One On One With George Magliano, Director of Automotive Research at Global Insight
Tuesday, October 03, 2006
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SUSIE GHARIB: September was a mixed month for auto sales, with America's biggest auto maker still struggling. General Motors saw its sales drop by almost 7 percent on a pull back in sales to daily rental companies. GM also said it's cutting its fourth quarter production target by another 2 percent to just over a million vehicles. Ford Motor posted the year's first year-over-year sales gain last month, up almost 5 percent to 238,000 cars and trucks. Ford credits much of the gain to strength in car sales but says cheaper fuel prices helped rev up sales of its F-150 pickup trucks and SUVs. Meanwhile, sales at Daimler Chrysler's U.S. Chrysler group dropped almost 4 percent. Chrysler is also bringing back zero percent financing to clear out its inventory of 2006 models. Toyota continued to build its U.S. market share. Its September sales surged 25 percent on the strength of its fuel efficient vehicles. But sales at Japanese rival Honda fell 4 percent.
Joining us now to talk more about the outlook for the auto industry, George Magliano, director of automotive research at Global Insight. Hi, George.
GEORGE MAGLIANO, DIR., AUTOMOTIVE RESEARCH, GLOBAL INSIGHT: Hi, how are you?
GHARIB: So tell me, what is the outlook for auto sales for the rest of this year? Do you think they`re going to pick up?
MAGLIANO: No. The selling rate in auto sales is going to run at about in the low 16 million, 16 1/2 million unit range for the closing months of the year. We do not expect any big sell offs like we saw a year ago. While we have some better deals in the marketplace, you know, Chrysler and Ford continue to push the incentives pretty hard. GM is sticking with value pricing and the consumer right now is pretty well tapped out and we don`t expect any big boost in volume as we close the year.
GHARIB: The 2007 models are beginning to roll off of the assembly line. Who's got the best lineup? MAGLIANO: Well, at this point in time it's really hard to tell, but Chrysler has got some exciting crossovers out there. We've got, in fact, all the big three do. You've got the new Edge from Ford and you've got the bigger crossovers from General Motors, which we are very excited about, the Acadia and its system of products. That's a new class of crossover. It should do very well.
GHARIB: Speaking of General Motors, it had a board meeting today and on the agenda would be some discussion about whether or not General Motors is going to have some kind of alliance with Nissan Renault. What do you think? If they even decide today, do you think ultimately that General Motors is going to team up with Nissan?
MAGLIANO: I don't think we`ll see a full-blown alliance like it's been put on the table right now. I think what you're going to see is some cooperation and maybe General Motors sells some of the plants to Nissan and some different technology sharing, etc., but a full blown alliance, the companies are very huge. There would be a big -- the biggest dominant player in the world. You`ve got a lot of culture problems. You've got a lot of structure there. You've got France. You've got Japan and the United States. That makes it pretty difficult.
GHARIB: Let me ask you real quickly about Ford (INAUDIBLE) new CEO, based on the move that he's made so far at Ford Motor, do you think that he's going to be able to turn around that company?
MAGLIANO: I think he has very high marks in the beginning. He's going to have a very short time frame and it still remains to be seen whether he can get the people to really develop new and exciting products out of Ford and accelerate the entire product development process there. That's the key to Ford`s future. It's the key to anybody's future in this business. We haven't seen that yet.
GHARIB: All right, George, thanks a lot for joining us this evening.
MAGLIANO: Thank you.
GHARIB: We`ve been speaking with George Magliano, director of automotive research at Global Insight.
