August 2, 2010

Democrats Apply Pressure on Korea Trade Deal
Ten House committee chairmen are among the Democrats complaining about the Obama administration's new push for a trade deal with South Korea. Click here for more information on the deal. The party leaders are among the 110 Democrats who have written to the White House pressing for a meeting with Obama on trade. In a letter sent last week, the Democrats say "it is unthinkable" to move forward with another free trade deal while the economy is struggling to recover from a deep recession. According to The Hill, Democrats are demanding changes to the agreement's chapters on investment, labor and financial services, and also want commitments to reduce non-tariff barriers in South Korea to U.S. cars and beef, among other exports. Obama has set a late-November deadline for negotiators to reach an agreement with South Korea that could pave the way for a vote on the deal. He is set to visit Seoul in November for a meeting of the G-20. Some have speculated that the South Korean trade deal could come up for a vote in a lame-duck session after the election, though Rep. Chris Van Hollen (D-Md.) this week said no big-ticket items would be considered. For the full story, click here.

Touring Detroit, Obama Hails Bailout
President Barack Obama on Friday declared the controversial bailout of the U.S. auto industry a success in visits to Detroit auto plants that came weeks before General Motors is expected to take a critical step toward an IPO. According to the Wall Street Journal, public and investor support of the U.S. government's $60 billion rescue of GM and Chrysler is important to Detroit auto makers as they prepare to make a return to public markets that will rely on solid sales and Wall Street support. Also, public support for the bailout is key for the Obama administration, worried that Democrats who supported the unpopular bailout could be ousted in November elections. "If we had done nothing, not only were your jobs gone, but supplier jobs were gone and dealership jobs were gone, and the communities that depend on them would have been wiped out," Mr. Obama said at the Chrysler plant. Click here for video of the visit. The argument has done little to win over critics of the bailout who see it as a massive overreach of the federal government and a misuse of federal funds. For more on the President's visit to Detroit, click here.

Lithia to Pass on Fiat Stores
Lithia Motors Inc., which receives almost 30 percent of its sales from Chrysler Group brands, doesn't plan to seek much Fiat business as the Italian automaker prepares to reenter the U.S.market. Chrysler dealers have been invited to apply for about 200 available Fiat franchises to be awarded later this year. Lithia CEO Sid DeBoer said Thursday that he's not yet sure whether Lithia, the nation's ninth largest retailer, will go after the franchises. "We're not in a lot of the markets that they're targeting," DeBoer told Automotive News. "It's not going to be a major initiative for us." DeBoer said Lithia has one Chrysler store with an empty showroom on its property - and that acquiring the Fiat franchise might be a good solution for that location. Lithia executives will attend an August briefing in Detroit to learn more about the Fiat opportunity. In the meantime, Lithia continues to reduce its exposure to Chrysler by selling some stores and buying dealerships that sell non-Chrysler brands. So far, Lithia has trimmed its roster of stand-alone Chrysler stores to 23 from a peak of 37. Lithia now derives 28.8 percent of its new-vehicle unit sales from Chrysler stores, down from 30.3 percent a year ago. For more on Lithia and Fiat, click here.

2011 Honda CR-Z hybrid is a sporty eco-activist
Cars typically force drivers to make a choice: sporty and piggish on fuel or efficient and underwhelming. But the L.A. Times reports that with its 2011 CR-Z, Honda Motor Co. is playing with a new concept. It's called responsible indulgence, and Honda's debuting the idea with a two-seat "sporty hybrid coupe" that's got some spunk but doesn't force drivers to check their environmental consciences at the door. Starting at $19,200, the CR-Z offers conservationist virtues and Kardashian curves on a Kmart budget. Click here for photos. The CR-Z has 0.2 liters of additional displacement and twice as many valves on its inline four cylinders. As a result, its 1.5-liter i-VTEC engine and 10-kilowatt brushless electric motor are slightly less fuel efficient, rating 39 miles per gallon on the highway for the automatic and 37 mpg for the six-speed manual transmission, a first for a hybrid car. Both versions offer far less fuel economy than the Toyota Prius, landing the CR-Z in the mpg and price realm of sporty mini- and sub-compacts like the BMW Mini and Honda Fit, market segments that are also gaining momentum. Overall, the Times found the CR-Z's design and concept to be spectacular. For the full review, click here.

Opinion: Dealerships Are Important? Now We Know
Edward Lapham, executive editor of Automotive News, is using recent national survey results to remind readers how important dealers are to the auto industry. He reports that a survey of recent new-vehicle buyers shows a consumer's experience at the dealership influences not only where he buys a car or truck but also which brand he buys. The study, conducted by Foresight Research, found that half the vehicle-buyers surveyed said the dealership experience was highly influential throughout the shopping and purchase process. Foresight surveyed buyers across the country about how much they were influenced by 16 common marketing communication channels used by automakers to pitch their brand messages. The list included a lot of places where automakers spend big bucks, including brochures, TV and print advertising, direct mail, promotions, events, and the Internet. But get this: When it comes to influencing brand decisions, the dealership experience ranked second only to brand experience. For more on the survey results, and why dealers may have been wrongly devalued by President Obama's auto task force, click here.

Ford Completes Sale of Volvo to China's Geely
Ford Motor Co. said today it has completed the sale of Volvo Cars to Zhejiang Geely Holding Group for $1.8 billion. Divesting Volvo completes Ford CEO Alan Mulally's strategy of exiting European luxury brands to focus on the core Ford brand, following the U.S. carmaker's 2007 sale of Aston Martin, and of Jaguar and Land Rover to India's Tata Motors Ltd. in 2008. Automotive News reports that Ford paid $6.5 billion for Volvo in 1999. "Volvo is an excellent brand with a strong product line, and it has returned to profits after a successful restructuring. We are confident Volvo has a solid future under Geely's ownership," Mulally said in a statement. Geely said that Stefan Jacoby, CEO of Volkswagen Group of America, will be the new CEO of Volvo Cars. Geely's plan for Volvo includes using the Swedish nameplate to produce luxury brands in China, while maintaining its operations in Europe to supply the international market. Geely says it will see its new Volvo China plant nearly double its annual global production, with an aim to sell 150,000 Volvo cars in China annually by 2015. For more on Geely's plans for Volvo, click here.

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