Wednesday, April 25, 2007
Case Study: How Ford Motor Co. Got Back on Track
After decades snug in the role of the perennial No. 2 in the U.S. auto industry, Ford Motor Co. suddenly seemed intent on overtaking its longtime rival, General Motors Corp., when Australian Jacques Nasser was named Ford CEO in 1999. An unabashed admirer of General Electric's "Neutron Jack" Welch, the cocky and confident Nasser billed himself as an agent of change. It was clear he not only wanted to pass the struggling GM in terms of global car sales volume, but also ease Ford's vulnerability to the recurrent downturns that regularly cripple the auto industry.
Nasser spent billions to acquire brands such as Volvo and Land Rover, and even more on an array of businesses ranging from repairs to recycling. But Nasser, like many top corporate executives in the heady days of the late 1990s, seemed even more enamored with the then-emerging world of "e-"—and put into place a $1 billion Internet strategy that seemed, at times, to lay more emphasis on the Internet than it did on automobiles.
"We've entered a world where you measure speed in gigahertz and pipeline bursts, not horsepower," Nasser declared at the January 2000 North American International Auto Show. Framed by a giant video image of himself, Nasser stood at center stage in Detroit's cavernous Cobo convention center, surrounded by a quartet of boxy concept vehicles. Dubbed "24.7," they looked like they'd just rolled out of a Nintendo game. Their plain-vanilla exteriors enveloped high-tech instrument panels featuring an array of telematic technology, including voice-activated navigation, organic LCD video displays and mobile Internet access.
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"Go back 100 years, Henry Ford put the world on wheels. Today," said Nasser, "Ford Motor Company will put the Internet on wheels."
But the bravado didn't stop there. A couple of days later, Nasser announced the launch of Ford's Wingcast telematics unit—which would allow consumers to use their cars as Net portals, ready to tap into the information superhighway from the road. Nasser also formed joint ventures with an array of high-tech partners ranging from Qualcomm Inc. to Yahoo!, and even announced plans—with Yahoo! founder Jerry Yang at his side—to give every Ford employee a computer and Internet access.
In addition, Ford, its stock price at an all-time high of nearly $64 a share, and its already fat profits looking to grow even larger with the spoils of the New Economy, took to the Web with a passion. It helped found the B2B auction site, Covisint, with crosstown rivals General Motors and DaimlerChrysler. It also moved aggressively to begin retailing its cars online, and boldly moved to sell factory-direct to consumers, bypassing dealers and their hefty markups.
Accelerate to the present. What once seemed so inevitable has taken on the ring of futility. Ford dissolved the Wingcast venture last June and has curtailed the computer giveaway. The Yahoo! partnership has quietly expired, while its standalone ConsumerConnect unit—the figurehead of its old aggressive, five-prong Internet sales strategy—has been downsized and absorbed into Ford's traditional marketing groups.
And after running afoul of state franchising laws and angry retailers, the automaker has handed its online retailing operation over to dealers—though Ford insists the Web is paying off handsomely with sales leads it wouldn't be getting otherwise.
Meanwhile, Ford's stock price is stuck in low gear, averaging around $9 in recent months. Its market share is sliding, from 23.2 percent to 21.5 in 2002. Earnings are also depressed, with worldwide automotive operations reporting a third-quarter loss of $243 million, compared with a loss of $877 million for the same period in 2001. True, the red ink is diminishing, but at press time, Ford's 2002 earnings were expected to fall way short of Wall Street expectations. Embarrassing vehicle recalls, meanwhile, have tarnished an image honed by years of advertising that "Quality is Job One," and the company is eliminating thousands of jobs and shuttering five factories to get costs back in line.
Indeed, things are not going quite as planned for the automaker as it approaches the celebration of its 100-year anniversary on June 16. With CEO Bill Ford, the first Ford family heir at the helm in more than two decades, the automaker has launched a "back to basics" campaign designed to help it regain its footing.
Nasser spent billions to acquire brands such as Volvo and Land Rover, and even more on an array of businesses ranging from repairs to recycling. But Nasser, like many top corporate executives in the heady days of the late 1990s, seemed even more enamored with the then-emerging world of "e-"—and put into place a $1 billion Internet strategy that seemed, at times, to lay more emphasis on the Internet than it did on automobiles.
"We've entered a world where you measure speed in gigahertz and pipeline bursts, not horsepower," Nasser declared at the January 2000 North American International Auto Show. Framed by a giant video image of himself, Nasser stood at center stage in Detroit's cavernous Cobo convention center, surrounded by a quartet of boxy concept vehicles. Dubbed "24.7," they looked like they'd just rolled out of a Nintendo game. Their plain-vanilla exteriors enveloped high-tech instrument panels featuring an array of telematic technology, including voice-activated navigation, organic LCD video displays and mobile Internet access.
Advertisement
"Go back 100 years, Henry Ford put the world on wheels. Today," said Nasser, "Ford Motor Company will put the Internet on wheels."
But the bravado didn't stop there. A couple of days later, Nasser announced the launch of Ford's Wingcast telematics unit—which would allow consumers to use their cars as Net portals, ready to tap into the information superhighway from the road. Nasser also formed joint ventures with an array of high-tech partners ranging from Qualcomm Inc. to Yahoo!, and even announced plans—with Yahoo! founder Jerry Yang at his side—to give every Ford employee a computer and Internet access.
