DC Profits from Benz; Chrysler Drops

A strong showing by the Mercedes-Benz Group and a one-time gain from the sale of its stake in the European Aeronautic Defence and Space Company helped DaimlerChrysler double its earnings in the second quarter, offsetting a steep slide in operating income from the Chrysler Group.

Dieter Zetsche, DaimlerChrysler AG's chief executive officer, said Thursday that the Chrysler Group's operating income dropped 91 percent to $65 million in the second quarter and the group is facing some challenges in the next several weeks.

The Chrysler Group expects to lose nearly $600 million during the third quarter as it trims inventories and kicks off production of vehicles such as the Dodge Nitro and Dodge Aspen, Jeep Wrangler and Chrysler Sebring.

DC Profits from Benz; Chrysler Drops by Joseph Szczesny (7/26/2006)
Company still expects $7.7B profit for the year.

AutoNation Income Hits Peak, But No 2007s Being Ordered

Operating income for AutoNation, Inc., the nation's largest auto retailer, set a second-quarter record of $213.2 million as sales revenues edged past the $5 billion mark for the first time in the 269-store chain's history. Reporting AutoNation financial results, Chairman and CEO Mike Jackson acclaimed the Fort Lauderdale, Florida-based megadealer's performance, but issued a warning on the outlook for the second half of 2006. "Inventories in our dealerships for domestic brands of new vehicles are at the 100-day level or higher," Jackson said in an analyst/media conference call Thursday, July 27. "Brisk sales of imports and premium vehicles are keeping our overall stockpile of 2006 models at about 70 days, but AutoNation is holding back on orders for 2007 models from the 'Detroit 3' until something is done to help clear out 2006 models.'

AutoNation's COO, Mike Maroone, said last summer's employee-pricing incentives by the Detroit automakers brought stocks of leftover 2005 models down sharply as records were broken for monthly sales, "but inventories this summer of 2006 domestic models have to be meaningfully lower to pave the way for a strong start to 2007-model selling." Only Chrysler Group has revived employee pricing this summer. GM and Ford have steered clear of a repeat this year, declaring employee-priced vehicles drain their profits too much.

AutoNation announced that its CFO since 2000, Craig Monahan, will leave the company August 31 to become CFO of Sears Holdings, Chicago. He will be succeeded by the company's corporate controller, Alex McAllister, who plans to retire from AutoNation December 31. Jackson said a search is underway for a new CFO. Sears Holdings CEO Ed Lampert is also CEO of ESL, which owns 21 percent of AutoNation.

AutoNation's operating income rose one percent in the second quarter on an advance of one percent in revenues to $5.01 billion. For the first half, revenues advanced 2.5 percent to $9.67 billion and operating income rose 1.7 percent to $416.4 million. Jackson, reporting that two-thirds of AutoNation's gross profits are emanating from premium and import luxury brands, said the reverse was true when he left DaimlerChrysler to join the company in 1999. Asked if AutoNation stores would seek franchises for the Mercedes-Benz Smart minicar from its new U.S. distributorship, UnitedAuto Group, Jackson said, "Roger's a better guy than me to take up that challenge." Roger, who is United Auto Group Chairman and CEO Roger Penske, said Tuesday, July 25, that the process of choosing U.S. dealerships to sell Smart minicars for a 2008 rollout was underway and already about 400 inquiries have been received from dealers, but apparently no AutoNation retailers. -Mac Gordon

Asbury Automotive Second Quarter Revenues, Income Climb

Despite rising interest rates and "ever-changing incentive wars," Asbury Automotive Group posted increased revenues and income for the second quarter, as reported Thursday, July 27. The publicly-owned Asbury, based in New York City and owner of 89 dealerships, said its quarterly revenues rose to $1.51 billion from $1.41 billion a year ago, while its operating income advanced to $51.9 million from $44.5 million. President and CEO Kenneth B. Gilman said the sixth largest U.S. megadealership network "again outperformed the industry in new vehicle unit sales, thanks to our strong brand mix. He said Asbury believes it has a "higher proportion of the more desirable luxury and midline import brands than most public automotive retailers." Gilman singled out new Honda stores in southern California and Texas as stellar performers, adding that "a significant amount of potential remains in our West region."

