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Japanese Automakers Recall 3.4 Million Vehicles Over Air Bags

April 12, 2013 by Leave a Comment

Takata has also supplied the faulty air bags to foreign carmakers, said Toyohiro Hishikawa, a spokesman for the Tokyo-listed components maker. The company’s shares tumbled almost 10 percent Thursday.

The recall — the biggest since Toyota pulled back more than seven million vehicles in October — underscores the risk of global supply chains as automakers increasingly rely on a handful of suppliers for common or similar parts to cut costs.

Toyota, the world’s biggest-selling automaker, is recalling about 1.73 million vehicles produced between November 2000 and March 2004, including 580,000 vehicles in North America and 490,000 vehicles in Europe.

Some air bags protecting the front passenger seat may not inflate correctly because of a problem with the propellant used in the air bag inflator, said the Toyota spokesman Ryo Sakai.

The Tokyo-based Takata supplies air bags and seat belts to major automakers outside Japan, including Daimler and Ford Motor, as well as to the Japanese brands.

A second Takata spokesman, Hideyuki Matsumoto, said the defect had been caused by problems in the manufacturing process.

There were no injuries or deaths reported as a result of the faulty air bags, Toyota said. The automaker said there was a risk of fires or injuries because of the flawed inflators.

Toyota will exchange the faulty inflators for new ones, a fix that is expected to take about an hour to two-and-a-half hours for most models, Mr. Sakai said. He declined to give the costs related to the recall.

“The inflators themselves are not so expensive, but there is the cost to cover for the hours spent to fix the problem,” said Kohei Takahashi, an auto analyst at JPMorgan in Japan.

Honda said it was recalling about 1.14 million vehicles worldwide. Nissan Motor said that it was recalling about 480,000 vehicles globally and that there might be more. Mazda Motor said it was recalling about 45,500 vehicles.

Takata estimates about two million vehicles use the defective air bag, Mr. Matsumoto said.

The air bag problem, announced during Japanese trading hours, hit Takata’s shares much harder than it did those of automakers.

Takata’s shares plunged 9 percent to close at ¥1,819, or $18.26.

Shares in Toyota, Honda, Nissan and Mazda, which continue to be supported by a weakening yen and Japan’s new economic policies, were up between 3.1 and 5.8 percent, outpacing a 2 percent rise in the benchmark Nikkei.

Article source: http://www.nytimes.com/2013/04/12/business/global/toyota-honda-recall.html?partner=rss&emc=rss

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Japanese Automakers Recall 3.3 Million Vehicles

April 11, 2013 by Leave a Comment

The recalls, announced in Tokyo, include about 1.7 million Toyotas, 1.1 million Hondas, 480,000 Nissans and 20,000 Mazdas. Almost 1.4 million of the vehicles are in the United States.

Among the automakers, Honda has had the most serious, continuing problem with air bags. Before Thursday’s action, Honda had already recalled almost two million vehicles since 2008 for an excessively powerful driver’s air bag.

Honda said on Thursday that it was not aware of any injuries related to the defect, which involves the inflaters on passenger-side air bags. But late in 2011, Honda acknowledged 18 injuries and two deaths linked to a recall of two million vehicles because of the problem with the driver’s air bag.

Chris Martin, a Honda spokesman, said in an e-mail that the passenger-side air bag deploys differently.

Instead of sending metal fragments directly at the driver, he said, the passenger’s air bag “could propel metal fragments upward toward the windshield or downward toward the front passenger’s footwell.”

The bags were produced by the Japanese supplier Takata Corporation, which also sold some of the defective products to General Motors and BMW, according to a report Takata filed Thursday with the National Highway Traffic Safety Administration in Washington.

About 48,000 2003 Pontiac Vibes, which is a mechanical sibling of the Toyota Matrix, will be recalled, a G.M. spokesman, Alan Adler, wrote in an e-mail.

A Toyota spokeswoman, Cindy Knight, said in an interview that only 170,000 of the company’s vehicles would need repair, but 510,000 vehicles had to be inspected to find them.

The models are the 2001-3 Toyota Corolla, Corolla Matrix, Sequoia and Tundra, and the Lexus SC 430.

The Hondas being recalled are 2002-3 CR-V models; 2001-3 Civics; and 2002 Odyssey minivans. The Mazdas are the 2003-4 Mazda 6 and 2004 RX-8.