In addition, Ford, its stock price at an all-time high of nearly $64 a share, and its already fat profits looking to grow even larger with the spoils of the New Economy, took to the Web with a passion. It helped found the B2B auction site, Covisint, with crosstown rivals General Motors and DaimlerChrysler. It also moved aggressively to begin retailing its cars online, and boldly moved to sell factory-direct to consumers, bypassing dealers and their hefty markups.
Accelerate to the present. What once seemed so inevitable has taken on the ring of futility. Ford dissolved the Wingcast venture last June and has curtailed the computer giveaway. The Yahoo! partnership has quietly expired, while its standalone ConsumerConnect unit—the figurehead of its old aggressive, five-prong Internet sales strategy—has been downsized and absorbed into Ford's traditional marketing groups.
And after running afoul of state franchising laws and angry retailers, the automaker has handed its online retailing operation over to dealers—though Ford insists the Web is paying off handsomely with sales leads it wouldn't be getting otherwise.
Meanwhile, Ford's stock price is stuck in low gear, averaging around $9 in recent months. Its market share is sliding, from 23.2 percent to 21.5 in 2002. Earnings are also depressed, with worldwide automotive operations reporting a third-quarter loss of $243 million, compared with a loss of $877 million for the same period in 2001. True, the red ink is diminishing, but at press time, Ford's 2002 earnings were expected to fall way short of Wall Street expectations. Embarrassing vehicle recalls, meanwhile, have tarnished an image honed by years of advertising that "Quality is Job One," and the company is eliminating thousands of jobs and shuttering five factories to get costs back in line.
Indeed, things are not going quite as planned for the automaker as it approaches the celebration of its 100-year anniversary on June 16. With CEO Bill Ford, the first Ford family heir at the helm in more than two decades, the automaker has launched a "back to basics" campaign designed to help it regain its footing.
Learning on the road
Sensory and data acquisition technology moves information information from factory to collection from factory the road.
Since the onset of massproduced automobiles, auto manufacturers have
But traditional testing techniques are time-consuming, expensive, and limited to a simulated environment that cannot replace real-world road tests.
With increasing market pressure to reduce product development time and expense, auto manufacturers have begun moving data collection from the shop to the road. And these new data collection techniques promise to improve both the quality and safety of automobiles in years to come.
They also provide permanent data recording capabilities that could have unprecedented influence on crash investigations and even crime investigations involving automobiles.
EQUIPMENT DURABILITY FAILURE
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For automobile manufacturers, the reliability of their systems is a major concern. Recent advancements such as telemetry, wireless computing and data transmission, and the ability to tap into onboard controller area network (CAN) bus systems greatly reduce and simplify sensor requirements, according to a Society of Automotive Engineers paper by Bob Davis and Jon Garner of HBM, Inc., a manufacturer of mobile automotive data acquisition systems.
In today's CAN bus networked automobiles, a data acquisition system can use inputs from permanent sensors for engine speed, oil and engine temperatures, oil pressure and consumption, and current and voltage throughout the vehicle electrical system.
Additional types of sensors, including torque and pressure transducers, provide a variety of specialized measurements to meet specific engineering requirements.
Microelectromechanical systems accelerometers are also becoming widely used, due to their small size and high level of sophistication. Custom-mounted strain gauges offer inexpensive, reliable solutions for tight areas and special applications that would preclude the use of typical packaged sensors.
A basic mobile data acquisition system offered by HBM provides a choice of singleto 8-input modules (maximum of 128 channels per housing). The system can have its own Ethernet address, just like a conventional office network.
A more advanced system reads data from a global positioning satellite receiver and enables test engineers to precisely assign the measured quantities recorded in the vehicle to the traveled route.
OBJECTIVELY IDENTIFY DRIVERS
Test engineers are not the only users of onboard data acquisition systems. Black box data recorders are becoming increasingly popular as a driver monitoring tool for fleets of commercial and emergency vehicles.
Such systems count events such as excessive speed or acceleration slamming on the brakes, and quick turns that are normally associated with accidents or near misses.
One such system manufactured by Thousand Oaks, Calif.-based Road Safety International, Inc. rates drivers on a score derived from average (miles) between counts (ABCs). The system's onboard computer transmits data via a wireless radio transceiver to the system administrator's desktop computer.
Database reports allow the administrator to look at all vehicle and driver information, including the driver's ABC performance individually or in comparison to others.
Data collected from these systems allows fleet operators to objectively identify which drivers should undergo additional safety or defensive driving training, hopefully before an accident occurs.
This preventive strategy promises to save companies money on insurance premiums, deductibles, and downtime resulting from accidents. But most importantly, it prevents injuries and loss of life.
RECORD CRASH EVENT DATA
More than 6 million traffic accidents are reported annually in the U.S., resulting in a cost of $150.5 billion. In many cases, having a permanent record of a crash event can be an invaluable asset in determining the cause of the accident.
To meet this need, some vehicle owners are installing crash cameras. San Francisco-based DriveCam Systems Inc. offers the DriveCam video event data recorder.
This palm-sized video recorder mounts behind a vehicle's rearview mirror. The device monitors driving activity by continuously recording video, audio, and four directions of g forces into a digital looping memory. The recorder saves events activated by g forces resulting from hard braking, rapid acceleration, harsh cornering, or collisions. Drivers can also manually activate the recorder.
But accessible data recorders may soon become standard equipment on most cars. According to Russell Lindsay, principal engineer at Asheville, N.C.-based PARC Engineering Associates, many newer cars actually do have something close to a black box.
Since the onset of massproduced automobiles, auto manufacturers have
But traditional testing techniques are time-consuming, expensive, and limited to a simulated environment that cannot replace real-world road tests.
