Monday, July 20, 2009

NEWS : First shots of updated Kia Rio surface

Slowly but surely, Kia's new corporate look is filtering through its entire lineup. We've seen it in play on the Forte range, the Soul, and the updated Sorento so far. Now you can add the entry-level Rio to the list. At least we think you can. The photo above shows the newly-facelifted South Korean domestic-market Kia Pride (the Kia Rio in the U.S. market), which is reportedly set to go on sale shortly. As you can see, the car boasts an revamped front fascia, sporting Kia's dog-bone grille, new lighting, and a rehaped, Ford-like lower air intake. As for the car's tail, we'll have to wait and see -- pics haven't hit the web yet., which was first online with the new shots, also reports that the interior is also revised, featuring a new steering wheel, a mildly reconfigured center stack, updated instrumentation, and a stereo system with integrated Bluetooth connectivity. Will we get this update Stateside as the 2010 Kia Rio? Well, the Rio's certainly due for a freshening, so we don't see why not, especially as the automaker makes a move toward a more unified, distinct styling language. Hat tip to Andy R.
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Update : Suzuki hits the skids in the U.S.

Name the mass-market vehicle brand with the largest decline in U.S. sales this year.

It has to be one of the Detroit 3 brands, right?

Wrong. The worst performer on a percentage basis was Suzuki, down 60.2 percent in the first half of 2009. In June, sales plummeted 78.0 percent compared with the same month last year.

Why would an Asian brand that builds small, fuel-efficient vehicles — the recipe for Detroit's rebirth as envisioned in Washington — be at the bottom of the heap?

Blame it on a shrunken product lineup, skimpy marketing and an ineffective captive finance company, which have made Suzuki all but invisible among the Asian players.

Suzuki is the latest second-tier Japanese brand to hit the skids in the United States, and some analysts wonder whether it is the next one headed for oblivion in this market.

"Suzuki had momentum, but they lost it," says a Northeastern dealer who declined to be named.

The company has failed to transfer the strength of its brand in other types of vehicles to its cars and crossovers.

"People spend $6,000 on a Suzuki ATV, $12,000 on a Hayabusa (superbike) and $18,000 on a Suzuki outboard," says Tim Faith, owner of Suzuki Auto Center in Corpus Christi, Texas. "But they question spending $21,000 on an XL-7."

The decline has been rapid. In 2006, American Suzuki finally achieved a decade-long quest to sell 100,000 vehicles, a level it maintained the following year. But this year Suzuki will be lucky to crack 40,000.

In a May 25 conference call with Suzuki's national and regional sales managers, 17 Florida dealers admitted that combined they had sold just nine vehicles that month.

The slide already has had an impact on the dealership count, which has skidded from 460 stores in July 2008 to about 380 today.

A Suzuki official says two-thirds of Suzuki dealers are in the black. But Mark Johnson, a dealership buy-sell consultant in Seattle, says that recent buy-sell transfers of Suzuki stores usually have blue-sky amounts from "zero to the low five figures," meaning dealers don't see much value in the franchise. Blue sky measures a dealership's intangible assets, such as goodwill.

Suzuki's slide
Why the brand's sales have plunged since 2007
• Daewoo-built models were eliminated.
• XL-7 production was halted.
• Fleet business declined.
• Number of dealerships fell.

Slashing product

Suzuki has drastically pared its vehicle lineup. The Reno, Forenza and Verona — volume cars of marginal quality built by GM Daewoo Auto & Technology — were deleted at the end of the 2008 model year. Sales of the Suzuki-built SX4 have replaced Reno sales somewhat, but Suzuki dealers are still waiting for the production version of the Kizashi 3 mid-sized sedan concept due later this year.

Also production of Suzuki's XL-7 mid-sized SUV has ended at CAMI, a Canadian joint venture with General Motors. Suzuki wasn't selling enough XL-7s to keep capacity high enough. So rather than eke out more units at a loss, production was halted last fall.

Those inventories have mostly run out since production ended, and there is no time frame for XL-7 production to resume — or for a replacement vehicle. A crossover based on the Kizashi platform has been rumored.

That leaves the SX4 compact sedan and hatchback and the Grand Vitara crossover as Suzuki's main vehicles. But retail sales of those vehicles have tanked.

Suzuki also has cut its reliance on fleet sales. By this time last year, Suzuki had sold 17,000 vehicles to fleets, nearly one-third of all sales. This year, just 4,000 fleet units have been sold, says Gene Brown, American Suzuki's vice president of marketing,

Technically, Suzuki's sales decline this year is surpassed by Scion's 60.4 percent drop. But Scion is a niche brand aimed specifically at Gen Y buyers who could have problems getting credit in this economy.

"We have to think holistically," Brown says. "We have made huge quality leaps. We have hit a rough patch, but there is every reason dealers can be profitable."

