DETROIT — General Motors’ defense subsidiary, which delivered its first Infantry Squad Vehicle Tuesday to the U.S. Army, could soon use GM’s electrification development for various military applications.
The truck delivered Tuesday is the first major product for GM Defense since it was reestablished by GM in 2017. The original GM Defense, which helped U.S. combat efforts beginning with World War I, was acquired by General Dynamics in 2003.
“There’s a re-learning process for the company to get back its skill. This represents a fantastic cornerstone program for us to do just that,” David Albritton, president of GM Defense, told reporters Tuesday.
The vehicle, based on the Chevrolet Colorado ZR2, can transport nine soldiers and their equipment. Despite coronavirus-related challenges, GM developed the vehicle in just four months after it was awarded a $214.3 million defense contract in June. GM Defense said it will build 649 of the vehicles through 2024 and will support production of up to 2,065 vehicles with additional authorization over eight years.
The truck is made up of 90 percent commercial, off-the-shelf parts, including Chevy Performance race components, and was engineered for rapid movement. It is light enough to be sling loaded from a UG-60 Blackhawk helicopter and can fit inside a CH-47 Chinook helicopter to be transported by air.
The first 27 vehicles will be built at GM’s Milford Proving Grounds, and GM Defense plans to use a plant in Mooresville, N.C., for higher-volume production.
GM Defense plans to work on projects beyond ground vehicles, said Albritton. The subsidiary has a cooperative research agreement with the U.S. Air Force to supply batteries used in the Chevrolet Bolt in place of a large diesel generator that’s used when aircraft don’t have their main engines on. GM Defense could also provide alternative propulsion systems for unmanned, underwater vehicles, said Albritton.
“There’s a wide variety of things we can look at across the capabilities of GM and apply them in different contexts. And we’re looking widely at those opportunities,” said Albritton.
Fuel cell infrastructure isn’t available to GM Defense today, but Albritton expects to build fuel-cell-powered defense vehicles in the future.
Tim Herrick, global chief engineer at GM, said the automaker can help GM Defense “mix and match” components and architectures to deliver more military vehicles.
“There’s no reason we couldn’t take the components of a Hummer and put it in flexible architecture and the propulsion system,” he said. “Putting the Legos together and building more out of fewer parts is really what we do best.
“We can have a lot of solutions for the Army and the soldiers going forward.”
Volkswagen of America has hired former American Honda executive Ray Mikiciuk as its new senior vice president of sales.
In the role, Mikiciuk will lead the German brand’s sales delivery, operations and planning in the U.S. and will report to Duncan Movassaghi, executive vice president of sales and marketing for Volkswagen of America.
Mikiciuk spent 30 years with American Honda before departing last year as vice president of sales operations. He has since worked as director of manufacturer and industry relations for Victory Automotive Group, where he managed factory relations for the group’s 43 dealerships.
Mikiciuk is a graduate of Michigan State University.
The Nissan brand scored at the top among non-luxury brands in the 2020 Automotive Reputation Report.
Subaru, Toyota, Ford and Mini rounded out the top five for 2020, the second year for the report.
Reputation.com ranks 18,000 automotive brands and dealerships in the U.S. on a scale of 0 to 1,000 based on visibility, sentiment and engagement.
The scores are measured using online data reviews, listings, search results, social media and customer engagement on Google, Facebook, Cars.com and Edmunds.
The Nissan brand finished with a reputation score of 681 compared with 672 in 2019.
Mazda took the last-place spot, with 25 fewer points than last year at 548, replacing Mitsubishi on the bottom of the non-luxury list.
Lexus was the highest-ranking luxury brand in the U.S. with a 673 score, up one point from 2019.
Tesla ranked in the bottom three with the lowest rate for responding to negative reviews and the lowest engagement scores. Tesla scored 520, down 29 points from 2019.
Cadillac, at 504 points, and Hyundai’s Genesis brand, 366 points, were the only brands finishing below Tesla in this year’s report. It was Genesis’ first appearance in the index.
Among large U.S. dealership groups, Hendrick Automotive Group posted the highest average reputation score per dealership, at 803 points and 99 percent engagement, up from its 2019 scores of 722 and 91 percent engagement.
The highest-ranked public dealership group was AutoNation with a score of 717, up from last year’s 704.
For dealerships to make the Top 100 list, they must score 866 or higher, 272 points above the industry average. Kimber Creek Ford of Pine River, Minn., was on top and Hendrick Lexus Charlotte in North Carolina was second.
Ali Fawaz, managing director at Reputation.com, said that although most standings stayed the same from the 2019 report, the analysis uncovered a new trend concerning the hygiene of dealerships.
Reviews concerning personal health and safety have grown by 100 percent since the pandemic hit, according to the latest report, released Monday.
