BU Now » auto industry

Toyota suspends some U.S. sales

Dick Taffe — Wed, 27 Jan 2010 22:13:38 +0000

In an unprecedented industry move, Toyota, the world’s most successful automaker, temporarily suspended U.S. sales of eight models until it figures out a brake-pedal problem that sparked a recall. Former Ford Motors executive Louis Lataif, long-time dean of the School of Management, says it may help domestic manufacturers, but it premature to read too much into the situation.

“It may be that suspending sales while the technical correction is made to vehicles in dealer inventory — and a week or so of production stoppage — will represent a more modest financial and reputational blow than other alternatives which may have given the problem a longer life.”

Contact Louis Lataif, 617-353-2668, lelataif@bu.edu

GM board sacks new CEO

Dick Taffe — Wed, 02 Dec 2009 23:23:00 +0000

Only eight months after General Motors’ new owners — the U.S. government — replaced the old CEO, the GM board canned that CEO in an effort to accelerate paying back taxpayers for the loans that kept the automaker afloat. School of Management Dean Lou Lataif, a former Ford Motor Company senior executive, says the moves reflect the government’s impatience.

“What we are seeing is that the U.S. government, as a direct investor, may be even more impatient that private investors because of political pressures to repay the taxpayers.”

Contact Lou Lataif, 617-353-2668, lelataif@bu.edu

Auto brand loyality fading

Dick Taffe — Wed, 21 Oct 2009 17:53:24 +0000

Whereas in the 1980s nearly four in five Americans were repeat buyers of the same brand of automobile, a new survey shows only 20 percent show such loyalty today. School of Management marketing Professor Shuba Srinivasan, who studies auto-industry marketing, says increased reliance on sales promotions is partly to blame.

“Over the last decade, the auto industry has seen an excessive reliance on sales promotions rather than an emphasis on ‘getting the products right’ through innovations. In fact, promotion escalation can lead to erosion in brand loyalty in the long run.”

Contact Shuba Srinivasan, 617-353-5978, ssrini@bu.edu

Auto industry update

Dick Taffe — Tue, 23 Jun 2009 14:45:56 +0000

The auto industry worldwide continues to struggle. With Toyota facing its largest losses ever, Akio Toyoda today becomes president of the company founded by his grandfather in 1937. Meantime, the first beneficiaries (reportedly Ford, Nissan, Tesla) finally are being named today for the loan program created by Congress in 2007 to help auto makers retool factories to make new-tech vehicles. School of Management Dean Louis Lataif, a former Ford executive, can discuss the industry big picture.

Contact Louis Lataif, 617-353-2668, lelataif@bu.edu

New role for U.A.W.

Dick Taffe — Tue, 02 Jun 2009 12:40:05 +0000

Now the major stakes in both General Motors and Chrysler, the United Auto Workers finds itself in an unusual dual role as both the major labor union in the automotive industry and a part owner. School of Management economist David Weil, a labor-relations expert, can discuss this dilemma/opportunity.

Contact David Weil, 617-353-4615, davweil@bu.edu

GM approaches bankruptcy

Dick Taffe — Wed, 27 May 2009 13:54:08 +0000

With bondholder interest too low, GM won’t proceed with the repurchasing of some $27 billiion of notes it sought, meaning it is on the brink of bankruptcy — which should come next week with the U.S. government winding up owning 70 percent of the automaker. School of Management Dean Louis Lataif, a former Ford senior executive, can offer an industry perspective

Contact Louis Lataif, 617-353-2668, lelataif@bu.edu

Bankruptcy for GM?

Dick Taffe — Fri, 22 May 2009 14:27:52 +0000

Speculation is rampant that the U.S. government will force General Moters into bankruptcy as early as next week. This comes as the Obama administration plans to lift Chrysler out of bankruptcy, also as soon as next week. School of Management Dean Louis Lataif, a former Ford senior executive, can offer a big-picture perspective on the auto industry’s woes.

Contact Louis Lataif, 617-353-2668, lelataif@bu.edu

“Transfusions don’t stop the bleeding”

Dick Taffe — Tue, 24 Mar 2009 16:14:43 +0000

In a Reuters commentary, School of Management Dean Louis Lataif argues that bit-by-bit bailouts to the auto industry and its suppliers won’t save the industry. The former Ford executive says bridge loans to the auto makers would be more effective while efforts are made to deal with falling housing values and toxic mortgage-backed securities – which he says are the real “wounds” that need to be treated.

Contact Louis Lataif, 617-353-2668, lelataif@bu.edu

Bridge Loans to auto makers would work

Dick Taffe — Thu, 19 Mar 2009 16:26:12 +0000

School of Management Dean Louis Lataif, a former Ford executive, says rather than providing bailout financing to auto-parts suppliers it would be better for the entire industry for the government to provide bridge loans to the auto makers themselves.

“The American public is growing increasingly dismayed by ‘bailouts’ and I’m surprised the government continues to trickle out bailout money a few billion at a time. There is another approach which would seem to make more sense.

“If our government believes that auto jobs and the auto industry are so fundamental to the health of the economy that they should not be allowed to collapse (a position I share), then it should function as a ‘lender of last resort’ and provide bridge loans to the auto companies that will get them through the next 12-18 months.

“The pent-up demand for autos will then be enormous and the companies should be required to first pay back those bridge loans with interest, making the taxpayers whole. The amount involved might be $150 billion (a huge amount, but small in the context of the $787 billion stimulus for thousands of quewstionable probrams not fundamental to the economy). That approach would also help preserve the critical auto-supply base.”

Contact Louis Lataif, 617-353-2668, lelataif@bu.edu

Detroit auto makers seek federal bailout

Dick Taffe — Thu, 20 Nov 2008 18:50:20 +0000

Congress is considering a bailout for the “Big Three” U.S. auto makers. School of Management Dean Lou Lataif, a former Ford senior executive, says if the federal government chooses to become a lender of last resort, its loan could come with conditions:

– the government loan takes precedence over all other creditors;

– the loan would bear a fair interest rate which could yield the taxpayers a decent return on the risk taken;

– executive compensation and UAW wages and benefits would have to be modified until the companies return to profitability and the loan is fully repaid;

– each company would have to file a confidential ‘roadmap to profitability’ so that legislators could be satisfied that repayment of the government loan is likely when the pent-up demand for new vehicles returns in 2010 and beyond.

Lataif outlines his views further in Will the Big Three Fall.