'Own worst enemy'

So should Suzuki dealers be poised for a rebound, or is the franchise beginning an irreversible downward spiral?

Consultant Johnson is pessimistic about the brand's future.

"I see things getting worse for them," he says. "People pick up Suzuki to get a shingle, to get some service business. But banks look at Suzuki so poorly that they won't floorplan them. Suzuki is half out of this market."

Johnson says Suzuki management "is its own worst enemy."

For instance, he says, when several Suzuki dealers in Florida folded recently, the company did not split the orphaned new-vehicle inventory among other Suzuki dealers. Instead, the vehicles were dumped into a general local auction. A Nissan dealer snapped them up and sold them as zero-mile used cars for thousands less than sticker — undercutting Suzuki's own dealers.

Dealers also are unhappy that an incentive for sales personnel paid by Suzuki has recently been lowered from $300 to $100 per unit sold. That is just one sign of Suzuki's waning marketing support.

"They stopped advertising and promotions of any consequence," says the dealer from the Northeast. "They are off network TV, and their cable advertising is seven to 10 days max. The finance company is useless. They used to buy low. Now they don't buy anybody."

Suzuki's Brown says funds for sales incentives were diverted to finance a "free gas for summer" promotion on the SX4 lineup, which last year gave Suzuki its best results of the year. He admits that Suzuki's inability to provide floorplan assistance to dealers has hurt. But he adds that banks are more effective lenders than Suzuki could be. And he says that American Suzuki Financial Services' approval rates are up.

New life?

Brown says that the Kizashi sedan coming this fall will give new life to the brand and that dealers who persevere will be rewarded with a sales turnaround. And many of Suzuki's fallen dealers had dualed with a domestic franchise that went out of business first, he says.

The unnamed Northeastern dealer is unimpressed: "If Suzuki is saving money for the Kizashi launch, what are we supposed to do until October? When new cars come out, that's all they advertise. They let the other ones coast. They never market other models at the same time."

Not all Suzuki dealers are in trouble. Corpus Christi dealer Faith has put Suzuki's Equator pickup — a rebadged Nissan Frontier — to good use in truck country. He is selling about 11 new Suzukis a month, which is enough for him to get by. But even Faith has concerns.

"Suzuki has never had dependable financing or capital funding," he says. "The manufacturer is guessing our orders rather than dealers telling the regional reps what we need."

Faith wants Suzuki to spend more on its umbrella message about other Suzuki-badged products, including motorcycles.

"In Europe, people see Suzuki on the level with Toyota and Honda, but not here," he says.

Brown says Suzuki will incorporate more of its global product message in its marketing. The company recently built a database that cross-references owners of multiple Suzuki products.

Improved quality

Suzuki also has a quality story to tell. Ending sales of the defect-plagued Daewoo-built vehicles prompted an instant leap in Suzuki's quality scores. The automaker jumped from 32nd place to ninth place in the 2009 J.D. Power Initial Quality Study, scoring better than Infiniti, BMW and Acura.

With the Daewoo-built cars gone, Suzuki also has seen the industry's most-improved residual values in the past year, according to Automotive Lease Guide.

But James Clark, Automotive Lease Guide's general manager, cautions that the improvement was relative. Previously, Suzuki's 36-month residuals had been languishing in the 30 percent range, at the bottom of the industry.

"It's an improvement from a low point, but you have to put it in context," Clark says. "Small-car residuals in general have moved upward since the gas spike last summer, so Suzuki benefits from that as well."
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NEWS : Germany's economics minister rules out GM buyback of Opel

Germany's economics minister ruled out any attempt by General Motors to include an option to buy back majority control of Opel as part of a deal to give up over 50 percent of its German unit in exchange for state aid.

"This is incompatible with our views and cannot happen," Karl-Theodor zu Guttenberg told German Sunday paper Frankfurter Allgemeine Sonntagszeitung in an interview.

The comments could suggest that Belgian financial investor RHJ International may have problems with its bid if the company is viewed as only a short-term player.

Germany is expected to shoulder the bulk of the billions in loan guarantees as part of a deal, and state and federal governments are represented on the board of a trust that has to approve a sale of Opel.

The minister also warned bidders for Opel will have to invest more of their own capital for the package of state aid to obtain EU clearance, since otherwise the only ones risking anything are taxpayers.

Final offers due Monday

Guttenberg explained that the size of the state aid requested would not be the deciding factor alone for Berlin.

"That's too simple. What good is an offer that is cheap (to the taxpayers) if the return of the money is in question. The key will be if a concept is so sustainable that there is a high probability that the interest, fees and the money can be paid back," he said.

When asked what was sustainable he responded: "A competitive company that urgently addresses the need to consolidate (capacity and staff)."

Magna International, RHJ and Beijing Automotive (BAIC) have been in a race to acquire Opel, with final binding offers due at the close of business in Europe on Monday.