With increasing market pressure to reduce product development time and expense, auto manufacturers have begun moving data collection from the shop to the road. And these new data collection techniques promise to improve both the quality and safety of automobiles in years to come.
They also provide permanent data recording capabilities that could have unprecedented influence on crash investigations and even crime investigations involving automobiles.
EQUIPMENT DURABILITY FAILURE
Advertisement
For automobile manufacturers, the reliability of their systems is a major concern. Recent advancements such as telemetry, wireless computing and data transmission, and the ability to tap into onboard controller area network (CAN) bus systems greatly reduce and simplify sensor requirements, according to a Society of Automotive Engineers paper by Bob Davis and Jon Garner of HBM, Inc., a manufacturer of mobile automotive data acquisition systems.
In today's CAN bus networked automobiles, a data acquisition system can use inputs from permanent sensors for engine speed, oil and engine temperatures, oil pressure and consumption, and current and voltage throughout the vehicle electrical system.
Additional types of sensors, including torque and pressure transducers, provide a variety of specialized measurements to meet specific engineering requirements.
Microelectromechanical systems accelerometers are also becoming widely used, due to their small size and high level of sophistication. Custom-mounted strain gauges offer inexpensive, reliable solutions for tight areas and special applications that would preclude the use of typical packaged sensors.
A basic mobile data acquisition system offered by HBM provides a choice of singleto 8-input modules (maximum of 128 channels per housing). The system can have its own Ethernet address, just like a conventional office network.
A more advanced system reads data from a global positioning satellite receiver and enables test engineers to precisely assign the measured quantities recorded in the vehicle to the traveled route.
OBJECTIVELY IDENTIFY DRIVERS
Test engineers are not the only users of onboard data acquisition systems. Black box data recorders are becoming increasingly popular as a driver monitoring tool for fleets of commercial and emergency vehicles.
Such systems count events such as excessive speed or acceleration slamming on the brakes, and quick turns that are normally associated with accidents or near misses.
One such system manufactured by Thousand Oaks, Calif.-based Road Safety International, Inc. rates drivers on a score derived from average (miles) between counts (ABCs). The system's onboard computer transmits data via a wireless radio transceiver to the system administrator's desktop computer.
Database reports allow the administrator to look at all vehicle and driver information, including the driver's ABC performance individually or in comparison to others.
Data collected from these systems allows fleet operators to objectively identify which drivers should undergo additional safety or defensive driving training, hopefully before an accident occurs.
This preventive strategy promises to save companies money on insurance premiums, deductibles, and downtime resulting from accidents. But most importantly, it prevents injuries and loss of life.
RECORD CRASH EVENT DATA
More than 6 million traffic accidents are reported annually in the U.S., resulting in a cost of $150.5 billion. In many cases, having a permanent record of a crash event can be an invaluable asset in determining the cause of the accident.
To meet this need, some vehicle owners are installing crash cameras. San Francisco-based DriveCam Systems Inc. offers the DriveCam video event data recorder.
This palm-sized video recorder mounts behind a vehicle's rearview mirror. The device monitors driving activity by continuously recording video, audio, and four directions of g forces into a digital looping memory. The recorder saves events activated by g forces resulting from hard braking, rapid acceleration, harsh cornering, or collisions. Drivers can also manually activate the recorder.
But accessible data recorders may soon become standard equipment on most cars. According to Russell Lindsay, principal engineer at Asheville, N.C.-based PARC Engineering Associates, many newer cars actually do have something close to a black box.
Gluteus Maxima: Nissan's new flagship is a seat-of-the-pants performer wrapped in luxury sheetmetal - Product
To paraphrase Mark Twain, the report of the Nissan Maxima's death has been greatly exaggerated. Maxima owners will be glad to hear that the sixth generation of Nissan's flagship carries on the tradition that has made it one of the company's best selling vehicles -- roomy interior, comfortable ride and plenty of power. But for 2004, Maxima is being pushed upscale to better fit into Nissan's overall sedan plan. The entry-level GXE has been dropped leaving just two trim levels, the luxury-equipped SL and the sports-equipped SE.
"We're striving for a very logical grade and price walk between the 4-cyl. Altima, the 6-cyl. Altima and the Maxima," says Jed Connelly, senior vice president, sales and marketing for Nissan North America.
Maxima offers all the amenities you'd expect from a car in the mid-size luxury segment. Inside, there are eight-way adjustable heated power seats, a one-touch driver memory system that will customize settings for the power-telescoping steering wheel, seat and exterior mirrors, and an optional DVD-based navigation system. The Z-influenced interior features a hoodless gauge cluster with special anti-reflective coatings to focus the light on the driver and keep it from reflecting off the windshield. Designers also created the illusion of a floating dash by running the tops of the door panels around under the windshield, hanging the dash about two inches below windshield level.
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For the electronic gizmo crowd, there is a 12-volt power point conveniently located in the passenger side foot-well (for those things that stick to the windshield, Nissan tells us) and another can be found in the bottom of the center console. A third power point is available with the four-passenger Elite package. The Elite package is one of a few unique options that Nissan hopes will set the car apart from the competition. While the standard five-passenger sedan comes with the usual 60-40 split rear bench seat, Nissan offers optional four-passenger seating designed for those who a looking for a true four-seat sports car. Heated rear buckets sit on either side of a large fixed center console with cup holders, storage compartment and that third 12-volt power point. To keep unwanted sunlight out, a power rear-window sun shade can be controlled from the back or the front. Nissan says it conservatively estimates that 10 percent of Maxima customers will opt for the Elite package.
