Industry Fails to Climb Back to 10-Million SAAR; Culprit Likely Cash For Clunkers
By Bill Visnic
With several industry consultants and analysts predicting U.S. auto sales would exceed a 10-million-unit Seasonally Adjusted Annualized Rate in June - a much-anticipated watershed many believed would signal slumping auto sales are beginning a consistent recovery - the real numbers didn't quite match the optimistic projections.
Instead, June's SAAR not only failed to hit the 10-million mark, the 9.66-million final tally even regressed from May's figure, according to data analysts at Edmunds.com.
One likely (but unintentional) culprit: the new "Cash-for-Clunkers" legislation signed by President Obama on June 24.
(Read more...)
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Led by Surging Ford, June Sales Ratcheted Reassuringly
By Dale Buss, Michelle Krebs and Bill Visnic
Automakers expressed more optimism about the U.S. car market despite the fact that overall sales in June fell by 28 percent compared with a year ago, to 859,420 vehicles. That represents only a slight improvement in year-ago comparisons over results for the first five months of this year.
Jesse Toprak, executive director of Industry Analysis for Edmunds.com, characterized the month cautiously. "It means, if nothing else, that things are not getting any worse, although things are not getting that much better, either. There was a lot of volatility, but there were signs of life."
Toprak added that June was "probably the best retail-demand month of the year."
(Read more...)
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June Car Sales Expected To Show Some Stabilization
Automakers selling vehicles in the U.S. report their June sales Wednesday, and the results are expected to show some stabilization in the business or at least a slowing of the decline.
The Seasonally Adjusted Annualized Rate (SAAR) is expected to come in at its highest level so far this year and could touch 10 million vehicles, according to a forecast by Edmunds.com, parent of AutoObserver.com.
(Read more...)
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June Is Priciest Ever for Automaker Incentives, Edmunds.com Reports
SANTA MONICA, Calif. -- Automakers spent more in June on incentives than any June on record, Edmunds.com reports.
The average automaker incentive was $2,930 per vehicle sold in June up $489 -- or 20 percent, from a year ago, Edmunds.com estimates. Incentives were down a scant $22, or 0.8 percent, from May.
"June incentives have never been higher, but we anticipate that the tide is about to turn," said Jesse Toprak, Edmunds.com's executive director of Industry Analysis. "The effects of recent production cuts are starting to be felt, and as supply dwindles, incentives will fall."
(Read more...)
Posted by Michelle Krebs at 4:42 AM under Analysis , Chrysler , Featured , Ford , GM , Toyota | Comments (0) | digg this | del.icio.us
"Good" GM: Maybe Not All That Good
By Bill Visnic
General Motors's Chapter 11 bankruptcy is winding its way toward completion -- perhaps even quicker than the lickety-split Chrysler bankruptcy restructuring. And everybody knows the plan, as it was with Chrysler, is to leverage the now-famous section 363 of the bankruptcy code to create a "good" GM that sallies forth with all of the company's best assets.
In addition to the numerous hard parts -- assembly plants, stamping facilities, powertrain- and other major component-making operations -- the "good" GM will comprise four major marketing divisions: Chevrolet, Cadillac, GMC and Buick.
Chevy need make no excuses: it is the domestic counterpart of Toyota, a sales channel for unapologetically mainstream cars and trucks that remains one of the most effective brands on the planet. 
But Buick, Cadillac and GMC? Be careful, "new" GM and Obama Administration Auto Industry Task Force: recent sales and market-share data compiled by Edmunds.com shows these brands may not be the rock-solid foundation for the leaner, meaner GM they've led the company's new taxpayer-owners to believe is coming.
(Read more...)
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GM To Close Louisiana Truck Plant
By Michelle Krebs
DETROIT -- General Motors will close its assembly plant and stamping operations in Shreveport, Louisiana, by 2012. The plant currently makes the midsize Chevrolet Colorado and GMC Canyon pickup trucks and Hummer H3 and H3T models.
It looked like only a few weeks ago that the Louisiana plant had dodged the plant-closing bullet when GM announced the sale of its Hummer brand to a Chinese company.
GM said then that if the sale goes through as planned during the third quarter, the Louisiana plant would be making Hummers for the new owner through "at least" 2010. Now the future of the H3, H3T -- as well as GM's small trucks -- is questionable.
(Read more...)
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June Sales To Hit 10 Million SAAR; Detroit Share Improves, Edmunds.com Forecasts
SANTA MONICA, Calif. - June vehicle sales will hit their highest level of 2009 with a 
Seasonally Adjusted Annualized Rate of 10.1 million when manufacturers report them Wednesday, Edmunds.com forecasts.
"The SAAR is finally back in double-digits," observed Jesse Toprak, Edmunds.com's executive director of Industry Analysis. "We're still a long way from 16 million unit sales, but things are moving in the right direction.
General Motors and Chrysler, which both were in Chapter 11 bankruptcy during the month, are expected to post market share gains in June compared with May, proving yet-again -- contrary to conventional wisdom -- that consumers will, indeed, buy cars from a bankrupt manufacturer, at least in these current tumultuous times.
Honda and Hyundai also are forecasted to show May-to-June market share gains. The gains come at the expense of share declines for Ford, Nissan and Toyota. Despite Ford's dip, the share for Detroit automakers is estimated to come in at 47.0 percent in June, up from 46.6 percent in June 2008 and from 46.5 percent in May.
(Read more...)
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GM, Chrysler Models Top List of Slowest Sellers, Edmunds.com Reports
Vehicles sold by General Motors and Chrysler, both of which filed for Chapter 11 bankruptcy 
in recent months, dominated a list of the 15 slowest sellers in May, according to an analysis by Edmunds.com, parent of AutoObserver.com.
Of the 15 slowest-selling vehicles, 12 were made by American automakers. GM and Chrysler dominated the list. Ford had one vehicle on the list - the Mustang.
"It's really a reflection of a misstep of the American automakers," Edmunds.com analyst Jessica Caldwell.
Models from Korean brands, Kia and Hyundai, rounded out the list of 15 slow sellers.
(Read more...)
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Vehicle Quality Improves Despite Bumpy Financial Ride
By Michelle Krebs
DETROIT -- The financial turbulence of the global auto industry has not hurt vehicle quality. Quite the opposite, according to new data released Monday by J.D. Power and Associates.
"Vehicle quality is better than it has ever been," Dave Sargent, J.D. Power's vice president of automotive research, told the Automotive Press Association here as he announced the results of the 2009 Initial Quality Study. The study measures defects reported by buyers in the first 90 days of ownership.
"There's a positive disconnect. There's no correlation between the financial side of the business and the production side," said Sargent. "Despite the turbulence on the business side and concern for the future of their own jobs, the people who design and build vehicles are getting on with their jobs and keeping their eye on the ball. That's remarkable."
(Read more...)
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New Incoming Rounds in Hybrid War
By Bill Visnic
When gasoline prices plunged early this year, sales of hybrid-electric vehicles went South, too.
Quickly.
The timing may be unfortunate, but major hybrid players Toyota Motor Corp. and Honda Motor Co. Ltd. launched new hybrids this spring -- and both seem determined to grub out a larger portion of the yo-yoing hybrid market. That battle, the latest summertime jump for gasoline prices and the U.S. auto market's continuing gyrations are once again cranking up the attention on hybrids.
(Read more...)
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Cash for Clunkers Up for Votes This Week
The so-called Cash for Clunkers legislation is up for a vote in the U.S. House of Representatives Tuesday with a Senate vote to follow shortly. If passed, the measure should be in effect sometime between July and September.
The legislation, which allows consumers to receive vouchers worth up to $4,500 on their trade-ins of clunkers for more fuel-efficient vehicles, may generate added sales of about 500,000 new vehicles this year, said Jesse Toprak, executive director of Industry Analysis for Edmunds.com, parent of AutoObserver.com.
(Read more...)
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In Trucks, Bare-Knuckles Marketing Continues
By Dale Buss
In a throwback to a simpler era, the new Ford F-150's drop-down tailgate step has become an entertaining flashpoint in the marketing war between heavyweights in the pickup-truck segment.
In a current TV ad for the Silverado, Chevrolet's celebrity pitchster, Howie Long, tweaks the addition of the "man step" to the F-150 as an embarrassment -- because it only helps make up for the unreasonably long reach required to get over the tailgate to the bed of the F-150.
But Ford executives assert that Chevy's gambit actually highlights an appealing innovation for potential truck buyers -- and makes them more likely to choose an F-150.
"Our steps have done very well, because they're selling at about 30 percent of the mix of our F-150s," said Doug Scott, Ford's truck marketing manager. "So I hope GM keeps running the ad [in which] they're panning it."
(Read more...)
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Edmunds.com Announces Consumers' Top Rated Vehicle Awards
SANTA MONICA, Calif. -- Edmunds.com has announced the winners of the Edmunds.com Consumers' Top Rated vehicle awards for 2009.
The winners were chosen through Edmunds.com's Consumer Ratings and Reviews feature, which allows owners to evaluate their new or used vehicles in eight different categories: performance, comfort, fuel economy, driving impressions, interior design, exterior design, build quality and reliability.
(Read more...)
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Lexus Says Luxury Car Sales May Be Coming in From the Cold
By Bill Visnic and Michelle Krebs
DETROIT -- Admitting the industry and economic downturn has taken a hard toll on luxury-car sales and possibly altered, at least for awhile, customers' thinking about their "wants" versus their needs, the sales boss for Toyota Motor Sales USA's Lexus luxury division says the worst may have passed.
Mark Templin, Lexus group vice president and general manager, says luxury has been beaten down -- maybe even disproportionately in relation to the battered overall auto market -- but he believes customers will come back to luxury cars, despite enduring a once-in-a-generation recession.
(Read more...)
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May Car Sales: Flirting with 10-Million SAAR
By Bill Visnic, Mary Connelly, Michelle Krebs
DETROIT - It's far too premature to break out the champagne and even too early to finally call the absolute bottom of one of the worst auto sales slumps in decades. But May sales reports from auto manufacturers in the U.S. hinted the worst just may be over.
"We saw glimmers of hope in May sales reports," said Jesse Toprak, executive director of Industry Analysis for Edmunds.com, parent of AutoObserver.com.
(Read more...)
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Japanese Automaker Incentives Hit New Record, Edmunds.com Estimates
SANTA MONICA -- Proof that the U.S. car market is in chaos: two automakers in bankruptcy are generating huge interest from car shoppers; Japanese automakers are spending record amounts on incentives, and luxury-maker Mercedes-Benz was the highest incentive spender of all brands in May.
"The industry is chaotic right now and every automaker is struggling to find something that works," stated Jesse Toprak, executive director of Industry Analysis for Edmunds.com. "Many of the bankrupt brands are drawing an impressive amount of attention from bargain-hunters, but the rest of the automakers have their work cut out for them."
As auto company sales reports poured in Tuesday, Edmunds.com estimated the average automotive manufacturer incentive in the U.S. was $2,946 per vehicle sold in May, down $111, or 3.6 percent, from April, and up $622, or 26.8 percent, from May 2008.
(Read more...)
