Ignition

Automotive headlines since the last issue went to press:

Chrysler confirmed it was filing for bankruptcy and would partner with Fiat as part of its solution to restore it to profitability. The U.S. and Canadian governments each have a stake in the automaker's success as well, with each receiving a portion of the equity of the new company. One of the side effects of its bankruptcy was to have its anticipated marketing budget of $134 million cut in half by the U.S. government. Additionally, it notified 789 dealers that they would be shuttered by June 9, 2009. This accounts for roughly 25% of the Chrysler's 3,181 dealerships. Four out of five remaining dealerships are expected to carry the full trio of Chrysler, Dodge and Jeep as a result.

Ford is refitting a Wayne, Mich., SUV factory to produce the smaller Ford Focus car in order to meet the needs of dealers and the desires of consumers. The project will cost the automaker approximately $550 million.

For the first time in over a year, Ford outsold Toyota in United States monthly sales in April 2009. Ford took the lead by outselling Toyota by 46,000 vehicles.

General Motors (GM) confirmed that Pontiac would be eliminated as part of its restructuring and that its sale or elimination of Saturn would be accelerated to take place by the end of 2009.

GM announced it planned to reduce dealerships from 6000 at present to 3600 by the end of 2010. First on the chopping block? Saturn, Hummer, Saab and Pontiac dealers. After that, the axe will be aimed at low-volume or low-performance dealerships. The first 1,124 dealers were notified today (Friday, May 15) that their contracts would not be renewed in October 2010. GM also anticipated losing 500 additional dealerships by the end of 2009 "through natural attrition," according to reports by the National Automobile Dealers Association (NADA). Those receiving notification from GM were also given instructions for appealing the decision.

Hydrogen fuel cell technology for automobiles was dealt a blow in the United States when President Barack Obama eliminated its funding, noting a preference for solutions that may be able to provide more immediate solutions. Hydrogen fuel cells would have required building a hydrogen fuel infrastructure in addition to developing the vehicles.

The NADA announced it would oppose the massive dealership cuts proposed by Chrysler and GM. They argue that the cost of dealerships is less than the value of additional sales outlets for consumers and the loss of those dealerships will neither help profitability nor help the economy recover, dumping large numbers of employees into unemployment lines.

Porsche announced that, rather than take over Volkswagen, it would ally with VW to form an even larger German automaker.

U.S. legislators are mulling a "cash for clunkers" program that would award $4,500 to consumers who trade in gas-guzzling vehicles getting 18 mpg or less for new, more fuel-efficient vehicles. A similar plan has already been effected in the United Kingdom, and some automakers there are noting advance orders in anticipation of the start of the program.

Automotive News estimated that the successful bidder for Volvo may be announced by Ford as early as the end of June now that the automaker has whittled the candidates down to fewer than five suitors. Meanwhile, GM was running through a similar process for the sale of its Opel and Saab nameplates, with an announcement for Opel possibly as early as the end of May.

Sources: Advertising Age, Automotive News, Detroit Free Press, NADA Headlines