Transportation Update

In September, GM North America produced 323,000 vehicles (118,000 cars and 205,000 trucks). This is down 64,000 units or 16 percent compared with September 2006 when the region produced 387,000 vehicles (161,000 cars and 226,000 trucks). (Production totals include joint venture production of 15,000 vehicles in September 2007 and 22,000 vehicles in September 2006.)

GM North America built 1.020 million vehicles (367,000 cars and 653,000 trucks) in the third-quarter of 2007. This is down 30,000 vehicles or 3 percent compared with third-quarter of 2006 when the region produced 1.050 million vehicles (417,000 cars and 633,000 trucks). The third-quarter 2007 production decline versus last month's guidance is largely due to the recent UAW work stoppage in the U.S. Additionally, GM North America's 2007 fourth-quarter production forecast is unchanged at 1 million vehicles (334,000 cars and 666,000 trucks). In the fourth-quarter of 2006 the region produced 1.107 million vehicles (446,000 cars and 661,000 trucks).

Toyota Motor Sales (TMS), U.S.A., Inc., reported September sales of 213,043 vehicles, a decrease of 0.6 percent from a best-ever September 2006. Calendar-year-to-date (CYTD) sales total 2,001,646 units, up 3.8 percent over the same period last year.

"Given September's economic headwind, the industry saw a fair month," said Jim Lentz, TMS executive vice president. "The fall selling season is likely to benefit from increased stabilization and modest gains."

The Toyota Division posted September sales of 187,929, down 0.9 percent from last September. The Lexus Division reported September sales of 25,114 units, an increase of 1.6 percent.

Toyota Division passenger cars recorded September sales of 107,743, a decrease of one percent from last September. Passenger car sales were led by Camry, which posted best-ever September sales of 40,438, up 9.9 percent over the same period last year. Camry Hybrid reported sales of 4,196 units in September, up eight percent over September 2006. The Prius hybrid gas-electric mid-size sedan posted best-ever September sales of 12,494, an increase of 23.8 percent over September 2006. Corolla reported September sales of 29,550 units.

Toyota Division light truck sales were down 0.9 percent, with sales of 80,186 units this month. Light truck sales were led by the all-new Tundra full-size pickup with best-ever September sales of 19,571, an increase 61.4 percent over the year-ago month. The RAV4 compact sport utility vehicle reported best-ever September sales of 14,412, up 29.8 percent over the same period last year. Highlander and Highlander Hybrid posted combined September sales of 8,173 units.

Scion posted September sales of 13,239 units. The tC sports coupe led the way with September sales of 5,694 units. The xB urban utility vehicle posted sales of 4,842 units for the month.

Lexus passenger cars reported best-ever September sales of 15,131 units, an increase of 10.6 percent over September 2006. Passenger car sales were led by the ES 350 luxury sedan with best-ever September sales of 6,491 units, an increase of 15.4 percent over the year-ago month. The all-new LS 460 and LS 600h L luxury sedans reported combined sales of 2,918, an increase of 237.9 percent over last September. The LS 600h L hybrid luxury sedan posted sales of 196 units for the month.

Lexus Division light trucks reported September sales totaling 9,983 units. The RX 350 and RX 400h posted combined September sales of 7,841 units. The RX 400h hybrid luxury utility vehicle reported sales of 979 units for the month.

TMS calendar-year-to-date hybrid sales totaled 208,187 units, an increase of 44 percent over the same period last year. In September, TMS posted sales of 18,130 hybrid vehicles, up one percent over last September. Toyota Division posted sales of 16,883 hybrids, up four percent over September 2006. Lexus Division posted sales of 1,247 hybrids.

	FY2007 first quarter (April 2006 through June 2006)	FY2008 first quarter (April 2007 through June 2007)	Increase (Decrease)
Japan	1,231,097	1,239,648	8,551
North America	313,451	340,192	26,741
Europe	186,998	183,339	(3,659)
Asia	184,284	219,496	35,212
Other	84,659	107,628	22,969
Overseas total	769,392	850,655	81,263
Total	2,000,489	2,090,303	89,814

	FY2007 first quarter (April 2006 through June 2006)	FY2008 first quarter (April 2007 through June 2007)	Increase (Decrease)
Japan	543,228	500,632	(42,596)
North America	747,330	762,599	15,269
Europe	307,382	332,521	25,139
Asia	192,632	221,667	29,035
Other	300,485	344,746	44,261
Overseas total	1,547,829	1,661,533	113,704
Total	2,091,057	2,162,165	71,108

Honda Motor Co. may double North American production of its compact CR-V, the best-selling sport- utility vehicle in the U.S., as demand for large, truck-based SUVs fades, according to two analysts.

