October 21, 2011

Daimler to Invest $350M to Build Fifth Mercedes Model in Alabama
Daimler AG said it will invest $350 million to produce a fifth Mercedes-Benz model at its factory in Vance, Ala., starting in 2015. The investment will create an additional 400 jobs at the plant, according to Automotive News. Earlier this year, company sources said the fifth model is a coupe-like version of the M-class SUV that will likely be called the MLC. The M-class coupe will be positioned against the BMW X6, which is built in Spartanburg, S.C. Daimler CEO Dieter Zetsche said in a statement that the new model for Alabama will be one of 10 additional vehicles Mercedes-Benz will roll out over the next four years. Production of the new vehicle is part of an investment of more than $2 billion that Daimler approved earlier this year. The spending includes plans to produce the Mercedes C class compact car at the Alabama factory beginning in 2014. The plant already produces the Mercedes M-class and GL-class SUVs and the R-class crossover. The plant currently employs 2,800 workers. Read more about the plant at AIADA’s website, www.whatisanamericancar.com. For more on Daimler’s plans to build a fifth model at its Alabama plant, click here.

Broken and Busted: Reviving America's Car Fleet
While much of the U.S. economy struggles, Derrick Oxender and people like him are pumping up sales and profits for auto retailers and auto makers alike. On Thursday, Mr. Oxender was shopping for a new Volkswagen Jetta to replace the 2004 model his son drives. Like many people, Mr. Oxender, 55-years-old, is spending his dollars cautiously. That need to replace aging vehicles has turned the auto industry into one of the economy's bright spots. The average vehicle on America's roads is 10.6 years old up from 8.8 years in 2000. According to The Wall Street Journal, that's helping drive sales even with the stock market and home prices slumping. Several auto retailers, including Group 1 Automotive Inc. and Penske Automotive Inc., report their earnings next week, and are expected to show improving sales. The restructured auto industry has kept production in line with sales and inventories lean, which is keeping new-car prices firm. Although deals are harder to come by thanks to vehicle shortages, they are available, and for some buyers that's enough to convince them to buy new cars instead of repairing older models. Read more on America’s aging car fleet and how it is expected to impact U.S. sales here.

BMW Expects to Maintain U.S. Luxury Sales Lead Going Into 2012
BMW, poised to become the best-selling luxury brand in the U.S. this year, can keep the spot in 2012's first quarter as it introduces its redesigned 3-Series sedan, reports Bloomberg. “We have a window to stay No. 1 in the first quarter,” Ludwig Willisch, who took over BMW's North American operations Oct. 1, said this week in New York. “Our model lineup is broad. We have a lot of opportunities to get there.” The BMW brand and Mercedes have been fighting to take the luxury sales crown away from Toyota Motor Corp.'s Lexus, which has been the annual leader for 11 years. BMW ended September in the lead with 177,679 sales while Mercedes is in second place with 170,058. Click here for more on September auto sales in AIADA’s Market Watch. Updated Mercedes C-Class models went on sale last quarter while BMW is still selling older 3-Series compacts. The 3-Series is slated to hit U.S. showrooms in March or April, BMW says. BMW's sales success over the past year has been driven by the redesigned 5-Series sedan and X3 sport-utility vehicle. Click here for more on BMW’s plans to maintain its U.S. luxury sales lead into the next year.

AutoNation Dealer Group's Profits Up 24% in 3rd Quarter
AutoNation, the largest U.S. dealership group, saw third-quarter profits rise 24 percent to $70.7 million as it was able to charge customers more for vehicles during the post-Japanese-earthquake shortage. Revenue increased 7 percent to $3.5 billion, said AutoNation, the top U.S. retailer of Toyotas, Nissans, and Hondas. After the Japanese earthquake and tsunami in March, those automakers' production was disrupted, causing shortages of vehicles. As a result, AutoNation saw same-store (dealerships open at least a year) new-vehicle sales decrease 2 percent. But the shortages allowed the retailer to increase pricing at its 257 new-vehicle franchises in 15 states. According to The Detroit Free Press, that helped AutoNation make $460 more per new vehicle it sold last quarter – a 23 percent increase from a year ago. "We called it early; we were prepared for it and were able to manage the situation," CEO Mike Jackson said. Jackson predicted lower margins on Japanese vehicles in the fourth quarter as vehicle stocks return to normal. He predicted U.S. light-vehicle sales will top a 13-million annual rate in the fourth quarter; the sales rate was above 13 million before the earthquake's effects hit and returned to that level in September. Read more about AutoNation’s third quarter sales success here.

Scion Sees Challenges, Opportunity with New iQ
Jack Hollis, vice president of Toyota Motor Sales USA’s Scion small-car division, isn’t deluding himself about the challenges Scion faces in launching the all-new iQ minicar in the United States. Despite the low buy-in price (the one-specification iQ comes delivered for $15,995) almost 19 percent of Scion’s target young customers are unemployed, twice the national average. Then there's the microcar market itself: there basically isn’t one. The optimistic end of Scion’s projected sales range is 2,000 units per month. According to Edmunds Auto Observer, Hollis remains unfazed. “I think it (the microcar market) will expand quickly,” he said at a recent media preview in Detroit for the iQ, which goes on sale on the West Coast soon and goes nationwide by next March. “There is a much more urbanistic focus,” in the nation, he insists, mentioning the concerted revitalization efforts of downtown areas in many major cities, attempts to roll back the decades of suburbanization that helped lead to larger, more-opulent commuting vehicles. The iQ is Scion’s first all-new nameplate since the tC coupe was launched in 2004, so high expectations might be present. Read more about these expectations and the challenges the Scion iQ faces in the U.S. here.

Nominate a Dealer for the 2012 David F. Mungenast Lifetime Achievement Award
Every year at AIADA’s Annual Meeting and Luncheon, AIADA presents the David F. Mungenast Lifetime Achievement Award to a highly respected member of our industry. The award recognizes an individual who displays an outstanding work ethic and success in the international auto industry, along with unparalleled commitment to family and community. Read more about the award here. Dave Mungenast Sr. built his automotive family of dealership in St. Louis, and he never forgot that community. His legacy of industry involvement and charitable giving is an inspiration to all dealers, and those like him deserve to be honored. If you know someone in the international auto industry like Dave Mungenast Sr., we want to know! In preparation for AIADA’s 42nd Annual Meeting and Luncheon to be held February 6, 2012 in Las Vegas, award nominations are now being accepted through October 31. Click here for the nomination form and additional details.

Around the Web
Administrator Asks Swedish Court to terminate Saab Reorganization [Motor Authority]
What the 2014 BMW M3 Could Look Like [Autoblog]
2013 Audi S8 First Look [Edmunds Inside Line]
Redone Hyundai Elantra Touring Due in U.S. Next Year [DriveOn]