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May Car Sales: Ever-So-Small Hint of Hope
SANTA MONICA, Calif. -- May car sales, due to be reported by auto manufacturer Tuesday, remain off by double-digits from last year, but the sales increase from April to May is in line with typical April-May seasonal bumps and the drop from a year ago is largely due to lower fleet sales, according to Edmunds.com's forecast.
For May, manufacturers are expected to report new vehicle sales -- retail and fleet -- of 890,000 units, a 36.1 percent decrease from the 1.4 million sold in May 2008 but an 8.9 percent increase from the 817,000 sold in April. A typical seasonal increase between April and May is a 9 percent rise. When adjusted for this difference in the number of selling days in May versus a year ago, sales decreased 33.6 percent.
That would put the Seasonally Adjusted Annualized Rate at about 9.5 million vehicles, up from 9.3 million in April.
(Read more...)
Posted by Michelle Krebs at 8:24 AM under Analysis , Chrysler , Companies , Featured , Ford , GM , Toyota | Comments (0) | digg this | del.icio.us
End in Sight for U.S. Recession; Recovery Modest
The end is in sight for the recession, the worst in U.S. history since World War II that is now in its 17th month, but the recovery will be modest, a new poll indicates.
The survey of 45 professional forecasters released by the National Association of Business Economists (NABE) Wednesday showed about three-quarters expected the economic downturn to end by the third quarter of this year. The other quarter said the upturn would be in the fourth quarter this year or early 2010. None believed it would go beyond the first quarter of 2010.
However, of those who saw an upcoming recovery, they predicted a more moderate one compared with those after previous downturns because of continued job losses and plummeting home prices.
The survey comes on the heels of U.S. consumer confidence, still at historically depressed levels, surged to its highest level this month since last September.
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Diesel-Fuel Price Plunges; Will Engines Be Revived?
By Bill Visnic
The price of diesel fuel dipped to less than the price of a gallon of regular unleaded gasoline earlier this month, according to the Energy Information Administration (EIA).
The price inversion followed what the EIA said is a "traditional" spring transition for the price of the two fuels. But it also ends extensive auto-industry hand-wringing about the price of diesel, which for some time has not followed historic patterns and many blame for derailing ambitious plans to launch diesel-powered light vehicles in the U.S. market.
(Read more...)
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Consumer Car-Buying Intent Rises With Confidence
Consumer confidence, a key factor in car buying, rose in May by the most in six years and 
at a level not seen since last September.
What must be music to automakers' ears is the fact that the Conference Board's report showed that Americans planning to buy a car in the next six months rose to the highest level since April 2008.
The Conference Board's index came in significantly higher than expected at 54.9. The Conference Board cited as reasons for the rise as more optimism about the future job market, climbing stock prices, falling mortgage rates and speculation that the recession's end is in sight.
(Read more...)
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Feds' New MPG Mandate May Collide With Buyer Preferences
By Bill Visnic
The Obama administration's "Kennedy moment" of announcing high-minded new Corporate Average Fuel Economy (CAFE) standards of 39 miles per gallon for passenger cars and 30 mpg for light trucks by 2016 drew kudos across the nation this week -- even from the automakers.
The new CAFE numbers sound great. But judging by the popularity of the vehicles on sale right now that comply with the ambitious new targets, car buyers might not stampede to get their hands on the future high-mileage wunderkars.
To be blunt, many of today's vehicles that can comply with the new CAFE numbers -- mostly compact or subcompact cars, hybrid-electric vehicles or four-cylinder crossovers or pickups -- are not exactly sales overachievers. For example, of the 100 most purchased vehicles in the U.S., only 17 could comply with the new fuel economy standards.
(Read more...)
Posted by Michelle Krebs at 12:01 PM under Analysis , Chrysler , Companies , Featured | Comments (16) | digg this | del.icio.us
Terminated Chrysler Dealers Offer Bargains, Earn Slim Profits, Edmunds.com Reports
SANTA MONICA, California -- Chrysler dealerships, whose franchise agreements have been terminated by the automaker effective June 9, are making significantly less profit on each vehicle sale, in large part, because they are offering the best deals to customers, Edmunds.com's analysis shows.
Profit margins for ill-fated Dodge dealerships are currently earning about $825 less per car, while closing Jeep dealerships are earning approximately $1,200 less per car.
(Read more...)
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CAFE, EPA Math: 35 Equals 26
By Michelle Krebs
One fully expected those gathered Wednesday in the White House rose garden -- environmentalists, captains of the global auto industry and government officials -- to break out into a rousing chorus of Kumbaya.
Everybody, including dueling parties normally at odds, expressed their delight with President Obama's announcement of the more stringent and earlier-than-planned fuel-economy and emissions standards that would be applied from sea to shining sea.
However, as in all things involving politics, the new fuel-economy standards aren't what they seem.
"Turns out that there are loopholes almost big enough to drive an SUV through," quipped Edmunds.com CEO Jeremy Anwyl.
(Read more...)
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Pickups Sales Plunging But Ford Buyers Spending More - What Gives?
By Bill Visnic
DETROIT -- By now, everyone knows the raw sales numbers are bloody red: the full-size pickup market was one of the first to be savaged by last summer's high gasoline prices and by the end of 2008, pffft -- five points of market share and some three-quarters of a million units were gone.
Maybe never to return. At least to the segment's former glories.
But there may be a sliver of a silver lining in the pickup sales plunge. At least one automaker -- Ford Motor Co. -- says those still buying pickups are splurging. Since its launch late last year, the "mix" of Ford's new '09 F-Series has been unexpectedly rich, slanted toward more expensive and heavily optioned models and trim levels.
The best example: the F-Series' ultra-plush Platinum -- the new top-of-the-line trim level -- has run at 8 percent of the total F-Series mix. Ford predicted a 3 percent take rate.
(Read more...)
Posted by Bill Visnic at 6:00 AM under Analysis , Business , Companies , Featured , Ford | Comments (1) | digg this | del.icio.us
Cash for Clunkers: Sales Boom If Quick; Bust If It Stalls
SANTA MONICA, Calif. -- A Cash for Clunkers program edging its way through Congress could create a desperately needed sales boom for automakers and their dealers if Congress moves quickly, according to Edmunds.com's analysis.
However, if legislation lingers in Congress too long, new-car sales could stall as consumers wait for the final program to be passed.
"Congress needs to pull the trigger," says Edmunds.com CEO Jeremy Anwyl. "The more the publicity on Cash for Clunkers, the more likely sales will drop off as people wait."
(Read more...)
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The Obama Bounce? Chrysler Purchase Intent Up, Edmunds.com Says
SANTA MONICA, Calif. -- Despite General Motors and Chrysler executives insisting for months that the spigot for sales and shoppers would shut off with a bankruptcy filing, quite the opposite has occurred with Chrysler of late, according to data collected by Edmunds.com, parent of AutoObserver.com.
On Thursday, Chrysler filed for Chapter 11 reorganization in bankruptcy court. Since then, the visitors on Edmunds.com's Web site who are shopping for Chrysler models shot up 15 percent. By comparison, GM's shopping consideration dropped 6 percent since Thursday and Ford's was up 7 percent.
"Maybe It's the Obama bounce," suggests Edmunds.com CEO Jeremy Anwyl.
(Read more...)
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Chrysler's Challenge: Finding Customers During Bankruptcy
By Michelle Krebs
DETROIT -- Chrysler has launched a major advertising campaign, to be coupled with a cash and dealer incentives, in its effort to convince new buyers to purchase Chrysler, Dodge and Jeep vehicles and keep current owners in the fold.
But even before it officially filed for Chapter 11 bankruptcy last Thursday, Chrysler was struggling to maintain its once-loyal buyers. In the months leading up to Chrysler's bankruptcy filing -- and despite some of the highest incentives ever in the U.S. auto industry doled out by Chrysler -- the automaker's customer loyalty has dropped on the news of its financial duress. Customer loyalty fell below 50 percent in April, according to Edmunds.com's data. That is, less than half of Chrysler owners who traded in their vehicle did so for another Chrysler, Dodge or Jeep vehicle.
(Read more...)
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Saturn Blazed Ahead of Its Time, Then Faded Into Oblivion
By Dale Buss
Around mid-February when General Motors placed Saturn on the chopping block, number-crunchers at Edmunds.com were shocked to discover how badly the brand had eroded -- already more than a year ago.
Edmunds.com figures showed that way back in January 2008, Saturn customers were demonstrating the least loyalty of any in the entire U.S. auto industry: Fewer than 5 percent of those who traded in a Saturn purchased another one.
That paltry showing contrasted with a loyalty factor for all of 2008 of more than 51 percent for Subaru, nearly 49 percent for Hyundai, and more than 47 percent even for Saturn's sibling brand, Chevrolet.
"Saturn's numbers even back then were horrendous," said Jessica Caldwell, industry analyst for Santa Monica, California-based Edmunds. "They had lost their message along the way. Saturn wasn't sporty, wasn't utility-oriented, wasn't even necessarily value-oriented. It had just become a one-off of other GM products."
(Read more...)
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High Incentives Spending May Be Hurting Some More than Helping, Says Edmunds.com
SANTA MONICA, Calif. - Sky-high incentives spending is reaching a point of diminishing returns and actually may be hurting some automakers more than helping.
"For some automakers, March's high incentives diluted brand image and hurt residual values while delivering only a negligible lift in sales," said Jesse Toprak, executive director of Industry Analysis for Edmunds.com. "The April sales reports may prove that there is a point of diminishing returns for incentives spending."
(Read more...)
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April Car Sales: The Bottom's Around Here Somewhere
By Dale Buss, Michelle Krebs and Bill Visnic
April's auto sales numbers looked pretty much like those from March, and February, and January - abysmal. Industrywide sales plunged by 34 percent last month compared with a year earlier, continuing the first-quarter trend of dreadful comparisons tied to a moribund economy.
But in those April results, carmaker executives and analysts on Friday also thought they saw more than just the latest in a long string of awful comparisons with 2008. Almost to a person, they interpreted April's performance and other economic data as painting at least a near bottom of the dreadful U.S. car market - and as the harbinger of an eventual recovery.
"We won't truly be able to call the bottom until summer when we can look back at three consecutive months of increase in the annualized rate of sales," said Jesse Toprak, executive director of industry analysis for Edmunds.com. "We had expected April would be the start of that. And April's annualized sales rate, while lower than March, still didn't dip to February level."
(Read more...)
Posted by Michelle Krebs at 8:49 AM under Analysis , Chrysler , Companies , Featured , Ford , GM , Toyota | Comments (2) | digg this | del.icio.us
April Auto Sales: SAAR Rises to 10 Million, Edmunds.com Forecasts
SANTA MONICA, Calif. -- April vehicle sales are looking like they will come in at a Seasonally Adjusted Annualized Rate of 10 million. That's certainly nothing to brag about in normal times and compared with the last decade. Still, April looks to be the best month in several and up from 9.1 million in February.
"The industry is slowly picking up much-needed momentum; a 'cash for clunkers program' could help while an automaker bankruptcy could hurt, depending on how consumer confidence is affected," said Jesse Toprak, executive director of Industry Analysis for Edmunds.com.
(Read more...)