CR-V sales jumped 44 percent this year to 167,223 through September, eclipsing Ford Motor Co.'s Explorer, the U.S. leader in 14 of the past 15 years, at 108,535. Tokyo-based Honda wants 80 percent of the autos it sells in the U.S. to be made in North America, meaning a shift in CR-Vs, now mostly imported.

Honda and Toyota Motor Corp. are expanding North American production as U.S.-based General Motors Corp., Ford and Chrysler LLC close plants to adjust to shrinking U.S. sales. U.S. gasoline prices that reached a record $3.227 a gallon in May have made efficient small SUVs such as the CR-V and Toyota's RAV4 more appealing.

Honda began building CR-Vs in East Liberty, Ohio, late last year after previously importing them from Japan and the U.K. The Ohio plant turned out 38,000 CR-Vs through September, and will likely produce a total of 57,000 this year, said Mike Jackson, an automotive analyst at consulting firm CSM Worldwide in Northville, Michigan.

Last month, Honda began assembling CR-Vs in El Salto, Mexico. That should help boost North American production to 116,000 next year, Jackson said. By 2009, CR-V output from the two plants may rise to 200,000, enough to satisfy U.S. demand, Global Insight's Madden said.

Through September, 77 percent of Honda cars and trucks sold in the U.S. this year were made in the U.S., Canada or Mexico, down from 78.3 percent a year ago. The slip in locally sourced vehicles was due to a 28 percent jump in CR-V imports.

Among Honda's seven light truck models sold in the U.S., the CR-V is the only one not built exclusively in North America.

Honda's effort to boost North American production comes amid dramatic changes in the U.S. auto industry's hierarchy.

Toyota, Japan's largest carmaker, passed Chrysler to rank third in the U.S. in 2006, and this year is outselling Ford and trails only GM in U.S. sales. Toyota's RAV4 is the second best- selling SUV, followed by Ford's compact Escape model.

Honda outsold Chrysler in July and could pass the automaker to rank fourth in the U.S. as early as 2009, market analyst Jesse Toprak of Edmunds.com has said. Through September, Honda's U.S. market share was 9.7 percent, compared with 12.8 percent for Chrysler.

Honda's American depositary receipts rose 29 cents to $34.48 at 4:22 p.m. in New York Stock Exchange composite trading. They have declined 13 percent this year.

Japanese automakers are poised to take a big step into South Korea amid increasing demand for foreign vehicles in one of Asia’s largest auto markets. Nissan Motor recently held a press conference in Seoul and announced that it would start selling cars in Korea within a year. It will be the second time that a Japanese carmaker has advanced into the South Korean market, following Honda. Years ago in Korea, Nissan launched its Infinity model and Toyota unveiled the Lexus series. If foreign companies start bringing mid- and low-cost cars to South Korean customers, it will deal a significant blow to the local auto market, where homegrown brands such as Hyundai Motor and Kia Motors have long been dominant, experts say.

Nissan is considering launching its cross-over sports utility vehicle, the Rogue, its mid-size Murano SUV, and its mid-size Altima sedan in South Korea. Gregory Philips, head of Nissan Korea, said that the final decision on which models will be launched here will be decided by the end of the first half of next year through close consultation with its Japanese headquarters.

Nissan cited Honda, Volkswagen and Chrysler as its possible rivals in South Korea. However, Nissan’s Altima could impose a threat to Hyundai Motor’s representative car, Sonata, Kia Motors’ Lotze and Renault Samsung’s SM series. Altima, which is being produced on Nissan’s U.S. production lines, is currently vying with Toyota’s Camry, Honda’s Accord and Hyundai’s Sonata in the local market. The Japanese carmaker would have an advantage in South Korea thanks to a strong local currency and a free trade deal reached between Seoul and Washington under which an 8-percent tariff imposed on cars imported here will be removed.