A year ago there was nothing in the data that expressed concern about consumer health and safety when entering a dealership, Brad Null, head of data science at Reputation.com, told Automotive News.
This is the second year that Reputation.com has conducted the study and the first year that wearing masks, cleanliness of facilities and offering contactless delivery options have influenced dealership reputation scores.
John Staluppi Sr. says he has no immediate plans to retire. But the megadealer went on the hunt this year for an equity partner for his dealership group, one of the nation’s largest.
Staluppi, 73, found that partner in LMP Automotive Holdings Inc., of Fort Lauderdale, Fla., a vehicle subscription provider and used-vehicle seller that is trying to become a major public new-vehicle retailer. LMP announced this month it would buy a majority stake in Staluppi’s Atlantic Auto Group of New York.
The tie-up could provide Staluppi access to capital to expand Atlantic, which he said he will still oversee.
“My main focus was that I would continue to be the dealer operator, dealer principal and continue running the company,” Staluppi told Automotive News. “Otherwise, it wouldn’t make sense to me.”
Atlantic represents a large chunk of Staluppi’s namesake Staluppi Auto Group. LMP agreed to pay $425.6 million for a 70 percent stake in Atlantic and its 17 dealerships, plus a related logistics company. The deal, which values Atlantic at $608 million, is expected by LMP officials to close by sometime in January, but it must first clear automaker, financing and other approvals.
Staluppi Auto Group also includes stores owned by John Staluppi Jr. that are not part of the transaction. Staluppi Auto Group ranks No. 9 on Automotive News’ list of the top 150 dealership groups based in the U.S., with retail sales of 62,570 new vehicles in 2019.
The deal, if completed, would give Atlantic access to a new e-commerce platform and a vehicle subscription business operated by LMP. Staluppi said he’d been eyeing a subscription service for his group and found LMP’s offering an added benefit.
Immediate growth also is on the horizon for Atlantic, which has several stores under construction that are expected to open by year end. At that point, Staluppi said, Atlantic will operate 21 dealerships. Those new points are included in the deal with LMP, Atlantic CFO Robert Dito told Automotive News. Staluppi said he expects Atlantic’s net income for 2020 will jump by $15 million.
Future dealership acquisitions under the Atlantic banner are possible. LMP CEO Samer Tawfik said this month that LMP, which went public in December 2019, intends to roll up more dealerships through Atlantic.
The acquisition agreement furthers LMP’s aggressive growth goals. The small company, which had $17.7 million in cash on hand at the end of June, has said it aims to acquire as many as 50 new-vehicle stores by next fall. It currently owns none.
Since July, LMP has announced deals to buy all or part of nine franchised dealerships and three used-vehicle stores in four states for a total of about $120 million. Those acquisitions are expected to close starting at the end of November, LMP executives said this month.
If those previously announced purchases and the deal with Staluppi are finalized, LMP would have a total of 26 franchised dealerships, not including the Atlantic stores under construction. Tawfik said this month that LMP plans to add 30 to 40 stores in 2021.
The Atlantic dealerships and logistics business are expected to contribute to LMP an estimated $1.6 billion in revenue and $38 million in net income on an annualized basis in 2021, LMP said. Atlantic Auto is expected to generate about $52 million in net income overall in 2021, according to Dito.
The deal calls for Staluppi to retain ownership of Atlantic’s real estate, which LMP will lease for five years, Staluppi said.
Tawfik told Automotive News that Staluppi plans to provide financing of $50 million for the transaction. Another about $140 million would come from a combination of corporate debt and the issuance of stock. The rest, he said, would likely be funded through working capital and/or loans taken out against the blue-sky value of individual dealerships. Blue sky is the intangible value of a dealership, including goodwill.
Tawfik said LMP could issue up to 2 million shares of stock to help pay for acquisitions. The company has about 9.9 million shares outstanding now.
LMP’s stock has risen substantially since Aug. 14, when it closed at $7.40 a share. It closed at $39.01 at the end of two days of trading after the announcement of the deal with Stalupppi. It has since fallen about 32 percent, closing out last week at $26.59.
The volatility in the share price has drawn questions from posters on stock-tracking websites such as Yahoo Finance about LMP’s business model and how it would secure the funding necessary to close on its announced acquisitions.
Sheldon Sandler, CEO of Bel Air Partners, a buy-sell advisory firm in Hopewell, N.J., wrote a piece about LMP last week that he shared with some 800 contacts. In it, Sandler said LMP faces “a lot of hurdles ahead” and would likely issue stock to help fund acquisitions and then use profits from the acquired dealerships to repay the debt taken on to buy Atlantic. He likened the approach to Wayne Huizenga’s vision in the 1990s when he built up AutoNation Inc., now the largest new-vehicle retailer in the U.S.
“Although starting modestly, LMP has big plans and sounds awfully like Huizenga’s blueprint,” Sandler wrote. “It’s paying substantial premiums for good, profitable dealerships largely because cheap debt and a flourishing stock market can make it all happen.”