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Ford To Report Hefty Loss, but Remain Loan-Free
Ford Motor Co. reports its first-quarter financial results on Friday and is expected to lose 
$3.2 billion for its largest first-quarter loss in 17 years, according to the average of analysts by four analysts surveyed by Bloomberg News.
Still, Bloomberg reported, Ford is likely to be able to steer clear of loans from the U.S. government, like those as General Motors and Chrysler have required. Loan-free Ford is expected to benefit from loan-laden GM and Chrysler, who still may be forced into bankruptcy. Analysts believe Ford has made enough cost reductions to maintain sufficient liquidity to 2010.
Posted by Michelle Krebs at 7:11 AM under Analysis , Ford | Comments (0) | digg this | del.icio.us
Goldman Ups Its 2009 Car Sales Forecast
Goldman Sachs has increased its forecast for 2009 new vehicle sales from 10 million to 11 million.
Goldman analyst Patrick Archambault said his optimism comes from the likelihood that Congress will pass a cash-for-clunkers bill, one that could add 750,000 to 1 million vehicle sales this year as consumers turn in their old cars for new new ones for a government rebate. Archambault also sees improvement in consumer confidence.
(Read more...)
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GM Extends Summer Breaks To Slash Bloated Inventories
By Michelle Krebs
DETROIT - General Motors plans to extend its usual summer shutdown from two weeks to as much as two months for many of its North American assembly plants as it attempts to reduce its record-high inventories of unsold vehicles.
GM's inventories, among the highest in the industry, are the highest since Edmunds.com began keeping records. Sales, and in turn revenues, have not picked up as GM had hoped as the slow sales months of the summer approach.
The move clearly is anticipation as well of a possible Chapter 11 filing that, GM has long argued, would shut off the sales tap even further as customers steered clear of a bankrupt company.
(Read more...)
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Toyota Prius Beats Honda Insight in Edmunds' Inside Line Comparison Test
SANTA MONICA, Calif. -- The 2010 Toyota Prius beat the 2010 Honda Insight in a comparison test conducted by Inside Line, Edmunds.com's online enthusiast car magazine.
"The 2010 Toyota Prius is quicker, it stops shorter and, with its smoother ride quality and quieter cabin, it's the one you want to be in when commuting," says Erin Riches, Edmunds' Inside Line senior editor.
In the comparison test, the 2010 Honda Insight was praised for its steering and for the responsiveness of its continuously variable transmission (CVT).
(Read more...)
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Bankruptcy Expert: GM "Quick Rinse" Bankruptcy Risks "Rinse And Repeat"
DETROIT -- Reports have heated up of late that General Motors will file for Chapter 11 
bankruptcy in late spring or early summer, emerging as a smaller but viable company in as little as two weeks or two to four months at most in a so-called "quick rinse" bankruptcy.
Both of these scenarios are exceedingly optimistic, say bankruptcy experts at the Detroit-based law firm of Plunkett Cooney. And done too quickly, a GM bankruptcy may become a 'rinse and repeat' bankruptcy," said Doug Bernstein, head of Plunkett Cooney's Banking, Bankruptcy and Creditors' Rights practice group.
(Read more...)
Posted by Michelle Krebs at 5:50 AM under Analysis , Chrysler , Companies , GM | Comments (0) | digg this | del.icio.us
Chrysler-Fiat: "Value" for Fiat Means "Free"
By Bill Visnic
With a May 1 deadline to make a deal with stakeholders -- a prerequisite of subsequently partnering with Fiat S.p.A. -- bearing down on Chrysler LLC lest the Obama administration's Auto Task Force take Chrysler into some form of bankruptcy, the posturing is heating up, particularly from Fiat Chief Executive Office Sergio Marchionne.
First, Marchionne threatened Fiat will deep-six its offer to tie up with Chrysler if the company cannot wrest further wage concessions from its U.S. and Canadian labor unions, concessions presumably to bring wages to parity with non-unionized Japanese transplant automakers in the U.S.
The unsubtle warning failed to immediately produce the desired result from either the United Auto Workers or the Canadian auto workers unions.
(Read more...)
Posted by Michelle Krebs at 4:18 AM under Analysis , Chrysler , Commentary , Featured | Comments (0) | digg this | del.icio.us
U.S. Manufacturing Slashing Cost Gap
A new study brings a glimmer of positive news for the embattled U.S. manufacturing sector, 
saying U.S. producers are making headway in reducing structural costs.
The Manufacturing Institute and the Manufacturers Alliance/MAPI says U.S. manufacturers have reduced five primary structural-cost measures compared with foreign manufacturers that make a comparable product, according to a commentary in the Pittsburgh Post-Gazette.
The study, aided by the accounting firm of Deloitte and reported by Deloitte employee Dmitri D. Shiry to the Post-Gazette, says the structural-cost "gap" between U.S. manufacturers and foreign producers making a similar product was cut to 17.6 percent in 2007 versus 31.7 percent in 2006. The 2006 disadvantage of 31.7 percent was a markedly worse figure than 2004's structural-cost gap of 22.4 percent.
(Read more...)
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Take My Pickup - Please
By Bill Visnic
Headlines declared the auto industry achieved a showroom mini-victory in March by markedly improving sales over a dismal February. But the improved numbers were something like lipstick on a pig as March's boost nonetheless concealed some ugly realities.
One of the most foreboding trends to continue despite the March uptick: the still-accelerating plunge of the full-size pickup truck market. If segment sales do not stabilize this year, revenue-ravaged automakers may have to take drastic measures.
(Read more...)
Posted by Michelle Krebs at 10:42 AM under Analysis , Chrysler , Featured , Ford , GM | Comments (2) | digg this | del.icio.us
Chevrolet Camaro Wins Edmunds' Inside Line Muscle Car Comparison Test
SANTA MONICA, Calif. -- Inside Line, Edmunds.com's online car magazine and sister site 
of AutoObserver.com, announced Wednesday that the 2010 Chevrolet Camaro SS took first place in its latest comparison test of iconic muscle cars.
The comparison is described in full at the 2010 Chevy Camaro SS vs. 2009 Dodge Challenger R/T vs. 2010 Ford Mustang GT Comparison Test.
"Car enthusiasts can rejoice that all three of these legendary pony cars have made a comeback," says Jay Kavanagh, Edmunds' Inside Line Engineering Editor. "But the 2010 Chevrolet Camaro SS leads the pack with its combination of power, speed and attitude."
(Read more...)
Posted by Michelle Krebs at 9:59 AM under Analysis , Chrysler , Commentary , Companies , Ford , GM | Comments (0) | digg this | del.icio.us
Smallest Cars Perform Poorly in Crashes With Bigger Cars, IIHS Confirms
WASHINGTON -- Turns out, auto engineers have been right all along: size matters and you 
can't defy physics in crashes.
The latest report from the Insurance Institute for Highway Safety (IIHS) shows that even the best small cars do poorly in head-on collisions even with only somewhat bigger midsize sedans from the same manufacturer.
"Minicars as a group do a comparatively poor job of protecting people in crashes, simply because they're smaller and lighter," Adrian Lund, president of the insurance industry-funded group, said in a statement. "In collisions with bigger vehicles, the forces acting on the smaller ones are higher."
The IIHS notes that frontal crashes are the most dangerous traffic accidents, causing about 15,000 out of roughly 40,000 U.S. traffic deaths annually.
(Read more...)
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BMW, Toyota Named Among Most Ethical Companies
BMW and Toyota were the only two auto companies to make the list of 99 of the world's most ethical companies in the Ethisphere Institute's third annual rankings announced Monday.
"The mission of our group is to improve corporate behavior," said Alex Brigham, executive director of the international think-tank based in New York dedicated to the advancement of best practices in business ethics, corporate social responsibility, anti-corruption and sustainability.
(Read more...)
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Saturn Dealers Lose Hope, Close Stores
Saturn dealerships are closing at a steady rate despite pleas from General Motors 
executives to hold on, trade journal Automotive News reports.
On January 1, Saturn had 420 stores in the United States. That dropped to 405 on February 15 and 384 on April 6. Last week, three dealerships in the Kansas City area and one in Springfield, Missouri, closed.
Saturn and its dealers are looking for an alternative ownership situation, one that may allow for the distribution of non-Saturn and non-GM products, including those from emerging markets like China and India.
(Read more...)
Posted by Michelle Krebs at 10:59 AM under Analysis , GM , In the Media | Comments (0) | digg this | del.icio.us
GM Told To Prepare for Quick Bankruptcy, Paper Reports
NEW YORK -- Yet another newspaper report claims General Motors is preparing to file for bankruptcy at the urging of the Obama administration.
This time, it is The New York Times reporting in Sunday's edition that the U.S. Treasury Department is directing the automaker to lay the groundwork for a bankruptcy filing by June 1.
Citing unnamed sources supposedly briefed on the GM's plans, the Times reports the goal is to prepare for a fast "surgical" bankruptcy if the automaker can't reach agreement with bondholders and the United Automobile Workers union for a debt-for-equity swap.
(Read more...)
Posted by Michelle Krebs at 9:23 AM under Analysis , Chrysler , Companies , GM , In the Media | Comments (0) | digg this | del.icio.us
GM, Chrysler Bankruptcies Have Beneficiaries, Report Says
LONDON -- It's not all doom and gloom if General Motors and Chrysler go bankrupt, a new report says. In fact, some automakers will benefit from their bankruptcy.
GM and Chrysler competitors could gain pre-tax profit of more than $24 billion if the companies are forced to dramatically downsize after some kind of bankruptcy, says a report from Bernstein Research in London and reported on by the Detroit News.
In the U.S., Ford would benefit most with GM and Chrysler customers deflecting to its brand. Ford would be followed by the Japanese automakers and Germany's Volkswagen.
(Read more...)
Posted by Michelle Krebs at 9:19 AM under Analysis , Chrysler , Companies , Ford , GM | Comments (1) | digg this | del.icio.us
Studies: Throttle Back on Highway Privatization
By Bill Visnic
Two new studies released by pubic-interest organizations are putting up the orange cones on the growing trend toward privatization of public roadways.
The Pittsburgh Post-Gazette reports this week that the wide-ranging U.S. Public Interest Research Group warns of "big potential downsides for the public" in road privatization schemes.
The Post-Gazette also quoted the PIRG-developed "Private Roads, Public Costs" report as saying, "Road privatization offers a hard-to-resist 'quick fix' for state budget and transportation challenges. But there are hidden costs to privatization."
(Read more...)
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Europe Sees New Cars Cheaper Than Used, Too
Europe is now experiencing the same counterintuitive phenomenon that was recently noted in the States: that some new cars are selling for less than their used counterparts.
The Financial Times in London points out in a story published Thursday that aggressive discounts on new vehicles and a shortage of high-quality, late-model used cars that has pushed up used car prices is resulting in new cars selling for less than used cars.
Earlier this month, an analysis by Edmunds.com, parent of AutoObserver.com, showed the same situation in the U.S.
(Read more...)
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Customers Prefer No-Bailout Ford, Edmunds.com Reports
SANTA MONICA, Calif. -- Ford's choice and ability to avoid taking loans from U.S. government is paying dividends in increased shopping by consumers.
