Toyota Receives Subpoena From U.S. Grand Jury

WASHINGTON -- Toyota Motor Corp. said Monday it has received a subpoena from a U.S. federal grand jury requesting documents related to unintended acceleration of its vehicles and the braking system of its Prius hybrid, as the auto maker's safety woes continue to grow. The company also said it has received a "voluntary request" and a subpoena from the Los Angeles office of the U.S. Securities and Exchange Commission for documents related to sudden unintended acceleration and the company's disclosure polices and practices. The Japanese auto maker said in a statement to the London Stock Exchange that it received the grand jury request on Feb. 9 and the SEC request on Feb. 19. Toyota said it intends to cooperate with the investigations and is preparing its responses.

Ford Profit Comes as Toyota Hits a Bump

DETROIT -- When (Alan R. Mulally) joined Ford in late 2006, (he) liberally borrowed from Toyota’s playbook — focusing on fuel efficiency, quality and so-called global cars to sell in markets around the world. He even hired away a top Toyota executive, James Farley. This week, at least, the student is doing better than the teacher. Ford, which managed to skirt the problems that forced crosstown rivals General Motors and Chrysler to seek government bailouts, reported a surprising profit on Thursday of $2.7 billion for 2009, its first in four years. Ford’s profit for 2009 — which Mr. Mulally called a “historic and pivotal” year — partly results from deep cost cuts and layoffs.

Toyota US Sales Halt Deals Blow to Image, Earnings

NEW YORK -- Toyota's suspension of U.S. sales on an unprecedented scale to fix faulty gas pedals deals a blow to the automaker's reputation for quality and came amid intense pressure from the Obama administration. The Obama administration said it pressed Toyota to protect consumers who own vehicles under recall and to stop building new cars with the problem. Transportation Secretary Ray LaHood told WGN Radio in Chicago that "the reason Toyota decided to do the recall and to stop manufacturing was because we asked them to."

Toyota dealers said they were concerned the move would hamper sales. They hoped parts to fix the problem could be distributed quickly. John McEleney, who owns a Clinton, Iowa, Toyota dealership, said the sales stoppage affects about 60 percent of the inventory on his lot. He said he was hopeful Toyota would come up with a fix soon — especially because the longer a vehicle stays on a dealer lot, the more money a dealer pays in interest fees. "Short term, it's going to be difficult," he said. "It will certainly set us back, but I think the impact will be very short lived."

Ford Net May Be $2.65 Billion as Mulally Achieves 'Impossible'

Ford Motor Co. may report 2009 net income of $2.65 billion tomorrow after overcoming the worst U.S. auto market in 27 years and avoiding a federal bailout. An annual profit would be the first for CEO Alan Mulally and ratify his strategy of developing new models such as the Fusion hybrid while slashing the North American workforce by about 47 percent since he joined Ford from Boeing Co. in late 2006. “This is a company that absolutely bled money in the last five years,” said Bernie McGinn, president of McGinn Investment Management of Alexandria, Va., which owns 320,000 Ford shares. “Mulally has done what had been considered impossible in a very short amount of time.” Mulally, 64, reiterated yesterday to reporters in Washington that Ford won’t be “solidly profitable” on an operating basis until 2011, saying he’ll give “updated guidance” once earnings are out.

Toyota halts US sales of 8 recalled vehicle models

WASHINGTON -- Toyota Motor Co. said Tuesday it was suspending U.S. sales of eight recalled vehicle models to fix accelerator pedals that stick, the latest quality problem to confront the world's No. 1 automaker.

As part of the plan, Toyota said it was halting production at five manufacturing facilities for the week of Feb. 1 "to assess and coordinate activities." There are 2.3 million vehicles involved in the recall, which was announced last week.

"This action is necessary until a remedy is finalized," said Bob Carter, Toyota's group vice president and general manager.