Another unique feature is designed to let the sun shine in. Maxima comes standard with a Skyview roof, a glass panel that runs lengthwise over the front and rear seats. The glass installs from the top and sits flush with the roofline. Nissan says that Skyview doesn't have the drawbacks of a traditional sunroof like decreased headroom and wind noise. A traditional sunroof is optional. Safety is always a consideration and Maxima comes through with standard active head restraints, side air bags and side curtain air bags for both front and rear occupants.
Maxima's aluminum 3.5L 24-valve V-6 puts out 265 hp at 5,800 rpm and 255 lbs. ft. of torque at 4,400 rpm. That's a 20 hp improvement over the Altima's V-6 thanks to a new intake and free-flowing dual exhaust system that boasts a 45 liter muffler volume. The engine bolts to the chassis with electronically-controlled engine mounts. The fluid-filled mounts are tied into the engine control module and, depending on engine rpm, can adjust the density of the liquid and dampening under certain conditions.
The 3.5 SL comes standard with a 4-speed automatic transmission. The 3.5 SE comes standard with a 5-speed automatic and offers an optional 6-speed manual.
At first glance, the Japanese-designed Maxima bears a strong resemblance to the Altima, though they share no exterior body panels. Upon closer examination you notice Maxima's taller roof line, distinctive grille, and front and rear fascias. The C-pillar design is borrowed from the Z, adding to the sporty-look. The standard car has a drag coefficient of .3 (an optional rear spoiler lowers that to .28).
High and low beam Xenon headlamps are standard on the SL and optional on the SE. Both get fascia-mounted fog lamps and cornering lamps.
The cavernous trunk has side storage nets, designed to hold things like windshield washer fluid, as well as a rear net. And designers have attached the deck lid with non-obtrusive piston-style hinges.
The 2004 Maxima is the fourth vehicle to come off of Nissan's FF-L (front-wheel-drive, front-engine - long) platform, shared with the Altima, Murano and new Quest minivan.
Maxima shares underpinnings and four-wheel independent suspension with Altima, though Maxima is lengthened by about 1-inch (10 mm) at the center of the vehicle. The suspension is upgraded with new bushings, springs and shocks and the tuning is refined for better ride and handling. Maxima also gets an upgraded steering rack to refine steering feel. Nissan says that Maxima is the only front-drive sedan to offer a (Helico) limited slip differential
"We're striving for a very logical grade and price walk between the 4-cyl. Altima, the 6-cyl. Altima and the Maxima," says Jed Connelly, senior vice president, sales and marketing for Nissan North America.
Maxima offers all the amenities you'd expect from a car in the mid-size luxury segment. Inside, there are eight-way adjustable heated power seats, a one-touch driver memory system that will customize settings for the power-telescoping steering wheel, seat and exterior mirrors, and an optional DVD-based navigation system. The Z-influenced interior features a hoodless gauge cluster with special anti-reflective coatings to focus the light on the driver and keep it from reflecting off the windshield. Designers also created the illusion of a floating dash by running the tops of the door panels around under the windshield, hanging the dash about two inches below windshield level.
Advertisement
For the electronic gizmo crowd, there is a 12-volt power point conveniently located in the passenger side foot-well (for those things that stick to the windshield, Nissan tells us) and another can be found in the bottom of the center console. A third power point is available with the four-passenger Elite package. The Elite package is one of a few unique options that Nissan hopes will set the car apart from the competition. While the standard five-passenger sedan comes with the usual 60-40 split rear bench seat, Nissan offers optional four-passenger seating designed for those who a looking for a true four-seat sports car. Heated rear buckets sit on either side of a large fixed center console with cup holders, storage compartment and that third 12-volt power point. To keep unwanted sunlight out, a power rear-window sun shade can be controlled from the back or the front. Nissan says it conservatively estimates that 10 percent of Maxima customers will opt for the Elite package.
Another unique feature is designed to let the sun shine in. Maxima comes standard with a Skyview roof, a glass panel that runs lengthwise over the front and rear seats. The glass installs from the top and sits flush with the roofline. Nissan says that Skyview doesn't have the drawbacks of a traditional sunroof like decreased headroom and wind noise. A traditional sunroof is optional. Safety is always a consideration and Maxima comes through with standard active head restraints, side air bags and side curtain air bags for both front and rear occupants.
Maxima's aluminum 3.5L 24-valve V-6 puts out 265 hp at 5,800 rpm and 255 lbs. ft. of torque at 4,400 rpm. That's a 20 hp improvement over the Altima's V-6 thanks to a new intake and free-flowing dual exhaust system that boasts a 45 liter muffler volume. The engine bolts to the chassis with electronically-controlled engine mounts. The fluid-filled mounts are tied into the engine control module and, depending on engine rpm, can adjust the density of the liquid and dampening under certain conditions.
The 3.5 SL comes standard with a 4-speed automatic transmission. The 3.5 SE comes standard with a 5-speed automatic and offers an optional 6-speed manual.
At first glance, the Japanese-designed Maxima bears a strong resemblance to the Altima, though they share no exterior body panels. Upon closer examination you notice Maxima's taller roof line, distinctive grille, and front and rear fascias. The C-pillar design is borrowed from the Z, adding to the sporty-look. The standard car has a drag coefficient of .3 (an optional rear spoiler lowers that to .28).
High and low beam Xenon headlamps are standard on the SL and optional on the SE. Both get fascia-mounted fog lamps and cornering lamps.