Among other things, Nissan’s advance into the South Korean market could spark competition with its Japanese rival, Toyota. Both have been focused on their luxury car models, which target high-end customers. But if they expand their available line-up, it would likely reshape the local auto market from the ground up, meaning that Japanese cars could threaten local brands. Though Toyota said the company has no immediate plans to enter the South Korean market in earnest, experts say that it is just a matter of time before it makes such a move.

Against this backdrop, Japan’s fourth-largest automaker, Mitsubishi Motors, will bring its product line to the South Korean market starting June next year as it has signed a deal with Daewoo Motor Sales under which the Korean company will sell the Japanese vehicles in Korea. So far it has been a three-way competition among Toyota’s Lexus, Honda and Nissan’s Infiniti. But the competition is sure to intensify with two more rivals in the picture.

Since 2000, Japanese automakers have been expanding their presence in South Korea. During the first nine months of this year, their market share in the imported car market stood at 32 percent, ranking a close second after their German rivals, whose combined share stood at 35 percent. That figure compared with the less than 20 percent recorded in 2003. Yun Dae-sung, an executive member of the Korea Automobile Importers & Distributors Association expected that Japanese carmakers’ advance would accelerate further with the introduction of inexpensive and convenience-focused models that follow the tastes of Korean customers.

Ford Motor Company and Mazda Motor Corporation recently announced plans to invest more than US $500 million in a new, highly flexible small passenger car plant at AutoAlliance Thailand (AAT) – the successful joint venture of the two global automotive leaders. Senior executives from Ford and Mazda made the announcement at a press conference in Bangkok.

The new, flexible small car plant will utilize the same automated systems and processes, and state-of-the-art auto manufacturing technologies as the Changan Ford Mazda plant that was launched last month in Nanjing, China.

AAT will begin manufacturing Ford and Mazda's respective small cars in 2009, which will compete in what the auto industry refers to as the “B-car” category. AAT will also be able to accommodate a more diversified range of products in the future, with simultaneous production of different passenger cars that extend up through the mid-size segment.

Plans for the small car production plant call for a new stamping line and body shop, new trim and final process area. A completely refurbished paint shop will utilize the environmentally friendly three-wet technology paint process, which dramatically reduces VOC and CO2 emissions and waste and improves paint quality. Additionally, warehouse storage will be expanded to handle the increased production volume, and a new employee cafeteria will be built.

Ford and Mazda have already jointly invested more than US $1 billion in the vast AAT facility. This new investment underscores the strategic role that AAT will continue to play as a regional production hub for both Ford and Mazda, as well as their confidence in the facility's ongoing success. AAT celebrated the production milestone of 1 million units earlier this year, reaching it nearly two years ahead of schedule.

The total investment value will be split evenly between Ford and Mazda, and increase AAT's potential production capacity to 275,000 units from its current annual 175,000, including both complete built up (CBU) units and complete knock down (CKD) units. In addition to domestic sale, Ford and Mazda plan to export their respective small cars manufactured at AAT to markets in the ASEAN region, as well as Australia, New Zealand and South Africa.

The world-class AAT plant is already one of the largest and most modern automotive manufacturing facilities in Southeast Asia, exporting Ford and Mazda pickup trucks to more than 130 markets around the world. Leveraging the collective practices of the Ford-Mazda partnership, AAT has helped set standards for auto manufacturing in the ASEAN region, through its ongoing commitment to world-class quality, standards and procedures.

AAT currently purchases approximately Bt.60 billion (US$1.72 billion) worth of components annually from 177 different suppliers – 90 percent of which are local, representing one of Thailand's largest domestic supply networks.

The facility currently employs about 3,600 staff, including engineers, technicians and skilled assembly workers. AAT says it will hire an additional 2,000 employees by the time the new production commences in 2009, which in turn, will result in up to 6,000 indirect jobs being created.

In 1995, Ford and Mazda jointly identified Thailand as a strategic part of their investment and expansion plans in the Asia Pacific region, and laid the groundwork for AAT to establish Thailand as a global manufacturing hub to serve growing demands in both the domestic and export markets.