An analysis of shopping on its Web site by Edmunds.com, parent of AutoObserver.com, shows the number of visitors who shopped for Ford vehicles in the first three months of this year rose 12 percent compared with the same period a year ago.
At the same time, the number of shoppers considering vehicles from General Motors and Chrysler, both of which have taken loans from the U.S. government, declined 19 percent and 15 percent respectively during the same period.
Posted by Michelle Krebs at 8:39 AM under Analysis , Chrysler , Companies , Ford , GM | Comments (0) | digg this | del.icio.us
Chrysler's Italian Lifeline Full of Knots
By Bill Visnic
With fewer than 30 days now to cement a partnership with Italy's Fiat S.p.A. or else, Chrysler LLC's prospects for survival -- at least in something resembling its current form -- are slimmer than the lapels on Fiat President Luca Cordero di Montezemolo's suit.
Thirty days to structure a complex, transcontinental and cross-cultural manufacturing and product-development alliance when both companies are in financial distress, auto markets on their home continents are dangerously depressed -- and their respective top management as recently as last week wasn't even on the same 
page regarding the most basic elements of the deal?
Auto-industry alliances often do not turn out well -- and can be assumed not to begin any better when devised under the condition that one party has a date in bankruptcy court if the plan doesn't happen.
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Posted by Michelle Krebs at 7:56 AM under Analysis , Chrysler , Featured | Comments (0) | digg this | del.icio.us
March Car Sales Show Signs of Life
By Michelle Krebs and Bill Visnic
A late-month uptick caused March car and truck sales to surpass forecasters' expectations, providing a glimmer of hope to the U.S. auto industry that the long and ugly drought is nearing an end.
"We started to see some signs of life in the March numbers," said Jesse Toprak, executive director of Industry Analysis for Edmunds.com, parent of AutoObserver.com. His remark echoed similar comments made by auto company executives and analysts as they delivered their March sales results Wednesday.
Particularly encouraging to everyone was the rise in the annualized rate and the above-average hike in sales from February to March.
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Posted by Michelle Krebs at 9:22 AM under Analysis , Chrysler , Companies , Featured , Ford , GM , Toyota | Comments (0) | digg this | del.icio.us
Incentives Set All-Time Record, Edmunds.com Reports
By Michelle Krebs
SANTA MONICA, Calif. -- Automaker incentives set a new all-time high in March, even though it appears they didn't help sales much, according to Edmunds.com.
The average automotive manufacturer incentive was $3,169 per vehicle sold in March, the highest industry average on record.
"Automakers are pulling every lever in their effort to attract buyers, as evidenced by the new programs from Ford and General Motors," stated Jesse Toprak, Edmunds' executive director of Industry Analysis. "The typical incentive programs simply do not resonate in today's economy."
(Read more...)
Posted by Michelle Krebs at 3:49 AM under Analysis , Chrysler , Companies , Featured , Ford , GM , Toyota | Comments (0) | digg this | del.icio.us
March Car Sales Look a Lot Like February Car Sales
By Michelle Krebs
SANTA MONICA, Calif. -- March car sales to be reported April 1 by manufacturers look a lot like February car sales, and that's not a good thing since March traditionally marks the kick off of the busy spring selling season.
"If sales continue at this pace all year, we're looking at a Seasonally Adjusted Annual Rate of only 8.9 million vehicles sold, which is slightly more than half of 2007 sales," said Edmunds.com CEO Jeremy Anwyl.
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Posted by Michelle Krebs at 12:06 PM under Analysis , Chrysler , Companies , Featured , Ford , GM , Toyota | Comments (1) | digg this | del.icio.us
Chrysler Rhetoric Gets Contradictory - and Desperate?
By Bill Visnic
AUBURN HILLS, Mich. -- In the weeks leading up to March 31, the day President Obama's auto industry task force gives some direction about whether the government will continue to invest billions to keep General Motors and Chrysler afloat, Chrysler executives have spoken in terms that seem to indicate a festering anxiety at the company's headquarters here.
In some cases, executives have issued threats. Some have deeply contradicted one another. Always-provocative CEO Bob Nardelli has contradicted himself.
And last Thursday, Chrysler Chief Financial Officer Ron Kolka violated the spirit of "we're all in this together" with probably the most inflammatory -- and reckless -- remark yet; Bloomberg News reported Kolka as saying Chrysler could be considered more deserving than GM of receiving continued government assistance.
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Posted by Michelle Krebs at 7:00 AM under Analysis , Chrysler , Featured , Personalities | Comments (0) | digg this | del.icio.us
Survey Says: Americans Oppose Government Auto Loans
DETROIT -- And here comes yet another survey showing that Americans oppose government loans to General Motors and Chrysler, just as the two face a March 31 deadline to convince the government they have made progress, deserve to keep the money they've received and should get more.
This survey comes from Detroit-based R.L. Polk & Co., released on Monday. It shows 61 percent of Americans oppose the loans.
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Posted by Michelle Krebs at 10:11 AM under Analysis , Chrysler , GM , In the Media , Personalities | Comments (0) | digg this | del.icio.us
Abu Dhabi Investor Becomes Daimler's Biggest Shareholder
By Michelle Krebs
Even the seemingly strong and mighty need help in this dismal economic environment as was proven over the weekend when Germany's Daimler AG, parent of Mercedes-Benz, sold nearly $3 billion worth of shares to an Abu Dhabi investment firm. The stock sales will generate much-needed cash for the automaker and give Daimler a single large shareholder to ward off any potential takeover by an outsider.
The two companies announced Sunday night that Aabar Investments PJSC would buy 96.4 million of new Daimler shares for $2.7 billion. Aabar, with a 9.1 percent stake in Daimler, now becomes Daimler's largest shareholder.
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Posted by Michelle Krebs at 5:31 AM under Analysis , Chrysler , Companies , Featured , Technology | Comments (0) | digg this | del.icio.us
Some New Cars Now Less Expensive than Used Cars, Edmunds.com Reports
SANTA MONICA, Calif. - The deals on some new cars are so generous that they actually 
make the new car less expensive than the one-year old used version of the same model, according to a pricing analysis by Edmunds.com, parent of AutoObserver.com.
"Compared with new vehicles sales - which are at lows unseen in decades - the used car market is doing well," observed Edmunds.com CEO Jeremy Anwyl. "Desirable used vehicles are becoming harder to find, pushing up their prices, while today's new cars are heavily discounted. This is creating an unusual economic event: It can actually be less expensive to purchase a new car than a used car."
(Read more...)
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Buick, Jaguar Tops For Vehicle Dependability
By Michelle Krebs
WESTLAKE VILLAGE, Calif. - Buick and Jaguar ranked highest in vehicle dependability, in a tie for first place in the J.D. Power and Associates 2009 Vehicle Dependability Study released Thursday morning.
Buick climbed to the top this year from sixth place in the 2008 rankings; Jaguar moved up from 10th place. Both surpassed Toyota and its luxury division Lexus, though Toyota and Lexus immediately followed in the No. 3 and 4 spots while also nabbing the most individual categories for vehicle dependability.
"Buick has ranked among the top 10 nameplates each year since the study was last redesigned in 2003, while Jaguar has moved rapidly up the rankings," David Sargent, vice president of automotive research at J.D. Power and Associates, said in a statement.
"Lexus remains a very strong competitor in long-term quality. In particular, the Lexus LS 430 sets the industry standard for dependability, with fewer problems reported than any other model in the study," Sargent added.
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Posted by Michelle Krebs at 6:38 AM under Analysis , Chrysler , Companies , Featured , Ford , GM , Toyota | Comments (0) | digg this | del.icio.us
Incentives Not Letting Up -- Even for New Products
By Bill Visnic
With industry sales continuing to grenade and analysts continuing to revise downward their 2009 full-year forecasts, the watchword in the market is "incentives" -- even for many new and relatively new models.
The need to put money immediately on the hood must be painful for automakers seeking to improve their cash flow positions, but ongoing credit pressure and flagging consumer confidence seemingly have left few options, even for models that in a normal environment likely would have been considered incentive-proof (at least for awhile).
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Posted by Michelle Krebs at 4:47 AM under Analysis , Companies , Featured | Comments (2) | digg this | del.icio.us
Despite Economy, Auto Shows Remain Crucial Marketing Stage
By Dale Buss 
Nissan just announced that it plans to stay away from the North American International Auto Show in Detroit next year, as the company did this year. It also plans to skip other major U.S. shows and dozens of smaller ones scattered across the country, as well as the Frankfurt exhibition this September.
But as auto company executives, suppliers and the global news media gathered in Geneva last week for one of the most prestigious regular shows, Nissan appears to be alone in its strategy of making draconian cuts in its annual exhibition budget to help get costs under control in this severe sales environment.
In fact, most other automakers -- even badly damaged Chrysler -- so far are making it a point to stick with their expensive investments in auto-show participation.
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Posted by Michelle Krebs at 8:10 AM under Analysis , Chrysler , Companies , Featured , Ford , GM , Toyota | Comments (2) | digg this | del.icio.us
Buyers, Buyers Everywhere - Or Is That 'Interested Parties?'
By Bill Visnic
With industry trade journal Automotive News this week quoting a spokesman from General Motors Corp.'s Saturn division as saying there are prospective buyers for the perpetually underachieving division, it occurred to AutoObserver that the auto-industry conventional wisdom on this subject is dead wrong: the global economic disintegration hasn't dissuaded anyone from considering investment in a money-bleeding car brand.
There are, in fact, buyers everywhere. After all:
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Posted by Michelle Krebs at 4:09 AM under Analysis , Chrysler , Companies , Ford , GM | Comments (1) | digg this | del.icio.us
Ford Sales Dip Below Significant Mark
By Bill Visnic
When February sales were tallied this week, Ford Motor Co. reported aggregate sales for its Ford, Lincoln and Mercury brands of 96,044. It was the first time in Edmunds.com sales data reaching back to 1991 that Ford monthly sales dipped below the 100,000-unit mark.
Even adding the 3,356 units sold last month by Ford-owned Volvo Cars couldn't buoy Ford above the 100,000-unit threshold.
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February Car Sales: Fearful Americans Hunker Down, Steer Clear of Dealer Showrooms
By Michelle Krebs and Bill Visnic
DETROIT - Americans, unemployed or fearing they will be, hunkered down last month, cutting their household budgets, squirreling away money and avoiding dealer showrooms as February car sales sunk to their lowest level of any February in more than four decades.
Automakers sold 691,073 vehicles in February, down 40.9 percent from the 1,168,729 they sold in February a year ago. That marked the lowest level of car sales for any February since 1967, according to General Motors' record books. That fact is even more eye-popping when population is considered: in 1967, the U.S. had 103 million registered drivers; today the nation has nearly twice that many.
And it put the closely-monitored Seasonally Adjusted Annualized Rate (SAAR) at 9.1 million vehicles, the lowest SAAR since 1982.
Not coincidentally, consumer confidence, a key indicator for how vehicle sales will fare, sunk to record lows in February, according to at least two measurements. And much of that has to do with dimming employment picture as well as dwindling household worth.