The Japanese automaker says the sales suspension includes the 2009-2010 RAV4, the 2009-2010 Corolla, the 2009-2010 Matrix, the 2005-2010 Avalon, the 2007-2010 Camry, the 2010 Highlander, the 2007-2010 Tundra and the 2008-2010 Sequoia.

It was unclear how long Toyota would suspend production of the vehicles. In an e-mail to employees, company officials said, "we don't know yet how long this pause will last but we will make every effort to resume production soon." Toyota officials did not immediately return phone messages.

Toyota said the company would stop producing vehicles at plants in Indiana, Kentucky, Texas and Canada. They said no other North American Toyota facility would be affected by the decision.

The auto company said the sales suspension would not affect Lexus or Scion vehicles. Toyota said the Prius, Tacoma, Sienna, Venza, Solara, Yaris, 4Runner, FJ Cruiser, Land Cruiser and select Camry models, including all Camry hybrids, would remain for sale.

Toyota said last week it was recalling 2.3 million vehicles in the U.S. to fix accelerator pedals with mechanical problems that could cause them to become stuck.

That announcement followed a larger recall months earlier of 4.2 million vehicles because of problems with gas pedals becoming trapped under floor mats, causing sudden acceleration. That problem was the cause of several crashes, including some fatalities.

Ford Vehicles Residual Values Rise $1,300 on Average from 2009 to 2010 Model Year; Industry's Largest Gain

DEARBORN -- Ford Motor Company vehicles, bolstered by improved quality, fuel economy and popular redesigned models, recorded the largest increase in residual values from the 2009 to the 2010 model year among full-line manufacturers.

The projected resale value of Ford, Lincoln and Mercury vehicles after 36 months in service increased by $1,310 per vehicle from 2009 to 2010 models, more than any other full-line automaker. This calculation is based on the straight average of all trim levels of each nameplate from ALG's January/February 2010 Residual Value Forecast with volume being weighted against R.L. Polk new vehicle registration data.

"We are very pleased that the quality and fuel economy our products are delivering is reflected in our residual values," said Ken Czubay, Ford vice president, Marketing, Sales and Service. "We know future trade-in value is a very important factor to customers when they are shopping for a new vehicle."

Ford already held a residual value advantage over its U.S.-based rivals. With the improvement in the 2010 model year, Ford narrowed the gap with leading Asian automakers, including Toyota.

Some Ford vehicles have now surpassed competing vehicles from Toyota in average residual values. The 2010 Ford Fusion midsize sedan, for example, is expected to be worth $687 more than the 2010 Toyota Camry after 36 months in service. And the residual value of the 2010 Ford Flex full-size crossover commands an $1,800 premium over the Toyota Highlander.

A steady stream of new products has helped boost Ford's residual values. For example, the redesigned 2010 Ford Taurus's projected average resale value after 36 months in service is $4,862 more than the 2009 Taurus. The Taurus was redesigned inside and out and features a host of new features and technologies.

"The ultimate measure of the health of an automotive brand is its residuals," said Waldek Raczkowski, Ford residual business analyst. "We have great new products with good quality, fuel economy and technology. We are pricing our vehicles properly and setting our volumes appropriately to meet market demand. This adds up to a significant increase in residual values."

The 2010 Ford F-150 earned the 2010 ALG Residual Value award in the Full-Size Pickup category, and the 2010 Ford Taurus and 2010 Ford F-Series Super Duty received Kelley Blue Book's kbb.com Best Resale Value awards for the full-size car and full-size pickup categories respectively.

In addition, Ford's improved products and brand image is translating into higher residual values. Compete Inc., a Massachusetts research firm that studies online car shopping, says Ford has surpassed Toyota in customer consideration for the first time since it began tracking such data in 2002. Compete data show Ford surpassed Toyota in customer consideration in September, October and November.