The Nissans being recalled are the 2001-3 Nissan Maxima, Infiniti FX, Infiniti QX4, Nissan Pathfinder and Nissan Sentra, a Nissan spokesman, Steve Yaeger, said in an e-mail.

Article source: http://www.nytimes.com/2013/04/12/business/global/automakers-recall-3-3-million-vehicles-over-air-bags.html?partner=rss&emc=rss

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Sign of a Comeback: U.S. Carmakers Are Hiring

February 22, 2013 by Leave a Comment

But since the recession ended and General Motors and Chrysler began to recover with the help of hefty government bailouts and bankruptcy filings, all three Detroit car companies including Ford Motor Company have achieved one of the unlikeliest comebacks among industries devastated during the financial crisis.

Now steadily rising auto sales and two-tier wage concessions from labor have spurred a wave of new manufacturing investments and hiring by the three Detroit automakers in the United States. The latest development occurred on Thursday, when Ford said it was adding 450 jobs and expanding what had been a beleaguered engine plant in Ohio to feed the growing demand for more fuel-efficient cars and S.U.V.’s in the American market.

Ford, the nation’s second-largest automaker after G.M., said it would spend $200 million to renovate its Cleveland engine plant to produce small, turbocharged engines used in its top-selling models. Ford plans to centralize production of its two-liter EcoBoost engine — used in popular models like the Fusion sedan and Explorer S.U.V. — at the Cleveland facility by the end of next year.

Its move to expand production in the United States is yet another tangible sign of recovery among the Detroit auto companies. Industrywide sales in the United States are expected to top 15 million vehicles this year after sinking beneath 11 million in 2009.

Last month, G.M. announced plans to invest $600 million in its assembly plant in Kansas City, Kan., one of the company’s oldest factories in the country. And Chrysler, the smallest of the Detroit car companies, is adding a third shift of workers to its Jeep plant in Detroit.

The biggest factor in the market’s revival has been the need by consumers to replace aging, gas-guzzling models. “Pent-up demand and widespread access to credit are keeping up the sales momentum,” said Jessica Caldwell, an analyst with the auto research site Edmunds.com.

And Joseph R. Hinrichs, the head of Ford’s Americas region, explained in an interview that the company’s Ohio revival plan was “all based on increased demand.”

“We’re putting the capacity here because that’s where we need it most,” he said.

Yet even though Ford is enjoying a resurgence in the United States, it is racing to reduce costs in its troubled European division. The workers in Spain who were building the small EcoBoost engines that have been shipped to America will be moved to an assembly plant that is taking on work from a plant to be closed in Belgium.

While Ford survived the industry’s financial crisis without government help, it still cut thousands of jobs and shuttered several factories to reduce costs and bring production more in line with shrinking sales.

But now, the burst of showroom business has prompted automakers to increase output at remaining plants. In Ford’s case, the company added about 8,000 salaried and hourly jobs last year, and has said it plans to hire about 2,200 white-collar workers in 2013. Ford is also moving some vehicle production from Mexico to a Michigan plant, where it will add 1,200 jobs.

The investment in Cleveland is indicative of how Ford and other carmakers have trimmed domestic labor costs and improved productivity since the recession. Just a few years ago, the company was forced to consolidate two engine plants into one in northern Ohio, and close a major component operation. “No question we have been through a lot in northern Ohio,” Mr. Hinrichs said. “But now our North American business is very competitive with the best in the world.”

Mr. Hinrichs said that a new local agreement with the United Automobile Workers union in Cleveland paved the way for the expansion. Currently the plant employs about 1,300 workers.

The Detroit companies are also benefiting from their ability to hire lower-paid, entry-level workers as part of their national contract with the U.A.W. Many of the 450 new workers at the Cleveland plant will start at $16 an hour, compared to about $28 for veteran union members, and some of the new engine plant workers could include employees from other Ohio plants.

“With our competitive labor agreements, we can bring business back to the U.S. from Spain and Mexico,” Mr. Hinrichs said.

Employment still falls far short of levels in the 1990s, when cheap gas and the popularity of S.U.V.’s led to big profits in Detroit.

The auto manufacturing sector employed 1.1 million people in the United States as recently as 1999, according to a recent study by the Center for Automotive Research in Ann Arbor, Mich. About one-third of those jobs were in the final assembly of vehicles, and the balance in the production of auto parts.