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Posted by Michelle Krebs at 8:57 AM under Analysis , Chrysler , Companies , Featured , Ford , GM , Toyota | Comments (1) | digg this | del.icio.us
Study Short-Circuits Chevy Volt as GM Stock Yo-Yos
By Bill Visnic
Shares in General Motors Corp. got on board for another broad U.S. stock market plunge Monday as a new study from researchers at uber-egghead Carnegie Mellon University says electricity-intensive hybrids such as GM's Chevrolet Volt "extended-range" electric vehicle won't be the ultimate environmental answer GM touts.
The Carnegie Mellon study, reported on by Edmunds Green Car Advisor Friday, is another setback for battered GM, whose stock price last week briefly visited a low -- $1.52 -- not seen since just after the Great Depression and today was again struggling to stay above the $2 mark as the Dow Jones Industrial Average slid to its own new lows. GM last week also reported an annual loss for 2008 of $30.9 billion, an amount exceeded in GM corporate history only by the $38 billion GM lost in 2007.
(Read more...)
Posted by Michelle Krebs at 8:22 AM under Analysis , GM , Technology | Comments (0) | digg this | del.icio.us
Chrysler Restructuring Plan: Three Options, One Reality
By Bill Visnic
The restructuring plan Chrysler LLC submitted February 17 to the U.S. Department of Treasury maps three potential outcomes -- and all will be expensive.
Short of the most-drastic scenario -- liquidation -- Chrysler's other two options, if they are to lead to the company's long-term viability, are dependent on a number of questionable assumptions and one indisputable fact: If auto sales in the U.S. do not increase quickly and markedly, nothing Chrysler does is likely to pull it from its death spiral.
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Posted by Michelle Krebs at 4:35 AM under Analysis , Chrysler , Featured | Comments (0) | digg this | del.icio.us
Forecasters Slash Outlook for 2009 U.S. Car Sales
With another month of dismal sales predicted for February, three forecasts released this week revise U.S. car sales for 2009 downward.
- Edmunds.com has cut its forecast by more than a million units to 10.1 million vehicle sales for 2009.
- J.D. Power and Associates has shaved its forecast by a million vehicles as well. The company puts 2009 sales at 10.4 million vehicles, down from the previous forecast of 11.4 million.
- Even Ford Motor Co., which had one of the rosier forecasts, reported in government documents that it had reduced its downside outlook for the year to 10.5 million vehicles, the same amount GM said it had conservatively estimated.
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Posted by Michelle Krebs at 4:26 AM under Analysis , Companies , Ford , GM | Comments (4) | digg this | del.icio.us
America Losing Interest in Keeping Detroit Afloat
A survey conducted by the USA Today newspaper and Gallup poll this week found only 25 percent of Americans believe the government should continue lending money to Detroit automakers.
"That's a huge, and fast, change of heart," said USA Today's Jim Healey, who added that in December, before the government approved emergency auto loans, 61 percent favored federal help for the automakers.
(Read more...)
Posted by Michelle Krebs at 3:56 AM under Analysis , Chrysler , Companies , Ford , GM | Comments (2) | digg this | del.icio.us
UAW Cornered on VEBA?
By Bill Visnic
With the United Auto Workers (UAW) submitting to its rank and file a proposed Ford Motor Co. amendment to the 2007 labor contract that asks the UAW to accept half of Ford's obligation to the union's Voluntary Employee Benefit Association trust, UAW leadership appears to be choosing the lesser of potential evils.
If any of the Detroit Three automakers that owe payments to the VEBA -- an amount totaling nearly $60 billion -- declare or are otherwise forced into bankruptcy, the trust that was established to fund health-care costs for UAW retirees could be shattered, says one bankruptcy expert.
(Read more...)
Posted by Michelle Krebs at 3:44 AM under Analysis , Chrysler , Companies , Featured , Ford , GM | Comments (0) | digg this | del.icio.us
Car Owners Hanging Onto Their Current Rides
Car owners, as suspected, are hanging onto their current vehicles longer -- and longer and longer.
The average age of trade-ins has been edging higher every year since 2004, according to recent data compiled by Edmunds.com, parent of AutoObserver.com. Today, the average age of a trade-in is nearly six years old, more than a year older than its counterpart five years ago.
In 2004, the average trade-in was 4.32 years old. For 2008, the average trade-in was 5.3 years old. In the first two months of this year, the age jumped to 5.95 years old.
Source: Edmunds.com
Posted by Michelle Krebs at 1:22 PM under Analysis | Comments (2) | digg this | del.icio.us
February Car Sales: Consumers Sit the Month Out Again
By Michelle Krebs
SANTA MONICA, Calif. -- The still-deteriorating economy and the continued uncertainty about employment kept consumers away from buying new cars again in February despite the record-breaking deals available to them.
February car sales, to be posted by automakers Tuesday, are expected to be down about 40 percent from a year ago to 685,000 vehicles sold for the month, according to Edmunds.com, parent of AutoObserver.com.
That puts the closely watched Seasonally Adjusted Annual Rate (SAAR) for the month at 9.3 million vehicles, down from 9.6 million the previous month.
"The fluctuation in car sales and the instability of the stock market are just two examples of the volatility in the marketplace, which is wreaking havoc on consumer confidence and hampering any economic recovery," said Jesse Toprak, Edmunds.com's executive director of Industry Analysis.
(Read more...)
Posted by Michelle Krebs at 10:13 AM under Analysis , Chrysler , Companies , Featured , Ford , GM , Toyota | Comments (0) | digg this | del.icio.us
Hyundai, Audi Deliver Oscar-Winning Performances
By Michelle Krebs
SANTA MONICA, Calif. -- Hyundai and Audi delivered a one-two punch with their Super Bowl commercials and now their ads on Sunday night's Academy Awards program.
For both events, both automakers scored a significant boost in Edmunds.com's car-shopping Web site, according to analysis of the ads' impact by the Santa Monica, California, company.
"This is proof that when you have a powerful message, television advertising still works," noted Jeremy Anwyl, CEO of Edmunds.com, parent of AutoObserver.com.
(Read more...)
Posted by Michelle Krebs at 11:26 AM under Analysis , Companies , Featured | Comments (0) | digg this | del.icio.us
GM State of Mind Revealed in New Restructuring Plan
By Bill Visnic
Details in the hundred pages-plus of General Motors Corp.'s 2009-2014 restructuring plan submitted to the U.S. Dept. of Treasury last week show the General to be confident and optimistic on several matters regarding its survival and planned revival. Perhaps exceedingly so.
And GM offers more than a few intriguing strategic and business-plan revelations that are worthy at least of a raised eyebrow.
(Read more...)
Posted by Michelle Krebs at 9:12 AM under Analysis , Featured , GM | Comments (0) | digg this | del.icio.us
Half-Million Recent New Car Shoppers Steered to Used Cars, Edmunds.com Reports
SANTA MONICA, Calif. -- At a time when automakers are desperate for every sale that they 
can make, a significant number of shoppers are drifting out of the new-car market and purchasing a used car instead.
Edmunds.com has determined that approximately 510,800 used cars sold in the past three months would have been new-car sales in a different economy. In manufacturing terms, that amounts to about two assembly plants of new-car production.
Projecting ahead, this could represent a seasonally adjusted annual rate (SAAR) of more than 2 million vehicles, which equates to more than 15 percent of total new-car sales.
(Read more...)
Posted by Michelle Krebs at 12:28 PM under Analysis , Companies , Featured | Comments (0) | digg this | del.icio.us
Viability Day for GM, Chrysler: Is Bankruptcy Looming?
By Michelle Krebs
DETROIT -- Today is V-Day -- Viability Day -- for General Motors and Chrysler.
As part of their acceptance of $17.4 billion in government loans to stay afloat, the two must submit reports on their progress regarding how they are becoming economically viable.
Increasingly experts believe one or both ultimately will file for Chapter 11 reorganization under U.S. bankruptcy laws, particularly because auto sales have continued their plummet.
"If I were betting, I'd say it (Chapter 11 filing) will happen," said Douglas Bernstein, a lawyer specializing in bankruptcy and a managing partner with the Detroit law firm of Plunkett Cooney.
(Read more...)
Posted by Michelle Krebs at 7:26 AM under Analysis , Chrysler , Companies , Featured , Ford , GM | Comments (1) | digg this | del.icio.us
Chrysler-Nissan Project Put on Hold: What's Next for Both?
By Michelle Krebs
DETROIT -- Chrysler and Nissan have put on hold their proposed arrangement to build vehicles for each other as they each evaluate their deteriorating financial situations in a worsening global economy and historically dismal car market.
The two companies had announced last spring that Chrysler would build a Dodge Ram-based replacement for the Nissan Titan while Nissan would provide Chrysler with Nissan-based small cars, one of which would be sold as the Dodge Hornet.
The on-hold project raises questions about Chrysler's ability to move forward with a partner and Nissan's product plans for North America.
(Read more...)
Posted by Michelle Krebs at 10:59 AM under Analysis , Chrysler , Featured , News | Comments (2) | digg this | del.icio.us
Chrysler Hit by Lawsuits; Is Bankruptcy A Way to Cope?
By Michelle Krebs
Chrysler has been socked by two lawsuits in as many days, prompting at least one expert to wonder if more lawsuits can be expected and force Chrysler into official bankruptcy proceedings.
French-based Faurecia has sued Chrysler, claiming the automaker owes the supplier $110 million for engineering and research costs as well as handing its research over to the Chinese.
Another lawsuit filed in Delaware charges Chrysler is automatically denying workers' compensation claims over a spinal-cord treatment for employees injured on the job. The suit seeks class-action status.
Meantime, a bankruptcy lawyer in Detroit suggests a flurry of lawsuits is often a reason for companies to file for bankruptcy.
(Read more...)
Posted by Michelle Krebs at 1:14 PM under Analysis , Chrysler , Commentary , Featured | Comments (0) | digg this | del.icio.us
2009 U. S. Vehicle Sales Fall to 10.7 Million Units, Polk Forecasts
DETROIT -- U.S. vehicle sales are expected to drop another 19 percent this year to to 10.7 million vehicles, according to the latest forecast from Detroit-based automotive research firm R.L. Polk & Co.
Polk estimates the 2009 sales split will be 8.5 million retail sales and 2.2 million fleet sales. The firm further predicts U.S. vehicle sales won't stabilize to the 16 million units annually seen in 2007 for a few more years at least.
"With the inability to use rising home prices to generate liquidity and tighter lending rules, the U.S. market stabilizing around 16 million units will occur within three to five years, depending on the efficiency of the government stimulus package, said Lionel Yron, Polk's director of Consulting & Analytics.
Global vehicle sales are expected to slow to 56.8 million vehicles in 2009, a 13 percent decline from 2008, according Polk. Vehicle sales in Western Europe will shrink to 13.5 million units this year, a 12 percent drop. Asia sales will fall to 12.4 million compared with 13.3 million last year, Polk says.
Posted by Michelle Krebs at 8:06 AM under Analysis , Companies | Comments (0) | digg this | del.icio.us
Consumers Hit by Higher Loan Costs, Comerica Bank Says
DALLAS -- The affordability of motor vehicles -- and the wallets of consumers buying them -- took a hit in the fourth quarter of 2008 from the sharp rise in the average interest rate on car loans, the Dallas-based Comerica Bank reported Tuesday.
