GM, Chrysler lead horrific month as October sales plunge

Falling gas prices and rising inventories weren't enough to offset a tight credit market, leading to another awful month of sales for all automakers.

On average, October sales were down 32 percent from a year ago, with General Motors hit the hardest. Not only did GM's HUMMER brand lead the industry with sales off by 64 percent, but the rest of the GM portfolio followed closely behind.

Cadillac and Saturn sales fell about 55 percent, GMC trucks were down 52 percent, followed by Pontiac, Buick and Chevrolet, which were all down by at least 40 percent.

The decline is largely due to tighter lending policies adopted by GMAC Auto Finance. With GM's in-house lending unit refusing loans to buyers with credit scores below 700, a large percentage of prospective customers were unable to qualify for a loan.

Possibly the worst month since World War II
"If you adjust for population growth, this is probably the worst industry sales month in the post-WWII era," said Mark LaNeve, GM's vice president for sales and marketing, speaking with Automotive News. "Until the credit markets open up and consumer confidence improves, the entire U.S. economy, and any industry like autos that relies on financing, will suffer."

To spur sales, GM said today it will start its annual Red Tag Sale early this year. The event - which normally runs from Thanksgiving weekend to January 5, will instead start tomorrow, with some GM vehicles carrying up to $7,250 in cash incentives.

Chrysler sales fell 50 percent, trailed by Jeep and Dodge, down 32 and 27 percent respectively. Ford sales were off 28 percent from a year ago.

So far only two automakers have reported monthly sales increases this year: Toyota in April and GM in January. This month, Toyota's decline was lead by its Lexus unit, down 35 percent. The Toyota brand retained its position as the nation's best-selling brand, ahead of Ford and Chevrolet.

MINI posts gain, Audi bucks the downward spiral
Among the few to post gains were BMW's MINI brand, up 56 percent. Audi, whose sales were up by less than one percent were weighed by parent company Volkswagen AG, whose sales fell by nearly 8 percent.

"This is the toughest economy we've seen in a long time," Mark Barnes, COO of VW Group of America, said in a statement.
[AN]

[Photo: Flickr.com; Original by Broken Wing Productions. Post-processing by David Moll.]

VW to invest in Puebla plant, expand US supplier contracts

Otto Lindner, CEO of Volkswagen Mexico, announced today that Volkswagen AG will expand production at the company's plant in Puebla, Mexico, partly in preparation for an as-yet unnamed new compact sedan for the global market.

In an interview with Automotive News last week, Otto Lindner said that production of the compact will start in 2010. "We can't say what it will be, but it will be a world car, with the exception of China," he said.

Currently, the plant produces both the current and previous generation Jetta sedan and wagon, as well as the coupe and convertible versions of the New Beetle. The United States and Canada are the primary exports markets for cars produced at Puebla. 40 percent of current- generation Jetta wagon production is exported to European markets.

Puebla to set all-time production record in 2008
In recent years, the Puebla plant has been operating at max capacity. The factory in set to build 450,000 cars this year and they will set a company record in the process.

Lindner said the expansion program will boost production output to 550,000 cars by 2011.

Volkswagen AG will build a new 65,000 square-foot stamping shop, a new 265,000 square-foot body shop and a new 85,000 square-foot logistics facility on the northern edge of the Puebla complex. The automaker also is extending the 117,000 square-foot paint shop by 70,000 square feet and adding 104,000 square feet to the 301,000 square-foot assembly shop.

VW to strengthen ties with US, Canadian suppliers
Along with the investment in Puebla plant, the automaker said it will also buy more parts assembled within Canada and the United States in an effort to combat fluctuating and often unfavorable exchange rates.

Currently, 60 percent of the parts used at Puebla are provided by suppliers based in Mexico. By 2011, the company plans for 90 percent of parts to come from suppliers within Mexico, Canada and and the United States, Lindner said.

[Source - AN ]

Lithe VW Passat CC lineup, pricing announced; sales to begin Q4 2008

Inspired by the sensuous lines and stately presence of the Mercedes-Benz CLS-series four door coupe, German automaker Volkswagen will bring the same dynamic design flair to the masses this fall under the aegis of the Passat CC moniker.

At Pebble Beach Concours d'Elegance last weekend, Volkswagen unveiled a special edition of their newest addition to the U.S. lineup.

Dubbed the Passat CC Gold Coast Edition, the car featured a 3.6 liter V-six gasoline engine with FSI direct injection, the company's DSG dual-clutch six-speed transmission and subtle aerodynamic revisions, lending the car a sporty, yet restrained presence. 19 inch propeller style alloy wheels and a unique paint hue — co-developed with DuPont and consisting of a mix of gold, brown and silver tones — completes the exterior package.

Inside, four ergonomically sculpted seats wrapped in warm brown leather with bronze piping, are set against dark brown interior panels with matching leather highlights. The balance of the interior arrives unchanged from the CC's sedan stablemate , yet with the new color palette and sweeping expanses of glass, the effect is anything but staid.

Taken in sum, the Passat CC is an alluring and refreshing design that brings the sleek essence of plutocrat CLS-class coupes to a new, more attainable price point, all while retaining enough visual DNA to remain a part of the Volkswagen brand.

Despite the dramatic visuals, the timing of VW's newest product comes at a turbulent time for automakers. Today's pricing announcement builds on last month's news that the company would commence construction on a $1 billion dollar plant in Chattanooga, Tennessee as a part of the company's long term plans to bump Toyota from their slot as the world's second most prolific automaker. It would appear then, that confidence remains high.

Yet Volkswagen is keenly aware of the icy reception Americans bestowed upon the $70,000 Volkswagen Phaeton four years ago this spring. Despite reviews that praised the car for its combination of power and understated grace, buyers rejected the notion of paying a premium price for a premium sedan spoiled by a plebeian badge.

Price, therefore will pay a key role in ensuring the Passat CC's success. The base model CC 2.0T will sell for less than $27,000. Equipped with a 200-horsepower 2.0 liter turbocharged inline-four and a six-speed manual transmission, the base model will be joined by the 280-horsepower CC 3.6 which also borrows its drivetrain from its Passat sedan cousin.

European markets will also receive a 1.8 liter, 160-horsepower model (for markets where road tax is based on engine size) and two diesel variants developing 140 and 170 horsepower respectively.

In a release accompanying the pricing announcement, company marketing chief Detlef Wittig said that the company expects 60 percent of CC sales will come from the U.S. market. In total, production of the CC is expected to top 300,000 units over the next seven years.

Upon initial review, those figures seem timid. The Passat CC combines sleek styling and proven mechanicals at a price heretofore unseen. If there's an automotive iPod marketing theme to be found — a gotta have it product with wheels — the Passat CC has the chutzpah to tap it.