Competitive Connection

March 17, 2008

A look at the competition
Audi plans North American growth
Audi may add a North American assembly facility to support the brand's ambitious goal of doubling its U.S. sales to 180,000 by 2015, company Chairman Rupert Stadler said.  Audi will introduce 40 new vehicles around the world, including many in segments the automaker does not currently compete in,  as it works to boost worldwide annual sales from 964,151 in 2007 to 1.5 million in 2015.

Audi has not definitely decided to build vehicles in North America, Stadler said. If it does, it could share a facility with Volkswagen or build a plant of its own. Both brands are owned by Volkswagen AG. VW is expected to announce this year that it will build an assembly plant in the southeastern United States.

Audi expects to have 120 exclusive dealerships in the United States by the end of this year and 170 within four years. The company has 116 Audi-only dealers in the United States.—Source: The Detroit Free Press, March 12, 2008
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A look at the competition
Ford focused on reducing dealerships
Ford is offering to buy out 81 dealerships. The move is part of Ford's decision to curtail part of its dealer development program, which is designed to support novice dealers. It comes as the automaker works to shrink its dealer base in the United States, where Ford says it has more stores than it needs to meet the declining demand for its cars and trucks.

The number of minority-owned Ford dealerships in the United States declined by 28 last year to 309. The automaker has eliminated 340 stores as part of its dealer consolidation effort, but still has 4,056 Ford, Lincoln and Mercury franchises in this country.

Erich Merkle, an automotive analyst with IRN Inc., said curtailing the dealership development effort is "tied back to Ford's restructuring program.”They have to reduce the number of dealerships. That is part of their turnaround strategy."—Source: The Detroit News, March 11, 2008
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What others are saying . . .
Investing in GM?
It is not hard to imagine a time in the not-too-distant future when General Motors will not exist. In fact, a lot of investors are imagining such a scenario.

Hampered by bloated costs and nimble foreign competitors, which are dining out on the Big Three's market share, GM's stock price has been decimated in recent years. Profits have turned to losses and the once-hefty dividend has been cut in half.

The GM-is-dying argument is certainly compelling, which is why the stock is down 75 percent over the past eight years. But what is more interesting, and potentially more profitable, is the argument in favor of the automaker's survival.  A number of savvy institutional investors, not exactly prone to making silly guesses, are making big bets on a recovery.

What are these investors thinking? Yes, they are betting that GM survives, as the giant slashes payrolls and makes more moves into emerging markets, where growth is in the double digits. They can point to the fact that revenue in GM's core automotive business is actually growing, belying the impression that no one drives GM's vehicles any more.

Right now, GM's shares are priced for disaster. But if disaster is averted - a bet that is by no means far-fetched, even with the U.S. economy on the edge of recession - then the shares are worth more. Much more. –Source: The Toronto Globe & Mail, March 8, 2008
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Around the globe
Toyota recruiting in Japan
Toyota will recruit more than 3,000 employees in Japan for a fourth straight year as it expands production globally. Toyota plans to hire 3,629 people in the year starting April 1, the company said. It will hire 920 engineers, an increase of 9 percent.
   
The company has increased recruitment since 2005 as it develops new models and builds more factories overseas. The automaker plans to open a second plant in Ontario, Canada later this year and started to operate its first Russian plant in December. -- Source: Bloomberg, March 10, 2008
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Around the globe
Industry making changes in Europe
General Motors Europe is seeking to cut about a tenth of its European workforce in a new round of cost cuts as the top U.S. car maker aims to stem steep losses in declining main auto markets.

In the European sector, the industry has seen the closure of a PSA Peugeot Citroen plant in Britain and cuts at Ford. BMW also plans to shed jobs and Volkswagen seeks to reduce labor costs.

"Germany is recovering, Spain and Britain are down, but Russia is booming," GM’s Carl-Peter Forster said. Forster said that Opel had an operating margin of some 2 percent in 2007 and GM wanted to boost that. He added low profitability was not confined to Opel but was an industry-wide problem among volume carmakers in Europe due to price pressure as Asian manufacturers exported cheap cars to the continent.—Source: Reuters, March 11, 2008
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To read previous editions of the Competitive Connection or to access other information about manufacturing and labor at GM, visit http://www.gmmanufacturing.info