Employment dropped as low as 560,000 in 2009. Since then, about 90,000 jobs have been added, the report said.

This article has been revised to reflect the following correction:

Correction: February 21, 2013

Because of an editing error, an earlier version of this article gave a false impression of sales among the Detroit auto companies. Overall auto sales in the United States are expected to top 15 million this year, not sales among the Detroit automakers.

Article source: http://www.nytimes.com/2013/02/22/business/ford-expanding-ohio-engine-plant.html?partner=rss&emc=rss

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Beijing Takes Emergency Steps to Fight Smog

January 31, 2013 by Leave a Comment

The effort came on the second straight day of air that was rated “hazardous” by the standards of the United States Environmental Protection Agency. That rating, in which the air quality index surpasses 300, means people should not venture outdoors at all. This month, Beijing has faced the most polluted air days on recent record. The surge in pollution, which is happening across northern China, has angered residents and led the state news media to report more openly on air quality problems.

Officials have also begun acknowledging the severity of the problem. Xinhua, the state news agency, reported that Wang Anshun, the newly appointed mayor of Beijing, said Monday that the government had come up with a preliminary plan to curb the pollution.

“I hope we can have blue skies, clean water, less traffic and a more balanced education system,” Mr. Wang said at a session of the municipal legislature, in a broad reference to quality-of-life issues.

Mr. Wang also told lawmakers that “the current environmental problems are worrisome.” He said the number of vehicles in Beijing should be allowed to increase, but slowly. The Xinhua report said there were about 5.18 million vehicles in Beijing, compared with 3.13 million in early 2008.

Mr. Wang told the legislature on Jan. 22 that the Beijing government was aiming to cut the density of major air pollutants by 2 percent this year. To that end, officials are ordering 180,000 older vehicles off the roads, promoting the use of “clean energy” for government vehicles and heating systems, and growing trees over 250 square miles of land in the next five years, Xinhua reported.

Prime Minister Wen Jiabao also addressed the pollution issue at seminars on economic development in the past week, Xinhua said. It reported that Mr. Wen said efforts should be made to “optimize industrial structure, promote energy saving and emission reduction, and advance ecological progress.”

In the past three decades, China has adopted a growth-at-any-cost attitude to build its economy, and the resulting environmental damage is now widespread and severe. Analysts say it will take years to clean up the air in northern China, even if serious measures are taken now.

Beijing sits in the middle of an industrial belt of coal-burning factories, and there is little incentive for officials or executives to slow down work there. Traditionally, officials’ performance ratings have been closely tied to economic growth and the maintenance of stability. In recent years, some policy makers have urged that a measure of environmentalism be taken into account.

The United States Energy Information Administration released a report on Tuesday that said China now accounts for 47 percent of global coal consumption, almost equal to all other countries in the world combined. Coal consumption in China grew by more than 9 percent in 2011, or 325 million tons, which equaled 87 percent of the total global rise in coal use.

The report said the heavy demand for coal was because of an increase of more than 200 percent in electricity generation since 2000. China’s demand for coal grew an average of 9 percent a year from 2000 to 2010. If China were excluded from measurements of global growth during that time, the average annual growth would have been only 1 percent, the report said.

On Tuesday morning, the air quality index, as measured by a device atop the United States Embassy in central Beijing, reached 517, which was so high that the rating was labeled “beyond index” on an embassy Twitter account, @BeijingAir. (Once before, the account had labeled a rating of more than 500 “crazy bad,” but embassy officials quickly deleted that tweet.) Index readings on a Web site run by the Beijing government had similar numbers.

The indexes are based primarily on measurements of a potentially deadly particulate matter called PM 2.5. In mid-January, some monitoring devices set up by the government in the Beijing municipality, which includes more than 20 million people, recorded PM 2.5 concentrations of nearly 1,000 micrograms per cubic meter, which was on par with some severely polluted days in industrial London during the mid-20th century.

Beijing announced in early 2012 that it would report PM 2.5 levels, in response to an outcry from residents demanding the information. A total of 74 Chinese cities are supposed to release that data this year. Among the prominent voices calling for greater disclosure is Pan Shiyi, a real estate tycoon.

This week, Mr. Pan has asked the 14 million followers of his microblog whether China should adopt a “clean air act” that would be much stronger than current laws. As of Wednesday afternoon, 99 percent of the more than 42,000 replies had voted in favor of the act.