Tawfik started LMP in late 2017 with a model centered around a “flexible lease” subscription offering.
If all of LMP’s planned acquisitions close, the company could have an estimated $2.2 billion in revenue on an annualized basis in 2021. The deals also would expand its employee count to more than 1,600 from 30 people today. LMP said it expects to earn about $70 million in annual pretax income from the various acquisitions.
“Atlantic is a trophy asset,” Tawfik said this month in a call with investors. “We believe this asset is practically impossible to duplicate.”
Volvo Car USA’s newest crossover signals the next chapter of the Swedish automaker’s evolution.
The 2021 Volvo XC40 Recharge P8, arriving in U.S. stores early next year, is the awkwardly named vanguard of a portfolio of emissions-free models.
“Electrification by far is the highest priority in the company,” Volvo Car USA CEO Anders Gustafsson told Automotive News last week.
Volvo’s bet on electrification is bold: Make battery-powered vehicles account for half of its global sales by 2025, with the rest being hybrids. To get there, Volvo is adopting a two-step strategy: Push plug-in hybrids in the near term as the EV lineup — and customer adoption — evolves.
“We have decided to go in very strong with our PHEVs,” Gustafsson said, noting Volvo commands a 23 percent share of plug-in hybrid sales in the U.S. luxury segment.
Volvo discontinued California sales of its T6 twin-turbocharged four-cylinder engine for the XC90 large crossover. Volvo now offers only the T5 turbocharged four-cylinder and T8 plug-in hybrid variants for the model. A spokesman would not say whether Volvo plans to drop the T6 variant across its range of sedans, wagons and crossovers.
Stringent limits on greenhouse gas emissions from vehicles in Europe and China are driving the auto industry to deploy more electrified powertrains to be able to continue selling vehicles.
“Any automaker that doesn’t move aggressively to launch vehicles with at least some zero-emissions capability will simply not be competitive, at least in Europe and China,” Guidehouse Insights analyst Sam Abuelsamid noted.
But the world’s second-largest auto market remains skeptical of the new technology. In the first nine months, EVs accounted for just 1.6 percent of U.S. vehicle sales, according to Kelley Blue Book.
As Volvo rolls out its EVs, the focus will be on profitability over market share.
“I don’t want to have price pressure,” Gustafsson said. “I don’t want to have the cars parked outside of any dealers.”
The XC40 Recharge has received the strongest pre-launch interest from customers in a new-vehicle introduction since the second-generation XC90 launched in 2015, Volvo told U.S. retailers last week. The company declined to disclose the number of preorders.
“The XC40 [Recharge] is the perfect electrified car for the U.S. market,” Gustafsson said. “We will compete directly with Tesla in a price range that’s going to be competitive.”
The 2021 XC40 Recharge P8 starts at $54,985, including shipping. Tax incentives for EV buyers would lower the price by at least $7,500. While the Tesla Model Y starts at $51,190, including destination, it does not qualify for the credit.
Beating the Model Y on price before other European luxury competitors would be key to Volvo’s potential success in that segment, said Sam Fiorani, vice president of AutoForecast Solutions.
“The XC40 is an outstanding small crossover in its own right, and adding the power and driveability of an electric drivetrain at a modest price should find a market,” Fiorani said.
But in another crucial metric, Volvo gets lapped. The XC40 EV’s range of 208 miles trails the competition. The Model Y leads the pack with 326 miles, followed by the Jaguar I-Pace at 234 miles and the Audi E-tron Sportback at 222 miles.
If Volvo executives have range anxiety, Gustafsson isn’t showing it. “Based on how our customers can charge the car, I think [range] is not going to be a concern,” he said.
Volvo is betting the new model will help sustain a robust recovery from the coronavirus shutdowns this year.
The brand’s U.S. sales have picked up faster than those of its European competitors and the overall industry. In the first nine months, Volvo sales are down 5 percent year over year compared with BMW’s 24 percent slump, Audi’s 22 percent slide and Mercedes-Benz’s 12 percent decline. In the latest quarter, Volvo outsold Ford Motor Co.’s luxury Lincoln brand by nearly 2,800 vehicles. Ford owned Volvo from 1999 to 2010.
Volvo’s sales rebounded from the COVID-19 slump in June and has seen year-over-year gains in every month since.
“We decided early to be very aggressive in the southern part of the country,” Gustafsson said. “So the first two or three months, the region was really the locomotive of the company.”
Volvo quickly implemented new operating procedures to help its dealers sell vehicles safely, including digital retailing, no-contact vehicle pickup and delivery, wearing masks and facility cleaning.
In March, the automaker introduced Volvo Valet, a mobile app that allows consumers to schedule pickup and delivery of vehicles for service or maintenance. The services are offered by 208 of Volvo’s 282 U.S. dealers.