The cavernous trunk has side storage nets, designed to hold things like windshield washer fluid, as well as a rear net. And designers have attached the deck lid with non-obtrusive piston-style hinges.
The 2004 Maxima is the fourth vehicle to come off of Nissan's FF-L (front-wheel-drive, front-engine - long) platform, shared with the Altima, Murano and new Quest minivan.
Maxima shares underpinnings and four-wheel independent suspension with Altima, though Maxima is lengthened by about 1-inch (10 mm) at the center of the vehicle. The suspension is upgraded with new bushings, springs and shocks and the tuning is refined for better ride and handling. Maxima also gets an upgraded steering rack to refine steering feel. Nissan says that Maxima is the only front-drive sedan to offer a (Helico) limited slip differential
SORL Auto Parts, Inc. Reports Net Income of $2.9 Million for the First Six Months of 2005
SORL Auto Parts, Inc. (OTC BB: SAUP) a leading international auto parts manufacturer based in China, today announced record financial results for the second quarter ended June 30, 2005.
SORL Auto Parts, Inc. ("SORL" or the "Company") reported net income for the second quarter ended June 30, 2005 increased by $0.2 million, or 19 percent, to $1.4 million or $0.11 per share, compared to $1.2 million, or $0.09 per share, for the same period a year ago. For the first six months of 2005, net income increased by $0.8 million, or 35 percent, to $2.9 million or $0.22 per share, compared to $2.1 million or $0.16 per share, for the first six months of 2004.
Sales for the second quarter ended June 30, 2005 increased by $3.6 million, or 31 percent, to $14.9 million from $11.3 million for the same period a year ago. For the first six months of 2005, sales increased by $9 million, or 44 percent, to $29.4 million compared to $20.5 million for the same period a year ago. The increase is primarily due to the increase in volume of our products shipped as a result of our aggressive expansion into new markets, especially in North America. Export sales grew by approximately 91 percent and accounted for approximately one third of total sales.
SORL reported that gross profit for the second quarter ended June 2005 increased by $0.7 million, or 26 percent, to $3.4 million from $2.7 million a year ago. For the first six months of 2005, gross profit increased by $1.7 million or 34 percent, to $6.6 million from $4.9 million for the same period a year ago. The improvement in gross profit was attributed to increased sales in both the domestic and international markets. The gross profit margin dropped 2 percent from 24 percent in the first half of 2004 to 22 percent in the first half of 2005. This decrease was due to the fact that 10 percent of the Company's gross sales were from products that were purchased from outside vendors as opposed to products manufactured internally, which carry lower costs and higher profit margins.
Selling, general, administration and related sales expenses for the second quarter ended June 30, 2005 were $1.6 million, or 11 percent of net sales. This compares to $1.2 million, or 11 percent of net sales for the same period last year. For the first six months of 2005, selling, general, administration and related sales expenses were $3.1 million or 11 percent of net sales compared to $2.4 million or 12 percent of net sales for the first six months of 2004. The decrease in these expenses was primarily due to economies of scales resulting from the increase in sales.
Cash and cash equivalents for the second quarter totaled $0.3 million. There was surplus working capital of $8.6 million for that same period.
Company Chairman and Chief Executive Officer Xiaoping Zhang said, "The Company had another outstanding quarter propelled by improvements in product quality, new marketing initiatives and growing export sales. Export sales accounted for more than 30 percent of total sales in the second quarter 2005, and we see many more opportunities for expansion into international markets and continued strong growth in export sales over the next two years."
About SORL Auto Parts, Inc.
SORL Auto Parts, Inc. is engaged in the manufacture and distribution of automotive air brake valves and hydraulic break valves primarily for the commercial vehicle market for vehicles weighting more than three tons, such as trucks, vans and buses in the People's Republic of China (PRC). The Company distributes products both in China and internationally under SORL trademarks. The Company's product range includes 36 types of brake valves with over 800 different specifications. The Company is rated as one of the top 100 auto component suppliers in China. The Company has two international sales centers in Australia and UAE, with additional new offices slated for opening in the U.S. and other locations in the near future.
FORWARD-LOOKING STATEMENTS
The information contained herein includes forward-looking statements. These statements relate to future events or to our future financial performance, and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. You should not place undue reliance on forward-looking statements since they involve known and unknown risks, uncertainties and other factors which are, in some cases, beyond our control and which could, and likely will, materially affect actual results, levels of activity, performance or achievements. Any forward-looking statement reflects our current views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to our operations, results of operations, growth strategy and liquidity. We assume no obligation to publicly update or revise these forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future. The safe harbor for forward-looking statements contained in the Securities Litigation Reform Act of 1995 protects companies from liability for their forward looking statements if they comply with the requirements of the Act
SORL Auto Parts, Inc. ("SORL" or the "Company") reported net income for the second quarter ended June 30, 2005 increased by $0.2 million, or 19 percent, to $1.4 million or $0.11 per share, compared to $1.2 million, or $0.09 per share, for the same period a year ago. For the first six months of 2005, net income increased by $0.8 million, or 35 percent, to $2.9 million or $0.22 per share, compared to $2.1 million or $0.16 per share, for the first six months of 2004.
Sales for the second quarter ended June 30, 2005 increased by $3.6 million, or 31 percent, to $14.9 million from $11.3 million for the same period a year ago. For the first six months of 2005, sales increased by $9 million, or 44 percent, to $29.4 million compared to $20.5 million for the same period a year ago. The increase is primarily due to the increase in volume of our products shipped as a result of our aggressive expansion into new markets, especially in North America. Export sales grew by approximately 91 percent and accounted for approximately one third of total sales.