“In order to control air pollution, we need everyone to participate,” Mr. Pan wrote. “The most important thing is legislation.”

Mr. Pan did not give details on what the legislation would say. He said that as a member of the Beijing municipal people’s congress, he would bring up the idea of an act to other legislators and officials. In China, though, legislatures have little power; senior party officials make important policy.

Zhang Xin, Mr. Pan’s wife and business partner, said on her microblog that after thousands of people died as a result of air pollution in Britain in the 1950s, the government vigorously tackled its air quality problems with strict laws.

Shi Da contributed research.

Article source: http://www.nytimes.com/2013/01/31/world/asia/beijing-takes-emergency-steps-to-fight-smog.html?partner=rss&emc=rss

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Toyota Sold Nearly 9.75 Million Vehicles in 2012

January 28, 2013 by Leave a Comment

Toyota Motor Corp. released its tally for global vehicle sales for last year Monday at a record 9.748 million vehicles — a bigger number than the estimate it gave last month of about 9.7 million vehicles.

It was already clear Toyota had dethroned General Motors Co. as the Detroit-based automaker fell short, selling 9.29 million vehicles.

GM had been the top-selling automaker for more than seven decades before losing the title to Toyota in 2008.

GM retook the sales crown in 2011, when Toyota’s production was hurt by the quake and tsunami in northeastern Japan.

The latest results show Toyota’s powerful comeback.

Global vehicle sales for the maker of the Camry sedan, Prius hybrid and Lexus luxury model surged nearly 23 percent from the previous year. Overseas sales jumped 19 percent, while sales in Japan, where the economy has been troubled, recovered a whopping 35 percent.

Volkswagen AG of Germany, the world’s No. 3 automaker, sold a record 9.1 million vehicles around the world.

All three automakers play down the significance of the sales ranking and say they are focused on making attractive products.

“Rather than going after numbers, we hope to make fine products, one by one, to keep out customers satisfied. The numbers are just a result of our policy. And our policy will continue unchanged,” said Toyota spokeswoman Shino Yamada.

Still, the recovery for Toyota is impressive. Like other Japanese automakers, Toyota’s production was devastated by the March 2011 disasters, which disrupted supplies of crucial components. Flooding in Thailand, where Toyota has factories, also hurt car production.

Before that, it struggled against a crisis of massive recalls in the U.S. over defective floor mats, gas pedals and brakes, involving millions of vehicles, some recalled over and over, that hurt its reputation for quality.

Toyota officials have vowed to scrutinize quality, and have held back product development to minimize recalls.

From the middle of last year, it was hit by another kind of problem — a widespread boycott of Japanese products, including Toyota cars, in China over a territorial dispute.

But sales growth in other parts of the world, including the U.S. and Asian nations such as Indonesia and India, was more than enough to offset such losses.

Toyota is planning to sell 9.91 million vehicles globally in 2013, putting it back on track toward its earlier goal of 10 million vehicles — a target that it had made a special effort to play down after its recall crisis.

___

Article source: http://www.nytimes.com/aponline/2013/01/28/business/ap-as-japan-toyota-.html?partner=rss&emc=rss

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Toyota to Settle Class-Action Suits Over Sudden Accelerations

December 27, 2012 by Leave a Comment

The proposed settlement, filed in a Federal District Court in California, would be one of the largest of its type in automotive history. If the agreement is approved by Judge James V. Selna, Toyota would make cash payments for the loss of value on vehicles affected by multiple recalls and install special safety features on up to 3.2 million cars.

While there are still individual personal-injury and wrongful death lawsuits pending against Toyota, in addition to an unfair business practice case brought by the attorneys general of 28 states, the class-action case was the largest legal action related to economic losses by vehicle owners.

The suit was filed in 2010 after numerous complaints were made to federal regulators that Toyota vehicles were accelerating suddenly without warning and causing accidents and injuries. Toyota has recalled more than eight million vehicles in the United States for problems related to floor mats that could become entangled with accelerator pedals, or pedals that could stick with the throttle open.

But the class-action case contended that Toyota’s electronics systems were at fault. After a long investigation, government officials concluded last year that there was no evidence that faulty electronics systems contributed to the acceleration issues. But a subsequent review of that inquiry by a branch of the National Academy of Sciences found that federal regulators had lacked the expertise to monitor electronic controls in automobiles.