"The underlying data show quite clearly that car buyers are facing stringent financing conditions," said Comerica's Chief Economist Dana Johnson. "In the latest quarter, car buyers had to put down bigger down payments, pay higher interest rates, and limit the maturity of their loans."
(Read more...)
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Rapid Pace of Job Losses Not Seen Since 1974, Conference Board Says
The Conference Board's latest measurement of job losses shows a further fall in January, indicating a rapid pace of job losses and persistence in those job losses for several more months.
"The Employment Trends Index has recently been declining faster than at any time since the 1974 recession," said Gad Levanon, senior economist at The Conference Board, in a statement.
(Read more...)
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China's Geely Mentioned as Volvo Suitor
By Bill Visnic
Joining the list of auto companies denying they are interested in purchases of or alliances with other auto companies is China's Geely Automobile Holdings Ltd. -- one of the more prominent of the nation's numerous automakers -- which is denying talks with Ford Motor Co. about acquiring its Volvo Cars operation.
The Wall Street Journal reported this week that Geely president Li Shufu said, "there are no such talks," and Ford, which has said it is shopping Volvo, would not comment.
(Read more...)
Posted by Bill Visnic at 7:02 AM under Analysis , Business , Ford , News | Comments (0) | digg this | del.icio.us
Fleet Cutbacks Help Shrink January Sales to Early-1980s Levels
By Dale Buss and Bill Visnic
Two huge drags on the U.S. auto market - an utter lack of consumer confidence, and a paucity of credit -- persisted in January and were joined by a new one: at least a temporary evaporation of the fleet market.
Industry-wide sales in January cratered from a year earlier, falling by 36.9 percent, to about 677,000 units from 1.06 million vehicles sold in January 2008. The seasonally adjusted annual sales rate fell to fewer than 10 million units for the first time in more than 26 years. And the American auto business sold fewer cars than for any month since the depths of a recession in December 1981.
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Posted by Bill Visnic at 5:14 PM under Analysis , Business , Chrysler , Featured , Ford , GM , News , Toyota | Comments (2) | digg this | del.icio.us
Business Goals Play Bigger Role In What Consumers Pay For Cars, Edmunds.com's Analysis Shows
SANTA MONICA, Calif. - The business goal of a car dealer and the health of a financial institution may have more to do with the price a consumer pays for a car or the credit terms a consumer receives on a car loan than anything about the consumer personally.
An analysis by Edmunds.com, parent of AutoObserver.com, of vehicle prices paid by consumers and finance rates on their car loans shows an unusually wide range depending on where the consumer does business.
"The car business has been pummeled by the economic downturn, and individual dealerships are dealing with tough times in different ways," explained Edmunds.com CEO Jeremy Anwyl. "Some are offering substantial price cuts in order to close as many deals as possible, while others are striving to earn the highest possible profit on each sale."
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Posted by Michelle Krebs at 4:22 AM under Analysis , Companies , Ford | Comments (0) | digg this | del.icio.us
Automakers Boost Incentive Spending, Edmunds.com Says
SANTA MONICA, Calif. - Automakers, in an effort to clear out old inventory and pare rising stockpiles of unsold cars, boosted incentive spending dramatically from a year ago, according to estimates calculated by Edmunds.com, parent of AutoObserver.com.
"Automakers need to clear out leftover inventory from the 2008 model year, and that effort is boosting the average incentive cost for the industry," said Jesse Toprak, Edmunds.com's executive director of Industry Analysis. "Last month, 27 percent of all new vehicles sold were from the 2008 model year while during January 2008, only 12 percent of new vehicle sales were from the previous model year's inventory."
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Posted by Michelle Krebs at 4:04 AM under Analysis , Chrysler , Companies , Ford , GM | Comments (0) | digg this | del.icio.us
Certified Pre-Owned Sales Become Industry's Only Bright Spot
By Dale Buss
Search high and low through statistics about U.S. auto sales and you'll find practically nothing to brag about these days. But one silver lining does emerge: sales of "certified pre-owned" vehicles.
Even through the industry's darkest days, sales of certified pre-owned units for most automakers selling in the American market have been ahead of a year ago while, of course, new- car and general used-car sales have been declining at ferocious double-digit rates.
Not even a negative fourth quarter of 2008 could prevent a robust performance by CPO sales for the entire year: Sales for the segment actually rose by 1 percent last year over 2007, according to Edmunds.com.
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Used-Car Sales Struggle, Along With Everything Else Auto
By Dale Buss
Used vehicles typically gain on new-car sales when times are tough because consumers scale back their expectations, and more of them settle for less expensive "pre-owned" products.
But these times are so tough that consumers are even discouraged from buying used vehicles. Even though they're considered classically to be less cyclical than new-car sales or even countercyclical to the new-car trend, this may be the worst year in two decades for used-car sales overall.
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January Car Sales Drop From December on Fewer Fleet Sales, Edmunds.com Forecasts
SANTA MONICA, Calif. -- U.S. car and truck sales in January are expected to come in at a weak 730,000 units when automakers report them Tuesday.
January sales are expected to be down 18.1 percent from very weak sales in December, Edmunds.com estimates, largely due to significantly lower rental-car and corporate fleet sales. Retail sales will be about flat with December's.
"Our research indicates that retail sales are pretty much flat compared with December," said Jesse Toprak, Edmunds.com's executive director of Industry Analysis. "However, automakers' decision to cut fleet sales and make other production cuts will cause a large sales decline to be recorded on the books."
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Dealer Dilemma: Stuck With Old Models; Pressured To Order New Ones
By Michelle Krebs
DETROIT -- In Washington, the talk is of what cars automakers will produce in 2011, 2016 and 2020, but the auto industry faces an immediate demand: sell cars today.
Dealers, particularly, face a challenging dilemma as to just how to do that. The auto manufacturers, notably General Motors and Chrysler, are pressuring them to order more 2009 models so that factories can remain open and the automakers can book revenue.
Yet, dealers are buried with bulging stockpiles of old models, becoming increasingly expensive to keep and eating into their bottom-line. Yet, even hefty incentives aren't attracting buyers.
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Posted by Michelle Krebs at 10:39 AM under Analysis , Chrysler , Featured , Ford , GM , Toyota | Comments (0) | digg this | del.icio.us
Chrysler-Fiat Alliance Gets More Interesting With PSA Presence
By Bill Visnic
Still digesting the possibilities and likelihood of the proposed alliance between Chrysler LLC and Fiat S.p.A? Add French automaker PSA Peugeot-Citroen to the mix.
The potential for a triumvirate comprised of Chrysler, Fiat and PSA either makes the situation more intriguing -- or more preposterous.
Reports from Europe saying suddenly hookup-hungry Fiat is building a war chest to fund a potential takeover of or, more likely, a merger with PSA were denied on Thursday, the same day Fiat's ability to sling money into any deal came under pressure as it revealed in its own shattered financials, including its heavy cash burn and a deeply cut profit forecast for 2009.
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Posted by Michelle Krebs at 6:25 AM under Analysis , Chrysler , Companies , Featured | Comments (1) | digg this | del.icio.us
Chrysler-Fiat Could Find Welcoming Marketplace, Experts Say
By Dale Buss
If the Chrysler-Fiat alliance makes it out of the crib, the combination could provide each company with some potent new assets in the U.S. and global marketplace.
Chrysler could badge fuel-efficient, Fiat-based or -built small cars under its Chrysler brand and fill out the American industry's weakest car lineup as well as gain access to Fiat's global retail network. Broader distribution of Chrysler's iconic Jeep brand -- into Asia, for instance -- would be one possibility.
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Posted by Michelle Krebs at 7:24 AM under Analysis , Business , Chrysler , Companies | Comments (0) | digg this | del.icio.us
U.S. Car Sales in January: More of the Same, GM Says
By Michelle Krebs
DETROIT -- Expect another month of dismal sales in January, a General Motors forecaster says.
"Don't be surprised to see a SAAR [seasonally adjusted selling rate] under 10 million vehicles," warned Mike DiGiovanni, GM's top sales analyst, said in a conference call with media and analysts Tuesday.
That's even lower than the SAAR of the previous three months, which ran at a rate of about 10.5 million each month.
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COMMENTARY: Fiat-Chrysler Link Is Nice Idea, but Futile Without Money
By Bill Visnic
Fiat S.p.A.'s acquisition of 35 percent of Chrysler has all the good-sounding trappings of an auto-industry alliance that, under normal circumstances, would indicate another industry tie-up that might bear fruit.
But in the supercharged atmosphere currently surrounding the auto sector -- and particularly the at-risk U.S. domestic automakers -- the deal is being considered by some as the salvation of Chrysler.
The prolongation of Chrysler's likely dissolution is the more viable assessment of Tuesday's announced Fiat-Chrysler deal because it includes no cash infusion to Chrysler.
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Posted by Michelle Krebs at 4:31 AM under Analysis , Business , Chrysler , Commentary , Featured | Comments (0) | digg this | del.icio.us
Sales Aren't the Only Thing Detroit Lost in 2008
By Bill Visnic
Nearly 3 million U.S. auto sales evaporated in 2008, and plenty of that blood was lost by the Detroit Three: General Motors Corp. sales were down 23 percent, Ford Motor Co. sales slid by 20 percent and Chrysler LLC sales dropped by 30 percent.
Total U.S. sales plunged from 16.1 million units in 2007 to 13.2 million for 2008. Equally interesting -- and troubling, for Detroit -- was that not only did the pie get painfully smaller, the domestic automakers' portion, market share, once again lost ground.
According to data from Edmunds.com, the Detroit Three lost a collective total of 3.7 points of market share in 2008. Chrysler led the group, ceding 1.9 points of share (from 12.9 percent of the market in 2007 to 11 percent in 2008). GM lost 1.4 percent (from 23.8 percent in 2007 to 22.4 percent). Ford gave back 0.4 points of share (from 15.5 percent to 15.1 percent for 2008).
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Posted by Michelle Krebs at 6:44 AM under Analysis , Chrysler , Companies , Featured , Ford , GM , Toyota | Comments (1) | digg this | del.icio.us
Hyundai Found 'Assurance' Campaign in Ruins of October
By Dale Buss
The promise made by Hyundai of America's new advertising is so unusual that the Korea-based automaker already is planning a second TV spot to reassure skeptical consumers that "Hyundai Assurance" isn't a joke.
Over the weekend, Hyundai announced with its ad that it would take back a buyer's new vehicle in the event of job loss or income. Hyundai meant the gambit as a dramatic and unique way to shake up the moribund marketplace by appealing directly to consumers' lack of confidence in their own financial future.
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Posted by Michelle Krebs at 7:27 AM under Analysis , Companies | Comments (2) | digg this | del.icio.us
Automakers Seek Game-Changers in Fresh TV Ad Campaigns
By Dale Buss
Striking every attitude from empathy to ambivalence to something resembling snarkiness, automakers have been using new TV-advertising campaigns to try to jolt consumers off their couches and into dealer showrooms.
The headwinds are daunting, but automakers have been launching a greater variety of messages than at any time in recent memory - attempting to find something, anything that punches effectively through the pervasive gloom in American households and reignites their desire and confidence to make a major purchase.