SORL reported that gross profit for the second quarter ended June 2005 increased by $0.7 million, or 26 percent, to $3.4 million from $2.7 million a year ago. For the first six months of 2005, gross profit increased by $1.7 million or 34 percent, to $6.6 million from $4.9 million for the same period a year ago. The improvement in gross profit was attributed to increased sales in both the domestic and international markets. The gross profit margin dropped 2 percent from 24 percent in the first half of 2004 to 22 percent in the first half of 2005. This decrease was due to the fact that 10 percent of the Company's gross sales were from products that were purchased from outside vendors as opposed to products manufactured internally, which carry lower costs and higher profit margins.
Selling, general, administration and related sales expenses for the second quarter ended June 30, 2005 were $1.6 million, or 11 percent of net sales. This compares to $1.2 million, or 11 percent of net sales for the same period last year. For the first six months of 2005, selling, general, administration and related sales expenses were $3.1 million or 11 percent of net sales compared to $2.4 million or 12 percent of net sales for the first six months of 2004. The decrease in these expenses was primarily due to economies of scales resulting from the increase in sales.
Cash and cash equivalents for the second quarter totaled $0.3 million. There was surplus working capital of $8.6 million for that same period.
Company Chairman and Chief Executive Officer Xiaoping Zhang said, "The Company had another outstanding quarter propelled by improvements in product quality, new marketing initiatives and growing export sales. Export sales accounted for more than 30 percent of total sales in the second quarter 2005, and we see many more opportunities for expansion into international markets and continued strong growth in export sales over the next two years."
About SORL Auto Parts, Inc.
SORL Auto Parts, Inc. is engaged in the manufacture and distribution of automotive air brake valves and hydraulic break valves primarily for the commercial vehicle market for vehicles weighting more than three tons, such as trucks, vans and buses in the People's Republic of China (PRC). The Company distributes products both in China and internationally under SORL trademarks. The Company's product range includes 36 types of brake valves with over 800 different specifications. The Company is rated as one of the top 100 auto component suppliers in China. The Company has two international sales centers in Australia and UAE, with additional new offices slated for opening in the U.S. and other locations in the near future.
FORWARD-LOOKING STATEMENTS
The information contained herein includes forward-looking statements. These statements relate to future events or to our future financial performance, and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. You should not place undue reliance on forward-looking statements since they involve known and unknown risks, uncertainties and other factors which are, in some cases, beyond our control and which could, and likely will, materially affect actual results, levels of activity, performance or achievements. Any forward-looking statement reflects our current views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to our operations, results of operations, growth strategy and liquidity. We assume no obligation to publicly update or revise these forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future. The safe harbor for forward-looking statements contained in the Securities Litigation Reform Act of 1995 protects companies from liability for their forward looking statements if they comply with the requirements of the Act
Group 1 Automotive Reports 2005 First-Quarter Results
Group 1 Automotive, Inc. (NYSE:GPI), a Fortune 500 specialty retailer, today reported first-quarter income before cumulative effect of a change in accounting principle of $14.4 million, or $0.60 per diluted share, on revenues of $1.4 billion. This compares with $10.5 million, or $0.45 per diluted share, on revenues of $1.1 billion in the first quarter of 2004.
The prior-year results include an after-tax charge of $4.0 million, or $0.17 per diluted share, related to the early redemption of certain of the company's senior subordinated notes. Excluding this charge, first-quarter 2004 earnings were $0.62 per diluted share.
Summary of Results of Operations (Unaudited)
(in millions, except per share amounts)
Three Months Ended
March 31,
-------------------
2005 2004
--------- ---------
Revenues $1,396.7 $1,147.0
Gross Profit $224.5 $183.4
Income from Operations $36.6 $33.2
Income before Cumulative Effect of a
Change in Accounting Principle $14.4 $10.5
Diluted Earnings per Share before Cumulative
Effect of a Change in Accounting Principle $0.60 $0.45
Results for the First Quarter
During the first quarter, total revenues increased 21.8 percent, to $1.4 billion from $1.1 billion during the same period last year, due largely to acquisitions made in 2004. On a same store basis, total revenues grew 0.1 percent, highlighted by a 3.7 percent increase in parts and service. Same store new and total used vehicle revenues were down 0.1 percent and 1.0 percent, respectively, while same store finance and insurance revenues were 0.1 percent lower.
Gross profit for the quarter was $224.5 million, a 22.4 percent increase from $183.4 million in the prior-year period. On a same store basis, gross profit for the quarter grew 1.7 percent, highlighted by a 4.4 percent increase in total used vehicles and a 2.7 percent increase in parts and service. Same store gross profit for new vehicle sales was also up slightly from the prior-year period. Same store gross margin increased to 16.2 percent from 16.0 percent in the year-ago period. This increase was due largely to an increase in parts and service revenues as a percentage of total revenues, as well as a 50 basis point increase in total used vehicle gross margins.
The company reported income from operations of $36.6 million in the first quarter, a 10.1 percent increase from $33.2 million in the first quarter of 2004. Operating margin was 2.6 percent, compared with 2.9 percent in 2004. On a same store basis, operating margin declined to 2.7 percent from 2.9 percent in the prior-year period, as the above-noted increase in same store gross profit was more than offset by a 90 basis point increase in selling, general and administrative (SG&A) expenses as a percentage of gross profit.