Following its promotional privileges grant by the Board of Investment (BOI) the same year, AAT invested more than US$500 million to build Thailand's first state-of-the-art, integrated vehicle manufacturing plant. The AAT facility currently includes stamping; body construction; paint, engine, trim & final assembly; and CKD packing facilities; covering more than 529 rai of land in the Eastern Seaboard Industrial Estate in Rayong province.

In addition to its production successes, AAT and its staff continue to be actively involved in the development of surrounding communities, participating in programs that range from donations for education supplies and equipment, to volunteering for disaster relief assistance and environmental preservation initiatives.

General Motors Corporation and its Shanghai General Motors joint venture on September 24 signed a multi-year agreement worth more than $800 million to export U.S.-built Buick Enclave premium crossover sport utility vehicles along with other vehicles and components to China beginning in 2008.

The agreement was signed in the presence of China assistant vice minister of commerce Chen Jian; Chinese Embassy officials; U.S. Assistant Secretary of Commerce Israel Hernandez; GM vice president of global sales, service and marketing operations John Middlebrook; and Shanghai GM executive vice president Robert Socia.

The all-new Buick Enclave is built at GM’s Lansing Delta Township assembly plant in Lansing, Mich. Enclave is one of GM’s most sought-after vehicles in North America because of its stylish, modern design and high level of standard features. Introduced earlier this year, the Enclave has received enthusiastic reviews and has helped lead General Motors’ recent sales increase in its home market.

According to Shanghai GM president Ding Lei, “Shanghai GM has become a leader in the production and sale of passenger cars in China, driven largely by the success of the Buick brand. These new Buick premium sport utility vehicles will strengthen our lineup and enable us to continue to meet the changing needs of our growing base of customers.”

The Buick agreement is the second of two China export agreements signed by GM this year. In May, GM signed a deal to export $700 million worth of Cadillacs and automotive components to China from the United States. GM’s China operations have already imported about $3.5 billion worth of vehicles, components, equipment and machinery from North America over the past 10 years.

Enclave will be imported by Shanghai GM and sold through its network of nearly 400 Buick dealerships across China. The new model will complement the rest of Shanghai GM’s popular Buick lineup, which includes the Park Avenue and LaCrosse premium sedans, Regal upper-medium sedan, Excelle family, and GL8 and FirstLand executive wagons.

GM operates seven joint ventures and two wholly owned foreign enterprises and has more than 20,000 employees in China. GM, along with its joint ventures, offers the broadest lineup of vehicles and brands among automakers in China.

Products are sold under the Buick, Cadillac, Chevrolet, Opel, Saab and Wuling nameplates. In 2006, sales of vehicles by GM and its joint ventures rose 31.8 percent on an annual basis to a record 876,747 units.

Ryder System, Inc. (NYSE: R), a global leader in transportation and supply chain management solutions, today announced the completion of its previously announced acquisition of substantially all the assets of Pollock NationaLease, one of Canada's largest privately owned commercial truck leasing and rental companies, as well as Pollock's transportation-based logistics operations.

The acquisition is expected to add approximately $43 million in annualized revenue, of which approximately 55 percent is related to commercial truck leasing and rental business, and 45 percent is related to the company's transportation-based logistics business. Ryder anticipates earnings improvement in future years resulting from synergies and operational improvements within the combined companies.

In the transaction, Ryder acquired Pollock's fleet of approximately 2,000 vehicles, six service locations, and nearly 200 contractual customers served by the Ontario locations of Sarnia, Windsor, London, Baden, and Milton, as well as the Moncton, New Brunswick location. Ryder expects to consolidate four overlapping locations from among the combined operations in order to upgrade and increase its capacity to serve customers. The combined network will operate under the Ryder name.

"We're pleased that Ryder's strong balance sheet and the improved financial position we have established over the past few years have enabled us to acquire a reputable company with a solid track record and strong commitment to serving customers," said Ryder Chairman and Chief Executive Officer Greg Swienton. "This acquisition strengthens our network and product offering in key markets, bringing a wide range of transportation and logistics solutions, expanded service locations, innovative technologies, operational efficiencies, and global resources to the Canadian marketplace."