially competing for the same piece of pie.

    I think you can absolutely have two brands, if they are developed and marketed correctly. BMW has done a good deal with Mini (although they are encroaching a bit with the 1 Series). Toyota/Lexus, Nissan/Infinity and Honda/Acura are also doing pretty well at last count. I don’t see why Dodge/Chrysler couldn’t do the same.

    As for Buick and GMC…Buick is debatable and we’ll see how that goes. I thought Pontiac should have been the one that lived, at least in the US. As for GMC, there sales figures show their viability. GMC buyers pay extra for that “Premium Grade” and even if you would retain 100% of them if you dumped GMC for just Chevy, you would lose that extra moolah. And marketing surveys show that Chevy is NOT the first alternative for a large number of GMC buyers….Ford is.

  6. Nick Stevens Says:

    TOny. You do not need to give me all this boilerplate, I had enough of it in my MBA strategy courses, but you really need to understand the gravity of the situation. DO you really think the US taxpayers will support these losers with resources ad infinitum? And NO, Buick is not at all debatable, it was a huge blunder that they kept it alive with its uninspoiring products.

    As for GMC, they “succeeded” in allowing FORD to keep the “Best seller” crown for almost 20 years, every single month, ALTHOUGH the GMC Sierra and the Silverado together almost always sold more than all the F 150 variations!!!!

    PS Acura has failed miserably recently, and infiniti is nothing to write home about either. HAve you followed their dismal sales numbers lately? Esp. Acura?

  7. Nick Stevens Says:

    And Scion DID fail, and miserably so. Not only did its sales never even approached the goals, the ones who boiught its unremarkable products were NOT the young people Toyota wished for, but many elderly and middle aged as well.

    It seems to me that you are not fully aware that the entire Auto industry is in a HUGE Crisis of overcapacity. The US makers are broke except Ford, but the overseas ones are NOT healthy either! Toyota in particular!

    Darwin should prevail! The incompetent and mediocre will go extinct, and the best will survive and profit, eventually!

  8. Hermann the German Says:

    Mr. Hall, if you were trapped in a television production studio and forced to give daily newscasts about the auto industry, no one would need to be the wiser.

    Could you live with that?

  9. diffrunt Says:

    Opel engineering is too important to let go.

    Why a salary limit on bailed out car bulders, but not on bailed out banks???

  10. DC Says:

    So if Dodge will be dropped, will they bring back say Plymouth for their cars?

    What will then happen to the Challenger, Viper, and Charger? Are they to become Chryslers? It makes no sense to drop Dodge as it is the “sporty” segment of ChryCo. Ram having its own nameplate I understand, but killing off Dodge itself, is rather foolish.

  11. Jim Sachetti Says:

    Diffrunt:

    In response to your Q, the banking industry is the lifeblood of all industries, who would fail without banks. It was thus able to blackmail both the previous and this administration to bail it out at huge expense to the taxpayer. That does not mean that we should repeat the mistake and bail out everybody else just to be fair to them. We are out of $ anyway and the US dollar is in free fall, as the liars in DC keep saying that they support a “Strong dollar” policy.

  12. Tony Gray Says:

    Nick,

    Boilerplate my behind. And trust me, I FULLY understand the situation. But you are all over the place. Are you talking about successfully developing and implementing a marketing strategy or are you talking about tax breaks or overcapacity or what?

    My comments were centered on the discussion if Chrysler could successfully market their vehicles in the US using a dual strategy in the same showroom.

    I think they can. LOTS of things are done that way. Let’s take a look at Sears itself. They sell MANY different brands of appliances, all under the same roof. They have even split the Kenmore brand into regular Kenmore and Kenmore Elite. Same idea, albeit a on a different scale. It all comes down to product and making folks want to buy it.

    All of the Japanese luxury brands have been feeling the pinch, has have all the upscale brands. The last sheet I saw had Lexus down 37% for the year, Acura down 33.6% and Infinity down 33.4%. These figures are VERY similar to the overall GM car sales decreases for 2009. Even BMW and Mercedes are down 25% or thereabouts.

  13. Dave Marsh Says:

    Call me naive (allow me to introduce myself) but the whole deal about separate vs combined dealerships is kind of a mute point. ALL of the Chrysler dealerships in Canada are combined and _somehow_ it works. Although, I will point out that in the past (90′s and early 00′s) marketing was sure messed up.

    Ever hear of a Chrysler Intrepid? Or a Chrysler Neon? For some reason Chrysler felt that Dodge wasn’t a car brand in Canada. I laughed at the “introduction” of the Dodge SX 2.0 (aka Chrysler Neon). The first gen Avenger was sold as a Dodge but then the second gen Dodges’ were not available at all. (although maybe that wasn’t a bad thing ;)

    Can anybody explain what their thinking was? Dodge cars are available again in Canada now as of around 2002-3ish.

    The Canadian market is different, I will give you that but different enough that a whole brand shouldn’t exist?

  14. Kit Gerhart Says:

    Nick Stevens Says:
    October 19th, 2009 at 2:05 pm

    “And Scion DID fail, and miserably so. Not only did its sales never even approached the goals, the ones who boiught its unremarkable products were NOT the young people Toyota wished for, but many elderly and middle aged as well.”

    It’s hard to see how Scion could be considered to have “failed.” Toyota sells more cars with Scion than they would with it, and it didn’t cost much to create Scion. They are sold at existing Toyota dealers, rather than at a bunch newly, and expensively created dealers like Saturn. More sales are more sales, whether to people in their 20′s or 60′s.

  15. Dave Marsh Says:

    PS – if GM still can’t find someone for their $1M/yr CFO position, I’ll clear my calendar and grudgingly accept.

  16. dcars Says:

    I wouldn’t want to work for Opel if GM has to keep it. With all the backstabbing the Germans did, I suspect that things would get nasty and the Opel name would disappear. Jim is very insightful.

  17. Dave Says:

    I think some of this is so great. Buick is bad GMC is bad I know it all. Maybe some of you should get away from the computer and work for GM, Fiat, or Ford and lead them to the angles and the light.

    lets be real I dont know if the new Buicks will sell, but as a 30 something I do like them. I would go look at one if I was in the market. As for GMC, its just a dressed up chevy, but with a big mark up and makes big bucks for GM..I thought that was what GM needs to do..

  18. Dan Clemons Says:

    Great show Jim. We would like you to come back from time-to-time. I liked your insite!!!

  19. John Says:

    Jim Hall,

    Excellent Show !

  20. naif Says:

    Well GM can only spend $1 million? But wall street is giving money away?

  21. John V Says:

    I am confused. Dodge is a brand that has some kind of identity. It has trucks and in-your-face aggressive sedans and coupes. Why are we talking about its possible demise?
    Jeep also has a strong identity that needs no explanation.
    Chrysler brand, however, does not have a strong identity. The 300 is it. The PT Cruiser will get no significant improvements and will play out. The minivans are the same as Dodge. If Fiats get Chrysler badges, it will not help. If Fiat dumps a brand, it should be Chrysler.

  22. Kit Gerhart Says:

    It would seem that the Dodge name is needed for the Ram pickups, Charger, and Challenger. Either Dodge or Chrysler would work for the minivans. The Chrysler name is needed for the 300, for however long it is around. Since there are no longer any free standing Dodge or Chrysler dealers, only combined ones in areas where I have been, it would seem that they could use both Dodge and Chrysler name plates without it costing much extra, since the free-standing Dodge and Chrysler dealers have been combined or closed.