Asbury boosted its earnings guidance for the full year to a range of $1.82-$1.87 per share from earlier estimates of $1.80-$1.85. Gilman, like other megadealer CEOs, said the franchise acquisition pace has receded this year. Like UnitedAuto Group, Gilman said Asbury's Nissan stores, numbering twelve, were hurt by a sales freeze and recall on Altima cars this past spring. A voluntary recall was ordered by Nissan Motor on Altima four-cylinder engines to correct excessive oil consumption that led to engine fires. Earlier in the week, United Auto Group said six of its Nissan stores sustained lost potential revenues of about $350,000 because of the recall. -Mac Gordon

Denso Boosts Sales, Earnings

Japan's DENSO Corp., which is on a path to become the world's largest automotive suppler, reported net sales increased 13.6 percent to $7.4 billion in the first quarter of the new fiscal year. Denso's operating income increased 16 percent to $717.4 million, while net income jumped 62.5 percent to $508.7 million. "We are pleased with the favorable financial results for this first quarter," said Koji Kobayashi, managing officer of DENSO Corporation. "The increase in domestic car production supported by growing export from Japanese auto manufacturers and the increase in sales overseas contributed to increased sales." Denso benefited from both strong production in the Japanese home market where sales increased 11.6 percent and strong results in North and South America where sales increased 18.9 percent to $1.7 billion. Operating income increased 5.7 percent to $74.8 billion. The sales increase in the Americas was led by a rise in sales to auto manufacturers such as Toyota and GM. Denso's North American operations are headquartered in Southfield. -Joe Szczesny

New Classic Car Show Bows In Motor City

With the hometown auto industry struggling, underwriting for Southeast Michigan classic car shows like the now-defunct Cranbrook Concours and the 27th Meadow Brook Concours (Aug. 6) has been hard to come by.

Nevertheless, the passion is there, so the Automotive Hall of Fame, around the corner from The Henry Ford in Dearborn, is sponsoring its own new and decidedly exclusive show on this Saturday, July 29: the Oakwood Classic, limited to "no more than 40 superior automobiles."

The other restriction on the Oakwood cars is that they must have been made in Michigan. Bully for Cadillacs, Buicks, Lincolns, and Packards but too bad for the disinvited Duesies, Auburns, Cords, and Marmons of Indiana, and the Pierce-Arrows, Franklins, and Locomobiles of New York, and of course, those late-arriving imports.

Proceeds from the bargain $5 admission will benefit the AHOF's educational programs. The show runs 9:30 a.m. to 4:30 p.m. -Mike Davis

FROM THE SOURCE headlines from the latest press releases

Acura TL Becomes First U.S. Model Exported to China by Japanese Luxury Nameplate

Name	Symbol	Last	Change
Autobytel, Inc.	ABTL	3.21	0.00 (0.00%)
Autoliv Inc.	ALV	54.96	-0.34 (-0.61%)
AutoNation Inc.	AN	19.85	-0.61 (-2.98%)
ArvinMeritor Inc.	ARM	16.12	-0.29 (-1.77%)
American Axle & Mfr. Holdings Inc.	AXL	16.44	-0.57 (-3.35%)
Ballard Power Systems Inc.	BLDP	6.05	+0.05 (+0.83%)
BorgWarner Inc.	BWA	59.92	+1.52 (+2.60%)
Cummins Inc.	CMI	111.68	-1.52 (-1.34%)
DaimlerChrysler AG (ADR)	DCX	50.12	+0.60 (+1.21%)
Dura Automotive Systems	DRRA	0.69	-0.87 (-55.77%)
Eaton Corporation	ETN	63.68	-0.94 (-1.45%)
Ford Motor Company	F	6.83	+0.08 (+1.19%)
General Motors Corporation	GM	32.11	+0.11 (+0.34%)
Gentex Corporation	GNTX	13.19	-0.27 (-2.01%)
Goodyear Tire & Rubber	GT	10.30	+0.04 (+0.39%)
Honda Motor Co. Ltd. (ADR)	HMC	33.09	+0.33 (+1.01%)
Johnson Controls Inc.	JCI	75.03	-0.68 (-0.90%)
Lear Corporation	LEA	24.07	-0.34 (-1.39%)
Magna International Inc.	MGA	74.18	-0.02 (-0.03%)
Motorola Inc.	MOT	22.11	+0.26 (+1.19%)
Nissan Motor Co. Ltd. (ADR)	NSANY	21.46	+0.36 (+1.71%)
Sonic Automotive Inc.	SAH	22.51	-0.11 (-0.49%)
Siemens AG	SI	79.81	-2.07 (-2.53%)
Sirius Satellite Radio	SIRI	3.97	+0.01 (+0.25%)
Toyota Motor Corporation (ADR)	TM	103.10	+1.34 (+1.32%)
TRW Automotive Holdings	TRW	25.57	-0.39 (-1.50%)
Tower Automotive Inc.	TWRAQ.PK	0.09	-0.00 (-4.26%)
United Auto Group Inc.	UAG	20.76	-0.52 (-2.44%)
Visteon Corporation	VC	6.73	-0.11 (-1.61%)
XM Satellite Radio Hold.	XMSR	10.89	+0.53 (+5.12%)