During September 2004, the SEC staff issued Staff Announcement D-108, "Use of the Residual Method to Value Acquired Assets Other Than Goodwill" (EITF D-108), which, among other things, required that a "direct" method be used to determine the fair value of intangible assets other than goodwill in connection with impairment testing under Statement of Financial Accounting Standards (SFAS) No. 142, "Goodwill and Other Intangible Assets." As required by EITF D-108, during the first quarter, the company performed an impairment test using a direct method on all intangible assets that were previously valued using a "residual" method. Upon completion of this test, the carrying value of some of the company's intangible franchise rights exceeded the newly determined fair value of such assets. As a result, the company recorded a non-cash, after-tax charge of $16.0 million, or $0.67 per diluted share. As required per EITF D-108, the charge is reported in the company's first-quarter income statement as a cumulative effect of a change in accounting principle.
Including this charge, the company's net loss for the quarter was $1.6 million, or $0.07 per diluted share, compared with $0.45 per diluted share on net income of $10.5 million during 2004.
Management's Outlook
Group 1 announced that it expects to report 2005 earnings of $2.95 to $3.05 per diluted share before cumulative effect of a change in accounting principle. However, as a result of the SEC's recent announcement delaying the implementation of SFAS No. 123(R), "Share Based Payment," this guidance now excludes the previously estimated negative impact of $0.07 per diluted share related to the expensing of stock based compensation in the second half of 2005. The company's full-year guidance also excludes any future acquisitions. The guidance is based on average diluted shares outstanding of 24.1 million
The prior-year results include an after-tax charge of $4.0 million, or $0.17 per diluted share, related to the early redemption of certain of the company's senior subordinated notes. Excluding this charge, first-quarter 2004 earnings were $0.62 per diluted share.
Summary of Results of Operations (Unaudited)
(in millions, except per share amounts)
Three Months Ended
March 31,
-------------------
2005 2004
--------- ---------
Revenues $1,396.7 $1,147.0
Gross Profit $224.5 $183.4
Income from Operations $36.6 $33.2
Income before Cumulative Effect of a
Change in Accounting Principle $14.4 $10.5
Diluted Earnings per Share before Cumulative
Effect of a Change in Accounting Principle $0.60 $0.45
Results for the First Quarter
During the first quarter, total revenues increased 21.8 percent, to $1.4 billion from $1.1 billion during the same period last year, due largely to acquisitions made in 2004. On a same store basis, total revenues grew 0.1 percent, highlighted by a 3.7 percent increase in parts and service. Same store new and total used vehicle revenues were down 0.1 percent and 1.0 percent, respectively, while same store finance and insurance revenues were 0.1 percent lower.
Gross profit for the quarter was $224.5 million, a 22.4 percent increase from $183.4 million in the prior-year period. On a same store basis, gross profit for the quarter grew 1.7 percent, highlighted by a 4.4 percent increase in total used vehicles and a 2.7 percent increase in parts and service. Same store gross profit for new vehicle sales was also up slightly from the prior-year period. Same store gross margin increased to 16.2 percent from 16.0 percent in the year-ago period. This increase was due largely to an increase in parts and service revenues as a percentage of total revenues, as well as a 50 basis point increase in total used vehicle gross margins.
The company reported income from operations of $36.6 million in the first quarter, a 10.1 percent increase from $33.2 million in the first quarter of 2004. Operating margin was 2.6 percent, compared with 2.9 percent in 2004. On a same store basis, operating margin declined to 2.7 percent from 2.9 percent in the prior-year period, as the above-noted increase in same store gross profit was more than offset by a 90 basis point increase in selling, general and administrative (SG&A) expenses as a percentage of gross profit.
During September 2004, the SEC staff issued Staff Announcement D-108, "Use of the Residual Method to Value Acquired Assets Other Than Goodwill" (EITF D-108), which, among other things, required that a "direct" method be used to determine the fair value of intangible assets other than goodwill in connection with impairment testing under Statement of Financial Accounting Standards (SFAS) No. 142, "Goodwill and Other Intangible Assets." As required by EITF D-108, during the first quarter, the company performed an impairment test using a direct method on all intangible assets that were previously valued using a "residual" method. Upon completion of this test, the carrying value of some of the company's intangible franchise rights exceeded the newly determined fair value of such assets. As a result, the company recorded a non-cash, after-tax charge of $16.0 million, or $0.67 per diluted share. As required per EITF D-108, the charge is reported in the company's first-quarter income statement as a cumulative effect of a change in accounting principle.
Including this charge, the company's net loss for the quarter was $1.6 million, or $0.07 per diluted share, compared with $0.45 per diluted share on net income of $10.5 million during 2004.
Management's Outlook
Group 1 announced that it expects to report 2005 earnings of $2.95 to $3.05 per diluted share before cumulative effect of a change in accounting principle. However, as a result of the SEC's recent announcement delaying the implementation of SFAS No. 123(R), "Share Based Payment," this guidance now excludes the previously estimated negative impact of $0.07 per diluted share related to the expensing of stock based compensation in the second half of 2005. The company's full-year guidance also excludes any future acquisitions. The guidance is based on average diluted shares outstanding of 24.1 million
Getting Automotive and Trucks Parts Just Got Faster; AUTOVIA Enhances Internet Service — Auto Shops to Eliminate Costly Delays That Cut into Profits
In its ongoing effort to reduce the time it takes for automotive repair shops to receive parts, Sacramento-based AUTOVIA announced that it has enhanced its parts ordering service to make it even easier and faster for repair shops to order and receive parts online.