The company has been fined more than $60 million by the National Highway Traffic Safety Administration for failing to inform regulators of internal information about the sudden acceleration, which the company has largely attributed to driver error.

The recalls mushroomed into broader problems for Toyota, which had long enjoyed a pristine reputation for quality, safety and reliability, and the class-action suit was a lingering obstacle to its steady comeback from the acceleration issues, which included testimony by its chief executive, Akio Toyoda, before Congress.

“This agreement marks a significant step forward for our company, one that will enable us to put more of our energy, time and resources into Toyota’s central focus: making the best vehicles we can for our customers,” said Christopher P. Reynolds, Toyota’s chief legal officer in the United States.

Under the proposed settlement, Toyota agreed to create a fund of $250 million to pay claims to former owners of cars affected by the acceleration recalls. The company also agreed to install so-called brake override systems on cars whose pedals could stick or become trapped in floor mats. The company said it had already installed the systems on 2.6 million vehicles but that an additional 550,000 cars had not received the equipment.

In addition, the settlement provides a customer support program for more than 16 million current Toyota owners, who will be eligible for free repairs on certain parts for up to 10 years.

Toyota has also agreed to contribute $30 million to finance automotive safety research related to driver behavior and unintended acceleration.

The lead law firm for the plaintiffs estimated that the overall settlement could total $1.2 billion to $1.4 billion.

“We are pleased that Toyota has agreed to a settlement that was both extraordinarily hard-fought and is exceptionally far-reaching,” said Steve Berman, the lawyer who led the settlement talks for the plaintiffs.

The amount a Toyota owner may receive for economic loss will be determined by a settlement administrator.

In its statement, Toyota said it would take a one-time charge of $1.1 billion against earnings to cover the costs of the class-action case as well as possible costs to resolve a consumer-protection lawsuit filed in California and the unfair-business-practices case.

One legal expert said the settlement appeared large but may be part of Toyota’s longer-term strategy to move beyond the acceleration scandal.

“The class is very large, so each plaintiff will not receive very much,” said Carl Tobias, a law professor at the University of Richmond. “The timing of this and the huge fine Toyota recently agreed to pay suggest Toyota may be concerned about the personal injury cases, in which several trials are set for this spring.”

Toyota has recovered much of the sales lost in the aftermath of the sudden-acceleration problems in 2010 and its supply-chain troubles caused by the Japanese earthquake and tsunami in 2011.

The company’s sales in the United States have increased 28 percent this year, about double the pace of growth for the overall market. One industry analyst said the proposed class-action settlement would help Toyota continue to rebuild its reputation and market share.

“Toyota wants to put its unintended acceleration recalls behind it once and for all,” said Jesse Toprak, an analyst with the auto research site TrueCar.com. “As costly as it may be, this settlement will allow them to remove most of the lingering financial uncertainty.”

Article source: http://www.nytimes.com/2012/12/27/business/toyota-settles-lawsuit-over-accelerator-recalls-impact.html?partner=rss&emc=rss

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Military to Deliver Fuel to Storm-Ravaged Region

November 3, 2012 by Leave a Comment

With the reopening of the Port of New York to tankers on Thursday, and the return of a critical Northeast fuel pipeline to full capacity on Friday, the biggest outstanding problems are the lack of power at hundreds of gas stations and continued panic buying by the public, industry officials said.

Because electricity will not be restored in parts of central New Jersey for seven to 10 days, gasoline shortages may remain severe in some areas. As of Friday, according to AAA, only 40 to 50 percent of the gas stations in New York City and New Jersey were operating, and even fewer were operating on Long Island. Most of the stations were out of service because of power failures.

“We have seen some stations open as power is restored, but other stations have closed while running out of gas,” said Michael Green, an AAA spokesman. “The long lines and supply problems will go away once power is restored.”

The Obama administration, realizing the political peril if it were to be blamed for fuel shortages in the days before the election, significantly accelerated its response on Friday.

It authorized the Defense Department to hire hundreds of trucks that will be used to deliver 12 million gallons each of gasoline and diesel fuel, mostly from commercial suppliers, to staging areas in New Jersey. The department is handling the task because its Defense Logistics Agency has contracting powers that enable it to move quickly.

From the staging areas, the fuel will be distributed throughout the region in coordination with the Federal Emergency Management Agency to help resupply stations. Together, the gasoline and diesel are enough for 1.6 million vehicles with 15-gallon tanks.