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Posted by Michelle Krebs at 4:44 AM under Analysis , Chrysler , Companies , Featured , Ford , GM , Toyota | Comments (0) | digg this | del.icio.us
Confidence Game: Winning It Is the Only Road to Recovery
By Dale Buss
Automakers are trying things they've never tried before -- apologies, thanks, guarantees against job loss -- to get Americans to consider buying cars again. But none of these prods will work very well until the market has reestablished itself on a bedrock of consumer confidence.
"Of all the factors you look at, [confidence] is the No. 1 driver of the new-vehicle business," said Mark LaNeve, vice president of North American sales for General Motors, as the company launched a new zero-percent-financing program a few days ago.
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2008 U.S. Auto Sales Are Worst Since 1992
By Michelle Krebs and Bill Visnic
U.S. auto sales continued their precipitous tumble in December, closing the books on the industry's worst year since 1992.
Five of the Big Six automakers -- General Motors, Ford, Toyota, Nissan and Honda -- saw sales slide another 30 percent each in December; Chrysler's plummeted 53 percent. No automaker showed higher sales December to December. The lucky ones saw mere single-digit dips.
For the full year of 2008, all of the Big Six automakers reported sales declines. In total, the industry sold 13.2 million vehicles for an 18 percent drop from 2007's 16.1 million.
"It was an unbelievable year -- not one I want to repeat," said Mark LaNeve, GM's head of sales and marketing in a conference call with reporters. "Hopefully, 2009 will improve from December's low point rather than deteriorate as 2008 did."
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Posted by Michelle Krebs at 5:22 PM under Analysis , Chrysler , Companies , Featured , Ford , GM , Toyota | Comments (3) | digg this | del.icio.us
December Incentives Set Record, Edmunds.com Estimates
By Michelle Krebs
SANTA MONICA, Calif. -- Automaker incentives set a new record in December, Edmunds.com estimates, and, surprisingly, leasing showed a remarkable jump despite reports of its demise.
"Never before has the December average incentive been this high," said Jesse Toprak, Edmunds.com's executive director of Industry Analysis. "Automakers have been pulling out all the stops to keep motivating shoppers during these tough times."
Slowing sales have struck virtually every automaker and every market segment. U.S. auto industry sales for December and the full-year of 2008 are being reported Monday. December sales are expected to look a lot like the dismal levels of October and November -- and down from in the neighborhood of 30 percent or more from December 2007. Full-year sales are likely to be the worst since 1992.
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Posted by Michelle Krebs at 6:36 AM under Analysis , Chrysler , Companies , Featured , Ford , GM , Toyota | Comments (2) | digg this | del.icio.us
2008: A Year Not To Be Forgotten, as Much as We'd Like To
SANTA MONICA, California -- For the automotive industry, 2008 will be a year not to be forgotten, 
though those in the auto industry, indeed, would like to forget it and move on.
The overhwhelming theme of the year came near the end with the collapse of the financial industry, which, in turn, prompted car sales to plummet to levels not seen since the early 1990s, when the country's population was 50 million people fewer. That led Detroit automakers to head to Washington for financial help.
Though largely overshadowed by the credit crisis, the deteriorating economy and bailout mania, other trends emerged in 2008, as an analysis by Edmunds.com, parent of AutoObserver, shows:
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It May Not Be Bankruptcy, but Chrysler Deconstruction Inevitable
By Bill Visnic
President George W. Bush finally released the crucial billions needed to keep General Motors Corp. and Chrysler LLC around to see the new year, but with the real work just beginning, the wrenching save-Detroit soap opera seems to be grinding towards just one certainty: Chrysler LLC isn't going to make it.
If the maneuverings of the past several weeks haven't twisted the automotive Rubik's Cube enough for everyone to see the inevitable outcome, the reality is telegraphed loud and clear in the White House's "bailout" numbers: GM will bask in the holiday glow of $4 billion on Dec. 29, another $5.4 billion barely two weeks later and an additional $4 billion in February, for a total of $13.4 billion.
Chrysler gets $4 billion on Dec. 29. That's it.
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Posted by Michelle Krebs at 3:39 AM under Analysis , Chrysler , Commentary , Featured | Comments (3) | digg this | del.icio.us
December Sales Rate Will Be Year's Lowest, Edmunds.com Forecasts
SANTA MONICA, Calif. -- The deteriorating economy, the precarious employment situation and the lack of available credit will push the annual sales rate in December for U.S. car sales to their lowest level of the year below 10 million units, Edmunds.com forecasts.
December sales (retail and fleet) are expected to total 852,000 units, a 38.4 percent decrease from December 2007 but a 14.6 percent increase from November, Edmunds.com predicts. Typically, December sales are about 18 percent higher than November's.
With the year closing on a low note, U.S. vehicle sales for all of 2008 will total just over 13 million, a decrease of almost 3 million vehicles, or 18 percent, from 2007. Automakers report December and 2008 sales figures January 5, 2009.
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Posted by Michelle Krebs at 5:28 PM under Analysis , Chrysler , Companies , Featured , Ford , GM , Toyota | Comments (3) | digg this | del.icio.us
New Blood? It's Another Important Issue for Big Three
By Dale Buss
The president's expected short-term bailout of the Detroit Three automakers will leave the industry with lots of short- and long-term issues. One of the biggest is who will lead them.
As they pulled the plug on their own rescue deliberations last week, some in Congress seemed to believe they could run the Detroit Three automakers better than the CEOs do. President-Elect Barack Obama also has suggested that some top auto executives have a "head-in-the-sand approach" and should lose their jobs. And the American public, at least as measured by polls, don't seem to want to give a break to the automakers' current leadership either.
Could others actually perform better as CEOs of General Motors, Ford or Chrysler than Rick Wagoner, Alan Mulally or Robert Nardelli have -- and will? If so, where would these executive savants come from? And will we ever see any of this new blood in Detroit?
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Posted by Michelle Krebs at 3:49 AM under Analysis , Companies , Featured , Ford , GM , Personalities | Comments (4) | digg this | del.icio.us
Toyota Delays Mississippi Plant Launch; Slashes Forecast, Details Cost Cuts Next week
Toyota Motor Corp. said Monday it is delaying plans to open its newest U.S. plant in 
Mississippi, which was to have built the next-generation Prius hybrid.
Citing the steep decline in the auto market, Toyota said it would complete construction of the building but would hold off on installing equipment, delaying the start of production that was slated for 2010.
The delay of the Mississippi plant is part of a massive cost cutting the Japanese automaker has undertaken. Next week, Toyota is expected to slash its 2009 sales forecast by at least 1 million vehicles and outline plans to cut costs at its year-end news conference December 22, Reuters news service reports.
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Posted by Michelle Krebs at 7:51 AM under Analysis , Featured , Technology , Toyota | Comments (2) | digg this | del.icio.us
White House May Come to Automakers' Rescue
By Michelle Krebs
The U.S. Treasury said it is willing to provide financing to Detroit automakers after the Senate Thursday night failed to approve $14 billion in loans to General Motors and Chrysler.
"Because Congress failed to act, we will stand ready to prevent an imminent failure until Congress reconvenes and acts to address the long-term viability of the industry," Treasury spokeswoman Brookly McLaughlin said in an e-mailed statement.
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Posted by Michelle Krebs at 6:36 AM under Analysis , Chrysler , Featured , Ford , GM | Comments (0) | digg this | del.icio.us
Withering Economy Already Endangers Bailout-Plan Assumptions, Expectations
By Bill Visnic
In their bailout blueprints presented to Congress last week, automakers presented forward-revenue assumptions based on forecasts for 2009 auto sales. In General Motors Corp.'s case, for example, it projected "downside," "baseline" and "upside" sales forecasts for the U.S. market, correlating how much funding the company believes it will need based on each sales scenario.
If a new survey of the nation's economists has any relevance, the beleaguered automakers had better strap in for a bumpy ride that may make a reality of those "downside" assumptions.
Bloomberg News' December survey of economists released this week paints a bleak outlook for 2009. The prominent economists comprising the survey sample predict consumer spending will plunge by a rate not seen since the 1940s, with household spending retreating by 1 percent, which also hasn't happened since World War II.
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Posted by Michelle Krebs at 4:13 AM under Analysis , Chrysler , Featured , Ford , GM | Comments (1) | digg this | del.icio.us
Consumers Reluctant To Buy From Bankrupt Automaker, Survey Confirms
Results released from a survey conducted by CNBC and Portfolio.com confirmed what the heads of Detroit's auto companies testified to in Congressional hearings the last months: Consumers are reluctant to buy a car from an automaker in bankruptcy.
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Posted by Michelle Krebs at 8:28 AM under Analysis , Chrysler , Companies , Ford , GM | Comments (0) | digg this | del.icio.us
Automakers' Bankruptcy Would Cost Taxpayers Four Times More Than Bailout, Study Finds
By Michelle Krebs
A bankruptcy filing by General Motors and Chrysler would cost U.S. taxpayers four times more than the amount of federal bridge loans being considered this week by Congress, a new study finds.
A bankruptcy, or even a prepackaged restructuring outside of bankruptcy court, cannot control a wild card unique to automakers -- the car-buying consumer -- noted a joint study by international consulting firm BBK and Michigan-based Anderson Economic Group.
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Posted by Michelle Krebs at 7:37 AM under Analysis , Chrysler , Companies , Featured , Ford , GM | Comments (1) | digg this | del.icio.us
7 Myths About Detroit Automakers, Detroit Free Press
The debate over aid to the Detroit-based automakers is awash with half-truths and misrepresentations that are endlessly repeated by everyone from members of Congress to journalists. Here are seven myths about the companies and their vehicles, and the reality in each case.
This column by Detroit Free Press auto critic Mark Phelan originally was published on November 17 and was updated last Friday to debunk the myths as Congress was about to fashion an automotive rescue package.
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Posted by Michelle Krebs at 5:33 AM under Analysis , Chrysler , Commentary , Ford , GM , Technology , Toyota | Comments (1) | digg this | del.icio.us
Scalp? Scapegoat? GM's Wagoner Remains One Vulnerable CEO
By Dale Buss
As he testifies before Congress today and tomorrow, Richard Wagoner will be doing more than attempting to seal the deal for some $12 billion in government loans and a $6-billion line of credit that he has requested to rescue his employer, General Motors.
GM's chairman and CEO also may be auditioning to keep his job.
Wagoner certainly looks to be in better shape to hold on to GM's top post this week than he did a couple of weeks ago, after his singularly uninspiring first round of bailout testimony on Capitol Hill. He has done all the right things since then, inside the company and for external audiences.
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Posted by Michelle Krebs at 6:02 AM under Analysis , Featured , GM , Personalities | Comments (2) | digg this | del.icio.us
GM Wants as Much as $18 Billion; Prioritizes Brands
By Bill Visnic
General Motors Corp. Tuesday released the plan submitted to Congress in application for federal bridge loans to carry the company through 2009, when it expects a host of structural improvements and general downsizing to create "a new General Motors, one that is lean, profitable, self-sustaining and fully competitive."
What GM wants: up to $18 billion -- up to $12 billion in direct federal term loans and another $6 billion committed line of credit to guarantee the company can weather an auto-sales environment even worse than GM's projected 12-million-unit sales rate for 2009.