BAIC has requested only 2.64 billion euros in state aid, while RHJ wants 3.8 billion and Magna 4.5 billion, but the Canadian supplier is seen as heavily favored within Germany -- a country where the short-term time horizon associated with financial investors is viewed with suspicion.

Magna's board of directors was expected to approve its takeover plan for Opel at a meeting on Sunday evening.

Some executives at GM unhappy about losing control over Opel are pushing for a deal with RHJ in part because of the higher likelihood that the Detroit carmaker could reacquire control over its former German subsidiary, sources familiar with the talks told Reuters.
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Update : 2009 Volkswagen Jetta TDI

Our smooth-driving, long-legged Four Seasons Volkswagen Jetta TDI has left Michigan, but thankfully not for good - it's currently in New York for a summer fling with senior editor Joe Lorio and NY bureau chief Jamie Kitman.

Before the Jetta headed east, several Ann Arbor-based staff members weighed in on their feelings three-quarters of the way through our year with our first-ever diesel long-term car.

Assistant editor David Zenlea, perhaps the biggest fan of the TDI, drove the Jetta to Chicago in June to visit his folks. "I started out my trip with the intent of hypermiling and seeing how high the TDI could go in terms of miles per gallon," he wrote in the VW's logbook. "Of course, I soon got bored/annoyed with this idea, because it involves going slow and accelerating even slower, and I soon relapsed into my normal, mildly aggressive driving style. I should add that to get the most out of the Jetta in the suburbs, you can't be shy--you have to get on it and short shift into second and third. Still, I averaged an indicated 43.6 mpg for the whole trip."

That impressive mileage led senior Web editor Phil Floraday to reacquaint himself with our Jetta. He wrote: "I felt compelled to spend a night in the frugal, slow, Spartan confines of the Jetta TDI after a weekend of fun in the Chevy Camaro SS and a night with the Aston Martin DB9 Volante. I'm surely headed to hydrocarbon hell if I keep selecting cars with double or triple the cylinder count of the Jetta, so I'll try to do a little atoning now.

"Actually," Floraday continued, "a four-cylinder Jetta TDI isn't a bad place to spend some time. If this were my car, though, it'd be a wagon and have the DSG dual-clutch automatic. I much prefer the DSG to our manual since this TDI has so little horsepower. You really need to drop a gear or three for passing, and I'll readily admit to being too lazy for the frequent up- and downshifts required to hustle along the two-lane roads on my commute."

It seems that our new associate editor Eric Tingwall would also prefer the DSG: "I'm glad to see that others have moaned about this clutch. I stalled at two out of my first three traffic lights and then on a hill this morning--twice. There's absolutely no feel in the pedal, and even when I manage a perfectly smooth take-off, I'm not quite sure where the clutch engages or how I pulled it off. Frustrating."

Executive editor Joe DeMatio chimed in with some wisdom about the bigger picture, though, writing, "The Jetta was a nice car for a lazy Sunday afternoon drive through the country. Perfectly reasonable body control, decent steering feel, good ride comfort; really, I have no complaints. Sure, you learn to keep the revs up, especially when you're launching from an intersection, but overall it's a very tractable powertrain."

And as Jablansky noted during his trek from Michigan to New York, that powertrain is fantastic for long journeys. "After 750 miles, I'd only stopped once and still had half a tank left," he scrawled in the logbook. "On the same trip, our frugal Four Seasons Honda Fit required three stops."

Base price (with dest.): $23,090
Price as tested: $23,090


Body Style: 4-door sedan
Accommodation: 5-passenger
Construction: Steel unibody


Engine: Inline SOHC turbocharged 4-cylinder diesel
Displacement: 2.0 liters
Power: 140 hp @ 4000 rpm
Torque: 236 lb-ft @ 1750-2500 rpm
Transmission: 6-speed manual transmission
Drive: front-wheel
Fuel economy: 30/41/34 mpg (city/hwy/combined)


Steering: Power-assisted rack-and-pinion
Turns lock-to-lock: 3.0
Turning Circle: 35.8 ft
Suspension, Front: McPherson struts, coil springs
Suspension, Rear: Multilink, coil springs
Brakes F/R: Vented discs / solid discs, ABS
Wheels: 16 x 6.5
Tires: Continental ContiWinterContact
Tire Size: 205/55 R16 H all-season


Headroom F/R: 38.5 / 37.2 in
Legroom F/R: 41.2 / 35.4 in
Shoulder Room F/R: 54.8 / 53.1 in
Wheelbase: 101.5 in
Track F/R: 60.6 / 59.8 in
L x W x H: 179.3 x 70.1 x 57.4 in
Cargo Capacity: 16 cu ft
Weight: 3230 lb
Weight Dist. F/R: N/A
Fuel Capacity: 14.5 gal
Est. Range: 490 miles
Fuel Grade: diesel fuel

Standard Equipment

Front, side, curtain airbags
Auxiliary jack
Cruise control
Electronic stability control
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