How Subaru defies the recession

U.S. executives rejected a move upmarket -- and listened to their
dealers
Diana T. Kurylko
Automotive News | December 21, 2009 - 12:01 am EST
CHERRY HILL, N.J. -- It may be the worst of times for new-vehicle sales, but in a nondescript office building on a
busy highway in suburban Philadelphia, executives at Subaru of America have pulled off a miracle.
While the rest of the industry cratered, the little Japanese brand has racked up big U.S. sales gains.
So how did Subaru beat the odds for two years running?
Credit a decision four years ago by U.S. bosses to dump a strategy, dictated by executives in Japan, to go
upmarket.
Since 2006, Subaru has cut prices, shed its quirky styling and refocused the marketing strategy on the safety and
practical virtues of its five vehicles. And it has let dealers weigh in on important product decisions.
Those and other moves helped make Subaru the best-performing brand in 2009 -- up 14 percent in a market down
24 percent. The brand has jumped from the 19th-largest U.S. seller in 2008 to the 11th, ahead of Volkswagen and
within striking distance of Jeep.
"Subaru is getting the respect it deserves," says Gunnar Heuberger, owner of Heuberger Subaru in Colorado
Springs, Colo., the largest U.S. Subaru dealership.
"It was one of the best-kept secrets for 20 years -- ever since they went to their platform of all-wheel-drive cars.
Now that it is priced at or lower than a front-wheel-drive car, people understand that this is a hell of a deal."
Subaru will finish the year with sales of about 215,000 vehicles, says COO Tom Doll. In a dreadful 2009, only two
other brands, Kia and Hyundai, managed sales increases over 2008. And in 2008, only Subaru and Mini were up.
"We knew we had strong momentum last year with the new Forester," says Doll. "And we knew that could
continue this year when we introduced the new Legacy and Outback."
Subaru's success is the real retail deal. Only 6 percent of sales this year have been to fleets, says Doll, well below
Kia's 28 percent and Hyundai's nearly 20 percent.
Incentive spending is also low -- about $990 per vehicle, compared with $2,694 on average for the industry, say
company executives, citing Autodata Corp. statistics.
New direction
Four years ago, Subaru officials decided to stop trying to compete with European premium brands such as Volvo
and Audi -- a plan in the works when Subaru launched its previous-generation Legacy sedan and Outback wagon
in 2004. Early in the decade, parent company Fuji Heavy Industries Ltd. even contemplated launching a luxury
car.
Since then Subaru has been repositioned as a value brand, outdoorsy and pragmatic. It also abandoned its goal
of hitting 250,000 sales by 2010. The target now is 236,000 by 2012.
Dale Walker, owner of Walker's Renton Subaru in Renton, Wash., says the push to premium was misguided.
"Even when it was going on, the U.S. guys were very concerned about that decision," he says.
Walker says three executives -- Doll, 54; chief marketing officer Tim Mahoney, 53; and sales boss Tim Colbeck,
46 -- brought Fuji "back down to Earth."
Until 2006, Subaru's prices were 5 to 10 percent higher than those of its Japanese competition. For example, a
base-level Legacy sedan listed at $24,795 in January 2006, including shipping, compared to a $18,225 starting
price for the Honda Accord.
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The company maintained that all-wheel drive and the added safety of its vehicles warranted the premium.
But the vehicles lacked interior space and sophistication. There was no navigation system, iPod connector or the
other electronics that competitors offer.
Shoppers were "simply walking way," says dealer Heuberger.
The products also had to be made more suitable for the United States. Rear passenger room in particular was
inadequate.
Ikuo Mori, CEO of Fuji Heavy Industries, admitted in a recent interview that the company was simply exporting
vehicles that had been developed for Japanese. "But now we design a vehicle to suit global markets," he says.
For example, both the new Legacy and Outback have more legroom than their predecessors.
New dealers
In a depressed market, Subaru has added 10 dealers this year for a total of 610. Most of the new dealers are in
the Sun Belt, where the brand wants to increase sales. Subaru's biggest markets are Denver, Seattle and the
Northeast, places where winter warrants all-wheel drive.