With fewer screens, quicker response times and significantly faster stock check responses from vendor systems, AUTOVIA's service enables repair shops to streamline the process of locating and ordering parts from their local distributors. In addition, AUTOVIA is a free of charge service to the automotive repair shops.
"Reducing the time it takes to find the right part quickly from their preferred local sources is the number one priority for repair shops," said AUTOVIA's Founder and CEO Rod Georgiu, who also founded ALLDATA. "AUTOVIA's service automates the ordering process and allows repair shops to increase productivity, improve profitability and save time by checking inventory and placing orders to multiple distributors all at once."
The process is simple: Technicians and Service Writers log onto AUTOVIA's service and click on the year, make and model of the vehicle they are working on. Then they choose the parts they need. The AUTOVIA service automatically displays each local vendor's stock information on the desired parts. The customers then select the parts he wants and AUTOVIA processes the order instantly.
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AUTOVIA also reduces the time it takes for repair shops to place an order by 70 percent and improves delivery time by as much as 20 minutes. These two important factors can eliminate delays in the ordering process that cut into a repair shop's profits.
"Seeing all of my distributors and their available inventory at once keeps me from having to call around town to find parts," said Lynne Cardwell of Car Care Center in Sacramento, Calif. "With AUTOVIA, we only have to spend two minutes on a stock check for all my (five) suppliers versus three to four minutes that I would normally spend on the phone with each one. This is a huge time-saver."
AUTOVIA's automated ordering process is also allowing distributors to dedicate more time to their customers as routine stock checks and orders are processed automatically. "It's a win-win for both distributors and repair shops," Georgiu said. "Distributors become more efficient when traditional time-consuming procedures such as stock checks and final orders are now processed automatically, freeing the counterman and boosting his productivity."
Distributors using AUTOVIA's services are reducing manual-order processing costs by as much as 75 percent and cutting the current manual cost of 10-12 percent down to 3 percent. Final orders print out automatically on the suppliers' existing invoice printers, which significantly reduce per order operating expenses as well as return rates for ordered parts.
"AUTOVIA has significantly improved our production and customer service," said distributor Sam Cracraft, of Sacramento Tires, Batteries and Accessories Company. "Several of our accounts have increased their monthly sales by more than 20 percent."
AUTOVIA's service is free of charge to repair shops. AUTOVIA provides free access to registered repair shops and fleets so that they can instantly compare parts availability among multiple distributors, quickly find the quality brands that they trust, provide them price information before they order, by part number, from each of their current local suppliers. Distributors pay a small transaction fee for each order they receive from registered customers. This minimal fee is significantly less than the 10-12 percent in extra costs that stem from processing orders by the traditional phone method. More importantly, the charge is only incurred when an order is actually accepted on the AUTOVIA network.
With fewer screens, quicker response times and significantly faster stock check responses from vendor systems, AUTOVIA's service enables repair shops to streamline the process of locating and ordering parts from their local distributors. In addition, AUTOVIA is a free of charge service to the automotive repair shops.
"Reducing the time it takes to find the right part quickly from their preferred local sources is the number one priority for repair shops," said AUTOVIA's Founder and CEO Rod Georgiu, who also founded ALLDATA. "AUTOVIA's service automates the ordering process and allows repair shops to increase productivity, improve profitability and save time by checking inventory and placing orders to multiple distributors all at once."
The process is simple: Technicians and Service Writers log onto AUTOVIA's service and click on the year, make and model of the vehicle they are working on. Then they choose the parts they need. The AUTOVIA service automatically displays each local vendor's stock information on the desired parts. The customers then select the parts he wants and AUTOVIA processes the order instantly.
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AUTOVIA also reduces the time it takes for repair shops to place an order by 70 percent and improves delivery time by as much as 20 minutes. These two important factors can eliminate delays in the ordering process that cut into a repair shop's profits.
"Seeing all of my distributors and their available inventory at once keeps me from having to call around town to find parts," said Lynne Cardwell of Car Care Center in Sacramento, Calif. "With AUTOVIA, we only have to spend two minutes on a stock check for all my (five) suppliers versus three to four minutes that I would normally spend on the phone with each one. This is a huge time-saver."
AUTOVIA's automated ordering process is also allowing distributors to dedicate more time to their customers as routine stock checks and orders are processed automatically. "It's a win-win for both distributors and repair shops," Georgiu said. "Distributors become more efficient when traditional time-consuming procedures such as stock checks and final orders are now processed automatically, freeing the counterman and boosting his productivity."
Distributors using AUTOVIA's services are reducing manual-order processing costs by as much as 75 percent and cutting the current manual cost of 10-12 percent down to 3 percent. Final orders print out automatically on the suppliers' existing invoice printers, which significantly reduce per order operating expenses as well as return rates for ordered parts.
"AUTOVIA has significantly improved our production and customer service," said distributor Sam Cracraft, of Sacramento Tires, Batteries and Accessories Company. "Several of our accounts have increased their monthly sales by more than 20 percent."
AUTOVIA's service is free of charge to repair shops. AUTOVIA provides free access to registered repair shops and fleets so that they can instantly compare parts availability among multiple distributors, quickly find the quality brands that they trust, provide them price information before they order, by part number, from each of their current local suppliers. Distributors pay a small transaction fee for each order they receive from registered customers. This minimal fee is significantly less than the 10-12 percent in extra costs that stem from processing orders by the traditional phone method. More importantly, the charge is only incurred when an order is actually accepted on the AUTOVIA network.
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