The Pentagon has also been authorized by the Energy Department and the White House to tap the Northeast Home Heating Oil Reserve. It will draw as much as two million gallons of diesel fuel — part of the 12 million total — for government emergency responders, helping them to keep electricity generators, water pumps, federal buildings, trucks and other vehicles running. The oil reserve, created by the federal government in 2000, holds 42 million gallons of ultralow-sulfur diesel at terminals in Groton, Conn., and Revere, Mass. It is the first time fuel has been released from the reserve.

Earlier Friday, the Homeland Security Department temporarily lifted a rule prohibiting foreign-flagged ships from delivering fuel between United States ports, a move that should soon bring additional tankers to the New York area with refined gasoline and diesel.

And on Thursday, the Defense Department used 17 of its aircraft to move 630 tons of equipment, including 10 bucket trucks and 20 pickup trucks, from West Coast utility companies to an Air National Guard base 60 miles north of New York City.

“We are working this as a team,” W. Craig Fugate, the FEMA administrator, said at a news conference Friday morning.

Tom Kloza, chief oil analyst at the Oil Price Information Service, said the federal government may end up sending more fuel than is needed. “Anyone running for office would rather err on the side of excess,” he said. “It’s a confidence builder. It will help placate people who think we are on the threshold of crisis.”

Government officials said they were confident that the shortages would ease in the coming week, as power was restored and the fuel now being delivered to the region arrived.

“There is no reason to panic; there is no reason for anxiety,” Gov. Andrew M. Cuomo of New York said at a news conference Friday. “We understand why there was a shortage, for very definable reasons. We also understand why it’s going to be better, and it’s going to be better in the near future.”

The fuel shortage has emerged as one of the most widespread problems after the storm, worsening the suffering in the region. Large parts of the public transit system remained out of service, and 3.5 million customers had no power Friday afternoon, down from eight million earlier in the week, according to Energy Department figures.

Eric Lipton reported from Washington and Clifford Krauss from Houston.

Article source: http://www.nytimes.com/2012/11/03/business/military-to-deliver-fuel-to-storm-region.html?partner=rss&emc=rss

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Aided by Growing Sales, Chrysler Profit Increases 80%

October 30, 2012 by Leave a Comment

DETROIT — Chrysler, the third-largest Detroit automaker, said on Monday that its third-quarter profit rose 80 percent on the strength of new models, less debt and steadily growing sales in both American and international markets.

The company said it earned $381 million in net income, up from $212 million in the same period a year ago. Revenue for the quarter was $15.5 billion, an 18 percent increase from $13.1 billion in the same period last year.

The results could be seen as the latest evidence that Chrysler’s improbable comeback from its government bailout and bankruptcy was not only sustainable, but accelerating.

“We’ve changed the conversation at Chrysler Group,” said Sergio Marchionne, the chief executive of both Chrysler and its Italian parent, Fiat. “We continue to work feverishly and are pleased to see that our all-consuming aspiration for excellence is translating into results.”

Chrysler’s solid results are propping up the faltering European operations of Fiat, which was scheduled to release its third-quarter earnings on Tuesday.

Mr. Marchionne may announce new moves to cut losses at Fiat, which is struggling to cope with the steepest decline in sales in Europe in nearly 20 years.

But there’s no need anymore to fix Chrysler, which has repaid its debt to the American taxpayers and totally revamped its product lineup since emerging from bankruptcy in 2009.

The company said its worldwide sales increased 12 percent in the third quarter to 556,000 vehicles. For the first nine months of the year, it sold 1.7 million vehicles, up from 1.4 million in the same period in 2011.

Before its financial collapse, Chrysler relied mostly on its pickups, S.U.V.’s and minivans to contribute the bulk of its profit. The company was particularly vulnerable to swings in gas prices, which drove consumers to buy smaller, more fuel-efficient passenger cars from other manufacturers.

With the assistance of Fiat technology and parts, Chrysler has broadened its lineup to include a compact car, the Dodge Dart, which gets 40 miles per gallon of gas. The company is also putting more efficient engines into its bread-and-butter models like the Jeep Grand Cherokee and Chrysler 300.

Mr. Marchionne on Monday reaffirmed Chrysler’s full-year targets of $1.5 billion in net income and global shipments of 2.3 million vehicles.

