Auto Industry Outlook It's been a big week for U.S. automakers, with news ranging from plunging sales to an astonishing bonus for Ford's CEO. Where is the auto industry headed?
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Auto Industry Outlook

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Auto Industry Outlook

Auto Industry Outlook

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It's DAY TO DAY from NPR News. I'm Noah Adams.


I'm Alex Chadwick.

Car news. We've seen several stories develop this last week, and we've called Paul Eisenstein. He's publisher of and a regular auto analyst for NPR. Paul, welcome back to the show. You're at the International Auto Show in New York, where people are talking once again about Kirk Kerkorian and the bid for Chrysler.

PAUL EISENSTEIN: Almost 12 years to the day before now, he put in an unsolicited $20 billion bid to buy what was then the Chrysler Corporation. Here he is, back with a $4.5-billion dollar deal to buy the Chrysler Group, which is apparently in serious trouble, from its German partners, Daimler, as in Daimler-Chrysler. I don't know. Those numbers haven't worked in the right direction for Chrysler.

CHADWICK: Is Chrysler really worth only one-quarter of what it was just a dozen years ago?

EISENSTEIN: Some people might argue it's worth even less, considering all the liabilities they have, including something like $16 billion in unfunded pension liabilities. So there are some folks that are saying that while the bids may come in at four, $4.5 billion dollars, there are going to be all sorts of little caveats on that.

Some companies have even said, some of the bidders have even looked at the idea of saying, we'll give you this cash, but you're going to have to keep some of those liabilities. So the fact is, Chrysler, right now, is a real bargain.

CHADWICK: Well, we'll see if Mr. Kerkorian can get himself a Chrysler bargain there. Ford Motor Company announced sales for last month. They were down nine percent from a year ago. I thought that was a pretty big drop. And then a couple of days later Ford reported pay for the CEO for last year, their new CEO: $28 million. Do those numbers go together?

EISENSTEIN: Awkward is the way they go together. Ford has been hit by a couple of things. One, they are very dependent on big trucks, particularly their F-Series pickup. And that has been in turn slammed by another rise in fuel prices and the drop in housing starts, because people buy pickups largely because they need them for work. Housing is the main reason that drives the big pickup market...

CHADWICK: Construction workers drive pickups.




CHADWICK: If they're not working, they're not driving pickups, or not buying new ones.

EISENSTEIN: And the drop in sales comes at a very awkward time. I mean, this is a company that's laying off, what, a third of its workforce in North America, and yet they go out and they give Mr. Mulally, their new CEO, who was hired not that many months ago from Boeing, a very big bonus.

CHADWICK: Okay, and one more. This is a sales prediction I read a couple of days ago from the South Korean carmaker Kia, of Kia Hyundai. They are expecting to sell 300,000 cars in North America this year; 500,000 within five years. And I thought, boy, somebody's doing something right.

EISENSTEIN: It's interesting. If you want to look at the success story in the auto industry right now, it's the Koreans. I'd say that meaning both Kia and Hyundai. These were companies that really - they were synonymous with cheap and - if they were lucky, they got people who thought they would go with a Kia or a Hyundai instead of a damaged used car maybe a decade ago. But these companies have come back strong. They're really putting the emphasis not on price but on value - a big difference.

They're just coming up with great design, lots of content. Who would believe this - Hyundai at the top of the quality charts, as they had been in the JD Power numbers. And Hyundai shocked everyone at the New York Auto Show by revealing a prototype called Concept Genesis. This is a BMW 7 Series competitor that they will have a production version of in barely a year, for $30,000.


EISENSTEIN: Barely half the price of a comparable BMW or a Mercedes.

CHADWICK: Paul Eisenstein, publisher of Paul, thank you again.

EISENSTEIN: My pleasure, Alex.

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