Colbeck says Subaru's success has attracted top-notch retailers, too. Twenty-five percent of Subaru dealers are
new since 2006, the result of terminations, closures or retirements. They replaced what Colbeck calls "our less
committed dealers."
About 90 percent of the brand's dealers are profitable. And those prosperous dealers gave Subaru the secondhighest
brand rating in the last two dealer attitude surveys, conducted in the past year by NADA. Only Lexus did
better.
What makes it a Subaru?
Mahoney, the brand's marketing boss, joined Subaru in 1984, left in 1999 to become vice president of marketing
for Porsche Cars North America and returned to Subaru in May 2006. When he came back, the marketing
approach was overhauled.
Subaru once trotted out the likes of Crocodile Dundee star Paul Hogan and seven-time Tour de France winner
Lance Armstrong. These days, celebrity spokesmen are out.
The current campaign is called "Love. It's what makes a Subaru a Subaru." TV spots show vehicles getting muddy
and plowing through snow. Mahoney says the company is "tapping into the emotions of car buying and letting
consumers discover the rational reasons such as safety and residual-value awards."
All five of Subaru's vehicles have a five-star safety rating from the National Highway Traffic Safety Administration
for front-impact, rollover and side-impact crash tests. Those accolades are being used heavily in advertising.
And Subaru's residuals are soaring. The brand won Automotive Lease Guide's "best mainstream brand" award for
the 2010 model year. Thirty-six-month residuals have improved to more than 50 percent for each model in the
lineup, according to ALG.
Combined with lower pricing, the higher residuals have allowed Subaru to offer lower leases, such as a $229
monthly payment on a 36-month Forester, compared with $299 a few years ago, says Doll. About 20 percent of
Subaru transactions are leases.
According to J.D. Power and Associates' 2009 customer-retention study, Subaru's brand loyalty was 57 percent.
Only Mercedes-Benz, Honda and Toyota were higher in the category, and Subaru was tied with Lexus.
"Their marketing is focused, and they are in launch mode," says Jim Hall, a consultant with 2953 Analytics in
suburban Detroit. "But they still have the same issue -- low consideration -- and they have to find a way to build
that."
An avoided brand
Kerri Wise, director of automotive research at Power, says Subaru is one of the most avoided brands. Wise says
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Entire contents ©2009 Crain Communications, Inc.
about 8 percent of the buyers surveyed in its Avoider study, released last week, considered a Subaru, while the
average brand attracts about 16 percent.
"The only negative perception is the styling," says Wise.
The study was conducted last May before Subaru launched its new-generation Legacy and Outback.
Subaru's new development strategy also meant shedding eccentric design cues and going more mainstream,
although not without talking with U.S. dealers. A dealer board committee of four members, formed several years
ago, travels to Japan three or four times a year to evaluate new products.
Walker says dealers asked Fuji Heavy to make the Forester bigger -- and management listened. The redesigned
crossover, introduced in 2007, has been a runaway hit.
Designers rounded some of the sharp lines on the previous version, which looked like a tall and boxy station
wagon rather than a crossover.
But dealers saw the 2010 Outback three years before launch and criticized Fuji Heavy for making it too
mainstream by removing the clad-ding and softening the lines.
"It was more refined and extremely nice-looking, but it didn't hit the mark -- it didn't have that rugged look or signal
a go-anywhere capability," says Phil Porter, who owns Center Subaru in Torrington, Conn., and Subaru of
Jacksonville in Florida.
"All the mechanics were there, but the appearance wasn't. We saw the car late in the fall, and they flew us to
Japan in March the following year to see the changes," says Porter, who is opening his third Subaru store this
week because of his growing confidence in the brand.
"It is the fastest reaction I ever witnessed to input from dealers."
ENLARGE
From left: Subaru of America COO Tom Doll, sales boss Tim Colbeck and marketing chief Tim Mahoney put the
little Japanese brand on the right track.
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