Changing Gears is a public media project about the future of the industrial Midwest. Each week, reporters Dan Bobkoff in Cleveland, Niala Boodhoo in Chicago and Kate Davidson in Ann Arbor cover issues of interest to the Great Lakes region. Changing Gears also sponsors public events and conversations.
Buyers at General Motors, Chrysler, Nissan and Hyundai paid record amounts for new vehicles during May, according to True Car.com, which tracks statistics about buying habits.
True Car bases its calculations on transaction prices: the final amount people pay, after incentives, bargaining and trade-ins. The numbers include the whole range of vehicles that the companies sell, such as cars, sport utilities, pickups, and minivans.
Transaction prices are way up since the beginning of 2010. Take a look at this chart by Meg Cramer of Changing Gears, which shows the industry average and what consumers at major carmakers are paying.
Honda, like Toyota, has suffered through a lot in the past year — sluggish sales, the Japanese tsunami and earthquake, and floods in Thailand. But it’s vowing to get its mojo back and plans to do so by revving up its American production.
This morning, Honda said it will invest $98 million at its engine plant in Anna, Ohio, the one you’ve probably driven by Interstate 75. The investment comes on top of a $120 million investment at Honda’s transmission plant in Russells Point, Ohio.
The money is going to build a new engine and transmission family called “Earth Dreams.” The transmission plant will make what are called Continuously Varying Transmissions, or CVTs, which don’t have gears but shift up and down smoothly, and the engine plant will produce parts for those transmissions. Continue reading →
Right to Work, right away Indiana is expected to be the first state in the industrial Midwest to become a Right to Work state. And it could happen as soon as today. Right to Work rules prohibit companies from negotiating contracts with their unions that make union membership mandatory. Instead, workers will have a choice whether to join the union. Business leaders say the changes will make Indiana more competitive. Union leaders say the changes will let some workers benefit from union bargaining without having to pay to support the union. They say it will ultimately weaken the union.
Indiana Gov. Mitch Daniels got a lot of attention late last year when he finally came out in favor of a Right to Work law. Now, Daniels is suggesting that Volkswagen, in part, is the reason.
Speaking on Inside INdiana Business Television last week, Daniels said he was frustrated that his state was losing opportunities to compete for projects to other states that had Right to Work laws, which prevent unions from collecting mandatory dues.
One such project, according to the governor, was the assembly plant that Volkswagen recently opened in Chattanooga, Tenn. “I couldn’t get VW to return our call,” the governor said. “We’ve won on Honda, we won on Toyota, we’re clearly the fastest growing automotive state, and we couldn’t even get them to talk to us.”
Daniels. by the way, is giving the Republican response tonight to President Obama’s state of the union address.
Stung by sluggish sales, consumer criticism and bad reviews, Honda announced today that it would revamp its Civic only eight months after it released its latest model.
Critics noted the newest Civic was made from cheaper materials, had slower braking capability compared to its predecessors and failed to receive “recommended” status from Consumer Reports.
Tetsuo Iwamura, chief executive of American Honda Motor Co., made the announcement during an appearance in Detroit on Tuesday. The move comes as part of Honda’s ambitious goal to lift U.S. sales by 24 percent in 2012. Civic sales have been trending in the opposite direction.
U.S. sales of the Civic have fallen 13 percent this year to 200,690, according to researcher Autodata Corp, while Honda’s overall market share in the U.S. dipped one percentage point to 9 percent.
Three stories making news across the Midwest today:
1. Angry residents confront Emanuel. Chicago mayor Rahm Emanuel sought solutions for the city’s budget woes during a public meeting Monday night. He got more than he bargained for, according to reports from our partner station WBEZ. A question from a laid-off traffic employee led to an extended back-and-forth with union members in the audience. “I’m responsible to the city taxpayers and the city residents,” Emanuel said, referring to a projected $635 million budget deficit. Audience members yelled that they were taxpayers too.
2. Honda renovates Ohio plants. Honda announced Monday it would spend $355 million to refurbish four plants in Ohio, according to The Columbus Dispatch. The improvements come as the automaker returns to full production following the Japanese catastrophes. The Dispatch reports some jobs will be added, but specifics are not yet available. Honda has more than 13,000 employees in the Buckeye State.
3. Lawmakers seek tax-credit extension. Tax credits for advanced battery manufacturers in Michigan are scheduled to be phased out by Gov. Rick Snyder, but Democrats in the state Legislature want to extend the incentives packages. The Associated Press reported Monday that the Democratic proposal would include tax credits for battery production and facility construction, as well as credits for buying electric vehicles and charging stations.
For nearly a decade, the auto industry’s Big Three included at least one company that wasn’t from Detroit. Now, Chrysler is back among the three best-selling automakers.
It ranked behind General Motors and Ford in May auto sales. It’s the first time the Detroit Three have been the Big Three since February 2006, according to Edmunds.com, a Web site that offers car-buying advice. During its worst days, such as its 2009 bankruptcy filing, Chrysler fell as low as fifth in the industry, outsold by Toyota and Honda as well as its Detroit neighbors.
When should a state provide incentives to a big employer?
That’s one of the questions that states are wrestling with as they try to shake off the recession and move forward. And, it’s a story the Changing Gears team will be examining many times in the next few years.
The latest state to deal with the issue is Missouri, whose governor has signed controversial legislation meant to keep a Ford Motor Company plant from leaving the state. I talked about the situation this week on KMOX in St. Louis.