Volvo also acted early to secure supply — nearly 90 percent of Volvos sold in the U.S. are built in Europe. The automaker prioritized production for the American market before the annual European summer shutdown.
“We were convinced that the U.S. was going to see a V-shaped recovery in terms of vehicle demand,” Gustafsson said.
Gustafsson is optimistic the retail momentum will continue.
“We are seeing good interest on our website, we see positive developments on floor traffic,” he said. “The vessels are full of cars — and exactly the cars that the dealers are asking for.”
SHANGHAI — With the coronavirus outbreak largely contained since March in China, the local market for new passenger vehicles and light trucks has sustained growth for five straight months.
But there has been little to celebrate for American brands here. Except for Tesla, demand for U.S.-brand vehicles remains subdued, leaving many of their dealers struggling in the red.
The worst performer among them is Jeep. While China’s overall market has returned to growth mode, Jeep sales are stuck in a downward spiral that began in 2018.
FCA Group now produces vehicles for only the Jeep brand in China. It assembles the gasoline and plug-in hybrid variants of the Grand Commander as well as the gasoline models of the Renegade, Compass and Cherokee at its joint venture with GAC Motor Co.
In September, Jeep sales fell 36 percent from a year earlier to 3,862, with year-to-date volume plummeting 47 percent to 27,675, according to GAC.
That’s in stark contrast to the performance of the overall market. New light-vehicle sales across China rose 8 percent last month, with the decline for the pandemic-fraught first nine months of this year narrowed to 12 percent.
Jeep’s troubles date back to 2015, when FCA launched local production but failed to keep product quality under control, according to John Zeng, Asia director of LMC Automotive in Shanghai.
Local production allowed FCA to sell Jeep models at much lower prices than imports, which were subject to a hefty 25 percent tariff in China. As a result, Jeep demand started to take off.
In 2017, Jeep sales exceeded 200,000, more than doubling the volume in 2014.
“As Jeep’s sales surged, customer complaints multiplied about its product quality problems,” Zeng said.
In September 2018, a group of Jeep owners complained on state-run China Central Television about the problems of excessive engine oil burning and sudden loss of power with models such as the new Cherokee and Compass.
Additional reports surfaced in Chinese press and social media about problems ranging from abnormal noises with transmissions to poor quality of exterior components, such as windshields and sunroofs.
“All these problems have hurt Jeep’s brand image as well as its sales,” Zeng said.
For 2018, Jeep sales shrank to below 130,000. In August of that year, 35 Jeep store owners from all over China gathered at FCA’s China sales company in Shanghai, demanding compensation for their losses.
At the Beijing auto show last month, executives from FCA-GAC provided an update for Chinese media on Jeep’s electrification and vehicle connectivity plans, without mentioning measures to address lingering customer grievances about product quality.
Meanwhile, sales of General Motors’ and Ford Motor Co.’s proprietary brands in China have recovered but in an unimpressive way.
In September, sales at SAIC-GM, GM’s joint venture with SAIC Motor Corp. producing and marketing Cadillac, Buick and Chevrolet vehicles, rose 9.6 percent to top 153,000, according to SAIC.
Because the sales recovery didn’t materialize until July, SAIC-GM’s deliveries through September show a slump of 22 percent, falling just short of 952,000.
The rebound came at a price.
To boost sales in the wake of the coronavirus outbreak, many global brands lowered vehicle prices by an average of 20,000 yuan ($2,990), the China Automobile Dealers Association said in a report this month.
The steepest price cuts, averaging 30,000 yuan, came from the GM brands. Buick’s Envision S, the upgraded version of the Envision crossover, went on sale in China in July at a starting price of 219,900 yuan. But at a Buick dealership in southwest Shanghai last week, the vehicle was selling for 40,000 yuan less, a discount equal to almost $6,000 on the new model.
U.S.-make dealerships here were already suffering from red ink. Just 11 percent of Jeep dealerships were profitable in 2019, according to a research report released by Detroit-based consultancy Urban Science along with Lechebang, a Shanghai company providing management advisory and IT services for dealerships in China. It found that only 30 percent of Chevrolet dealers made a profit in 2019, as did 36 percent of Buick dealers.
Ford is not out of the woods, either.
Ford’s China deliveries plunged for the three years following its 2016 results of 1.08 million sales, due partly to a lack of fresh products. This year, Ford sales have staged a strong rebound. But the volume is still reduced — reaching around 232,000, according to numbers disclosed by Ford’s two joint venture partners, Changan Automobile Co. and Jiangling Motors Corp.
Changan Ford is the U.S. company’s main partner in China, building and distributing sedans and crossovers for the market. According to the report from Urban Science and Lechebang, only 23 percent of Changan Ford’s 600-plus dealerships made money last year.