Chrysler’s balance sheet also continues to improve as its business grows. The company said it had $11.9 billion in cash at the end of the third quarter, compared with $9.5 billion in the same period a year ago.

The company’s net industrial debt was $693 million at the end of the quarter, considerably lower than the $2.86 billion in debt on its books a year ago.

Chrysler’s two American rivals, General Motors and Ford, are expected to report lower earnings for the third quarter than a year ago, primarily because of growing losses in the troubled European car market. Ford was scheduled to report on Tuesday and G.M. on Wednesday.

Article source: http://www.nytimes.com/2012/10/30/business/chrysler-profit-rises-80-percent.html?partner=rss&emc=rss

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Chrysler and Fiat Merger Shows Fruits of Teamwork

January 10, 2012 by Leave a Comment

Industry analysts have been skeptical of the combined potential of the two automakers since Fiat took control of Chrysler after it emerged from its government-sponsored bankruptcy in 2009. Memories are strong of another overseas partnership — the German automaker Daimler-Benz’s merger with Chrysler — that ended unhappily in 2007.

But the integration of Fiat and Chrysler is nearly complete and some analysts now say it could become a model for trans-Atlantic cooperation in the auto industry. Sergio Marchionne, the chief executive of both Fiat and Chrysler, spoke enthusiastically of the combined company at the auto show in Detroit on Monday.

“We are making all the decisions together as one management team,” Mr. Marchionne said at a media briefing. “There is no question about who runs what. I run one company.”

The first fruits of the integration are on display here, and promise to help Mr. Marchionne achieve his long-term goal of increasing global sales of the two companies to six million vehicles by 2014. Together, Fiat and Chrysler sold about 4.2 million cars and trucks last year.

On Monday, Chrysler took the wraps off the new Dodge Dart, a compact car derived from the chassis and technology of an Alfa Romeo, one of Fiat’s European car brands.

But the bigger introduction comes Tuesday, when Mr. Marchionne will show the Maserati Kubang, an upscale sport utility vehicle based on Chrysler’s popular Jeep Grand Cherokee.

The Kubang is expected to be built alongside the Grand Cherokee in an assembly plant on Detroit’s east side.

The marriage of an all-American Jeep with the Italian luxury heritage of a Maserati is the best evidence yet that Chrysler and Fiat can create products together that they could not afford to make independently, auto analysts said.

“This merger is the closest thing to a truly symbiotic relationship that the industry has ever seen,” said Jim Hall, managing director of the automotive consulting firm 2953 Analytics.

Ever since Fiat took control of Chrysler, Mr. Marchionne has said he planned to leverage the strengths of both companies and operate them as co-equals.

But that goal was questioned by industry analysts who saw how Daimler-Benz dominated Chrysler during their nine-year merger.

“Daimler could never figure out what to do with Chrysler because they had no interest in integrating it into their business,” Mr. Hall said. “But Fiat actually believes it needs Chrysler for mass purchasing of parts.”

In Mr. Marchionne, Fiat and Chrysler have a strong leader who divides his time equally between the two companies. He has also promoted executives from both sides and assigned responsibilities that cut across geographic and corporate lines.

“This management team spends their time traveling and making decisions in the operating regions,” Mr. Marchionne said. “But this thing runs as one house.”

The final step in the integration process will be to increase Fiat’s ownership of Chrysler from 58 percent to 100 percent. That will require either a public stock offering to cash out the remaining stake held by the United Automobile Workers’ health care trust, or a direct purchase of the trust’s stake by Fiat.

“We need to find a way to bring these two businesses together completely,” he said.

Once Fiat takes full ownership, Mr. Marchionne will be faced with the delicate decision of whether to locate its corporate headquarters in Italy, the United States or possibly a neutral location.

The possibility that Fiat might move its corporate offices out of Italy has churned emotions there about the potential loss of an industrial icon. But Mr. Marchionne was coy on Monday on where the combined companies would be headquartered. “All options are open,” he said.

The corporate issues, however, have not slowed down his prime task of bringing profitable new products to market.

The Dart gives Chrysler a competitive product in the important small-car segment of the American market, where the company has had little success.

Production of the car at an assembly plant in Illinois also allowed Fiat to gain another 5 percent stake in Chrysler as part of the overall rescue plan Mr. Marchionne agreed to with the Obama administration in 2009.

