Daddy-O

Foreign Automakers Also Piling on the Incentives
The three American automakers and their Asian competitors had far
different U.S. sales last month, but there was a common theme -- the
foreign companies, like the domestics, used heavy incentives to lure
buyers. Toyota Motor Corp., which outsold DaimlerChrysler AG's Chrysler
Group in the United States for the first time in August, raised
incentives 73 percent from a year ago, Deutsche Bank Securities analyst
Rod Lache said in a report Monday. Even compared with July's heavy
spending, Toyota and Honda Motor Co. beefed up incentives 12 percent as
they, like the rest of the industry, tried to sell off remaining 2003
models. A Merrill Lynch report says incentives among Asian automakers,
led by Toyota, rose 33 percent in August from a year ago. The result:
Asian brands saw sales rise 8 percent in August, while General Motors
Corp., Ford Motor Co. and Chrysler had an overall drop of 6 percent.
While Asian brands increased incentives recently, their average spending
per vehicle still falls well behind GM, Ford and Chrysler. At the
American automakers, the average outlay in August was about $4,000 a
vehicle; the average among Asian brands was $1,474. U.S. market share
for GM, Ford and Chrysler fell to an all-time monthly low of 57.9
percent in August. In the first eight months of the year, the domestics'
total U.S. market share was 60.1 percent, down from nearly 62 percent a
year ago. At the same time, Asian brands increased their U.S. share from
31.3 percent to nearly 33 percent. European companies are up to 7
percent of the U.S. market from 6.8 percent a year ago.
(Source: The Detroit Free Press)


Judge Releases Dealer Funds to Pay Service Contract Claims
A federal judge has released millions of dollars car dealers set aside
to pay claims under vehicle service contracts insured by insolvent
National Warranty Insurance Co. The United States Bankruptcy Court in
Omaha ruled Sept. 5 that the money does not belong to National Warranty,
which is in liquidation proceedings in the Cayman Islands where it is
incorporated. Some of the estimated 5,000 dealers who sold vehicle
service contracts insured by Lincoln, Neb.-based National Warranty had
deposited money in escrow accounts to pay claims if the insurer was
unable to do so. But these funds were frozen by the Grand Court of the
Cayman Islands when it issued an order protecting National Warranty from
creditors June 6. The court declared the troubled insurer insolvent on
August 1. About 1 million service contracts are still in force and many
dealers have been honoring the contracts even though National Warranty
stopped paying claims.
(Source: Automotive News)



2008 Could See Lower SUVs, Trucks
Most automakers have agreed to make big sport-utility vehicles and
pickups less threatening to cars. [Details of] the changes, obtained by
USA Today, include lowering many full-size sport-utility vehicles and
pickups and putting head-protecting side air bags in most cars and
trucks. They would be phased in by the 2008 model year under a voluntary
plan, expected to be announced next month. The plan addresses so-called
compatibility issues that place people in cars at greater risk of death
in front and side crashes than those in light trucks such as pickups and
SUVs. In perhaps the most sweeping voluntary safety reform in years, 95%
of automakers say their vehicles will pass the called-for front and side
crash tests. Among vehicles likely to be affected are Ford Expedition,
Chevrolet Tahoe and some Dodge Ram pickups, but automakers have not
concluded which vehicles would need to be lowered or by how much.
Automakers have been under pressure to address dangers SUVs and pickups
pose to their occupants and those in other vehicles. The plan's
compatibility provisions would take effect at least a year earlier than
legislation pending in Congress would require.
(Source: USA Today)


DaimlerChrysler Bets on China Market
DaimlerChrysler on Monday unveiled a major deal to start producing
Mercedes sedans in China. The German-U.S. automaker announced a 1
billion euro ($1.1 billion) deal with Beijing Automotive Industry
Holding Co. to target increasingly affluent Chinese with locally made
Mercedes cars. The undertaking expands an alliance with its Chinese
partner of 20 years and exemplifies how foreign automakers are stepping
in to shore up ailing state-owned Chinese companies as competition for
the country's huge market heats up. "The strategic cooperation between
DaimlerChrysler and Beijing Automotive is a new wave of strategic
restructuring of Beijing's automotive industry in the face of domestic
and international competition," the companies said in a joint statement.
DaimlerChrysler's move puts it in competition with longtime rival BMW,
which plans to tap the top end of China's automotive market through a
50-50 joint venture with Bermuda-registered Brilliance China to produce
its 3-series and 5-series models. DaimlerChrysler is also betting on the
medium- and heavy duty truck market in China.
Mercedes eventually plans to produce its top-end truck models in China,
though its focus for now is on producing parts, such as engines,
gearboxes and axles, said DaimlerChrysler Senior Vice President Hartmut
Schick.
(Source: The Associated Press)