The Dart will be Chrysler’s most fuel-efficient model, getting an estimated 40 miles per gallon, and will sell at a base price of about $16,000.

From a marketing standpoint, the Dart should be a big boost to Chrysler’s dealers, who have been hard-pressed to attract younger, first-time car buyers.

“We weren’t competing in this segment,” said Reid Bigland, head of the Dodge brand.

The Maserati S.U.V. is the first of several vehicles with Fiat brands that could be produced in the United States. Mr. Marchionne said that three Chrysler assembly plants could potentially build Alfa Romeo vehicles in the future.

Article source: http://feeds.nytimes.com/click.phdo?i=1bd863f457705b70d7d0590dbbb2cf1a

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Toyota Expects 31 Percent Profit Slump

June 10, 2011 by Leave a Comment

TOKYO — Toyota Motor said Friday that it expected its annual net profit to fall almost a third from the previous year, hurt by production disruptions after the earthquake and tsunami that struck Japan in March.

The company’s prediction of a 31 percent decline in net profit to ¥280 billion, or $3.5 billion, for the year ending in March 2012 was gloomier than expected. Analysts had been anticipating a profit forecast of about ¥422 billion, according to a survey by Bloomberg. In the same period the previous year, Toyota earned ¥408 billion.

But Toyota’s forecast also projected a robust recovery in the coming months as the automaker made headway in mending its supply chain. Though Toyota’s 17 plants in Japan escaped the disaster relatively unscathed, factory lines have been working well below capacity, as vital suppliers in the country’s worst-hit areas have raced to restart operations.

Sales for the year are expected to shrink 2 percent to ¥18.6 trillion, the company said.

Toyota reiterated that there would not be a complete recovery in global production until November. Still, there have been signs that output may be bouncing back more quickly than expected. Last month, the automaker said production would begin recovering in June in all regions of the world, a month earlier than previously announced.

Even with a recovery, Toyota is still likely to lose its title as the world’s biggest automaker by sales to General Motors and be passed by Volkswagen as well, giving up its crown after just three years. Toyota now expects to sell 7.24 million vehicles for the year through March 2012, down from 7.31 million vehicles in the previous year.

A Toyota executive downplayed the importance of global rankings.

“We don’t see it as necessary to be the largest automaker in the world,” said Satoshi Ozawa, Toyota’s executive vice president.

Toyota executives have tended to avoid tough talk about global market share, especially after the company’s embarrassing spate of recalls in 2009, saying that customer trust and safety were more important.

Also weighing on production at Toyota are electricity shortages in Japan since the accident at the Fukushima Daiichi nuclear plant. Many other nuclear power plants are being kept closed as Japan rethinks its nuclear policy, leading to concerns about a power crunch this summer, when energy use peaks. A nuclear power plant that supplies the region where Toyota’s headquarters and its surrounding factories are located was shut down in May over concerns that it was vulnerable to tsunamis.

Japanese automakers, together with other manufacturers, are being asked to reduce their electricity use 15 percent this summer. Toyota officials have said they will do their best to cut electricity use, moving some shifts to the weekends to avoid peak times.

On top of the physical disruptions wrought by the earthquake, the strong yen continues to hurt Toyota earnings by blunting its competitiveness overseas and eroding overseas profits when repatriated into the home currency. The dollar has been trading at about ¥80, down from close to ¥95 a year ago.

The higher costs of producing cars in Japan has raised the question of how long Toyota can continue to base so much of its production in its home country.

Even compared with its peers, Toyota stands out in the number of cars it still manufactures in Japan, then ships overseas — a setup that has become a drag on its profitability. In 2010, Toyota made 43 percent of its cars in Japan, while Nissan made 28 percent and Honda 27 percent.

Akio Toyoda, Toyota’s president and a member of its founding family, has repeatedly said the company remains committed to keeping production and jobs inside Japan. But Friday, Mr. Ozawa hinted that Mr. Toyoda’s thinking might be changing.

The disruption caused by the earthquake and the strength of the yen had helped to remind Mr. Toyoda recently that his automaker was a global company, not just a Japanese company, Mr. Ozawa said.

“Someone told me the other day that Toyota manufacturing is not owned by Japan. When it’s put like that, I struggle to answer,” Mr. Ozawa quoted Mr. Toyoda as saying.

Article source: http://www.nytimes.com/2011/06/11/business/global/11toyota.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,