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Posted by Michelle Krebs at 4:14 PM under Analysis , GM , News , Personalities | Comments (0) | digg this | del.icio.us
Funereal November Sales Provide More Ammo for Bailout Plea
By Dale Buss
In case members of Congress needed any more reminding why the domestic automakers are hat-in-hand before them this week, the 37 percent drop in November sales has provided them with the latest bleak snapshot of a moribund U.S. vehicle market.
As the Detroit Three were presenting their restructuring plans in Washington, D.C., on Tuesday, the sales data rolling in from them and all other OEMs gave further dimension to the vast pall that has come over the nation's automotive market and quantified the paralyzing dread that is felt by American consumers.
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Posted by Michelle Krebs at 3:35 PM under Analysis , Chrysler , Featured , Ford , GM , Toyota | Comments (0) | digg this | del.icio.us
Domestic Automakers Ease Off Incentives While Imports Rev Them Up in Pursuit of Market Share, Edmunds.com Reports
SANTA MONICA, Calif. -- Domestic automakers eased off the incentive gas in November while import automakers revved up incentives, according to Edmunds.com.
"All three domestic automakers lowered their incentive spending this month, seeking to preserve cash during these incredibly tough times," said Jesse Toprak, Edmunds.com's executive director of Industry Analysis. "Meanwhile, the imports have poured more money into incentives, attempting to seize the opportunity to gain market share. Toyota's monthly incentives spend hit a new record high in November, and the company's market share might follow suit."
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Posted by Michelle Krebs at 10:00 AM under Analysis , Chrysler , Companies , Ford , GM , Toyota | Comments (0) | digg this | del.icio.us
COMMENTARY: For Bailout Blueprint, GM, Ford Might Finally Burn Rubber on Underperforming Brands
By Bill Visnic
The plans the Detroit Three automakers are developing to submit on December 2 to Congress in justification for their entreated $25-billion federal loan probably are being more closely guarded than the manuscript for Sarah Palin's first book, but we can guess one aspect that seems certain to feature in the bailout blueprint of both Ford Motor Co. and General Motors Corp.: ditching some brands that have long dogged their ever-more-fragile bottom lines.
For at least a decade, critics have shouted down both GM and Ford for refusing to do what it now appears must be done -- stop supporting underperforming divisions.
Rumors howling in Detroit's November winds point to brand-burning as one of the primary ways the companies plan to demonstrate to Congress they will be able to sustain their operations in a U.S. auto market that is expected to be decidedly unkind for all of 2009 and possibly well into 2010.
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Posted by Bill Visnic at 3:15 AM under Analysis , Business , Commentary , Ford , GM | Comments (9) | digg this | del.icio.us
Honda Planning V8 -- but Not Until 2015
By Peter Nunn
Maybe dreams do come true, after all. Americans who have long yearned for Honda to develop a production-car V8 engine may finally be getting their wish -- if recent comments made by Honda president Takeo Fukui are any guide.
In a recent media interview, Fukui was quoted as saying that Honda was now planning to strengthen the Acura brand with a production V8.
Why? Because the 3.7-liter V6 currently installed in the newly face-lifted RL, the range-topper for Honda's upscale Acura sales channel -- wasn't "sufficient" to compete with other premium brands, he said.
Just don't take it to mean a Honda V8 is around the corner.
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Posted by Bill Visnic at 3:00 AM under Analysis , Business , Featured , News , Technology | Comments (4) | digg this | del.icio.us
Gas Prices and Heavy Incentives Keep Car Sales From Sinking Below October's Depths
SANTA MONICA, Calif. -- November car sales improved over October's historic lows thanks to lower gas prices and high incentives.
November new vehicle sales, including fleet and retail sales, are expected to be 850,000 units, a 27.6 percent decrease from November 2007 but showing a 1.9- percent increase from last month, according to Edmunds.com's forecast.
Still, the Seasonally Adjusted Annual Rate (SAAR) for the month is expected to be only about 11.5 million units.
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Posted by Michelle Krebs at 10:45 AM under Analysis , Chrysler , Companies , Featured , Ford , GM , Toyota | Comments (0) | digg this | del.icio.us
Chance of GM, Chrysler Bankruptcy 75 Percent Without Loans, Says IHS Global Insight
The odds of General Motors and Chrysler filing bankruptcy in early 2009 soars to 75 percent without a government rescue package, predicts forecasting firm IHS Global Insight. With federal loans, the odds drop to 25 percent.
"Without a loan package, the probability of both GM and Chrysler going bankrupt in early 2009 is about 75 percent -- almost a certain probability," George Magliano, IHS Global Insight's director of North America, said in a Webcast on the economy and auto industry Thursday morning.
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Posted by Michelle Krebs at 8:17 AM under Analysis , Chrysler , Featured , GM | Comments (4) | digg this | del.icio.us
Caution Flag Waves Over Los Angeles Auto Show
By Danny King
LOS ANGELES -- With its exhibit set in its own small wing of the Los Angeles Convention Center away from other automakers, its mix of new blindingly fast models with its classic roadsters, its trays of hors d'oeuvres for visitors and a visit from comedian and noted enthusiast Jerry Seinfeld, Porsche would appear to be the last carmaker to show the effects of a slumping auto industry at the Los Angeles auto show.
Don't be fooled, says the company's head of U.S. operations. The slowdown is not lost on him.
"I would be very happy if I could say this doesn't affect us or affects us differently from every other car manufacturers, but we all have the same problem," said Detlev von Platen, chief executive officer of Porsche Cars North America, Wednesday. "At the moment, we cannot count on the confidence of the consumers."
On a day when U.S. senators couldn't agree on whether or how to extend $25 billion worth of loans to help General Motors, Ford and Chrysler survive, the overriding mood during the first day of the Los Angeles auto show's exhibits for members of the press was one of restraint.
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Posted by Michelle Krebs at 5:15 AM under Analysis , Chrysler , Companies , Featured , Ford | Comments (0) | digg this | del.icio.us
Outlook for Automaker Loans Fragile as Senate Hammers Detroit Chiefs
By Bill Visnic and Michelle Krebs
Chief executives from each of the Detroit Three automakers couldn't have come to Tuesday's session of the U.S. Senate Banking, Housing and Urban Affairs Committee at a less-receptive time. Seeking $25 billion in emergency loans to keep their ailing operations afloat, they might as well have been kids who've gorged on all their Halloween candy and now are whining for more.
Although the committee is chaired by a receptive persona in Senator Chris Todd (D-CT), Republicans are largely presenting an icy posture regarding Detroit's plight - and senators on both sides of the aisle grilled Ford's Alan Mulally, GM's Rick Wagoner and Chrysler's Bob Nardelli with varying degrees of understanding and acidity. The three are scheduled for a House committee hearing Wednesday morning.
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Posted by Michelle Krebs at 3:36 AM under Analysis , Chrysler , Companies , Featured , Ford , GM , Personalities | Comments (0) | digg this | del.icio.us
Without Ford: 25 States Could Lose 3,000 Ford-Related Jobs
If Ford were to cease operations, 25 states could lose 3,000 or more Ford-related jobs, according to an internal document obtained by the Wall Street Journal.
The document detailed state-by-state the number of workers directly employed by Ford, the number of auto parts suppliers who work with the company and the amount they spend to support their business.
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Posted by Michelle Krebs at 7:34 AM under Analysis , Ford | Comments (0) | digg this | del.icio.us
Don't Be Lulled Again by Cheap Energy, Report Says
By Bill Visnic
The International Energy Agency has issued a warning that failure to invest globally in trillions for new-energy exploration in the next 20 years could lead to a fresh global energy crisis.
The IEA says that despite worldwide efforts to reduce energy usage, consumption of crude oil, for example, is forecast to climb from today's 85 million barrels per day by more than 20 percent to 106 million barrels per day by 2023. The agency urged energy giants - and the Organization of the Petroleum Exporting Countries (OPEC) - not reduce expenditures in oil exploration and production in the face of plunging crude-oil prices.
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Posted by Michelle Krebs at 5:28 AM under Analysis , Companies , Technology | Comments (1) | digg this | del.icio.us
Winter of Discontent and Joblessness for Autoworkers Worldwide
By Bill Visnic and Michelle Krebs
For autoworkers, this is shaping up to be a winter of discontent and joblessness as manufacturers around the globe slash production to match supplies of vehicles to plummeting demand.
Automakers are offering buyouts to shed jobs permanently, laying off workers temporarily, not rehiring temp workers who had expected to return and extending holiday shutdowns to keep vehicle inventories in check.
Virtually no automaker is immune. Even manufacturers of hot-selling models like Mini, Audi and Renault's Dacia Logan are trimming production and laying off workers to meet lower demand - or taking action just in case sales fall further south. Nor is any region exempt. The fast-pace growth of China and Brazil has slowed, prompting automakers in those emerging markets to slow or halt production lines as well.
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Posted by Michelle Krebs at 8:15 AM under Analysis , Companies , Featured | Comments (2) | digg this | del.icio.us
Rover Case Study: A Sign of Things to Come in the U.S.?
As autoworkers in the U.S. and around the globe lose their jobs in this economic downturn, a new study from the U.K. is worth noting: three years after the collapse of MG Rover, 90 percent of workers who lost their jobs have found new ones, but most have taken significant pay cuts.
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Auto Affordability Worsens, Comerica Reports
By Michelle Krebs
Auto affordability, which has become better and better for consumers in the past couple years, worsened in the third quarter, according to the Auto Affordability Index compiled by Dallas-based Comerica Bank.
The index showed a confluence of factors: family income barely increased in the third quarter, the total cost of buying an average-priced vehicle increased and the credit crunch is taking its toll on affordability.
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Now That Gasoline Prices Are Plunging...
By Bill Visnic
Even those predicting a retreat from this summer's $4-per-gallon fuel prices didn't call for prices to plunge so far, so fast.
Regular unleaded gasoline in some parts of the country once again begin with a "1." The Energy Information Administration (EIA) said last week's national average for regular unleaded was $2.40, but even that number reflected a drop of some 61 cents from a year ago and a crash of 25 cents in just a week.
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Posted by Michelle Krebs at 6:54 AM under Analysis , Companies , Featured , Ford , Technology | Comments (2) | digg this | del.icio.us
Lincoln Updates MKZ as Marque's Sales Sputter
By Bill Visnic
DETROIT -- Ford Motor Co.'s Lincoln premium division can't seem to catch a break.
The historic brand has struggled for years to justify its continuing existence within its own family while Ford went shopping overseas for more "relevant" premium brands such as Jaguar, Land Rover and Volvo. Jaguar and Land Rover are sold, but Volvo and home brand Lincoln continue to struggle against economic and industry currents that appear to be particularly battering to luxury brands.
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Posted by Michelle Krebs at 6:42 AM under Analysis , Ford | Comments (1) | digg this | del.icio.us
Cash Crunch Simultaneously Prods, Prevents Castoff of Swedish Automakers
By Bill Visnic
With operating revenue becoming an increasingly scarce commodity in Detroit, General Motors Corp.'s and Ford Motor Co.'s luxury of maintaining their premium-brand but low-performing Swedish automaking units is likely to earn deeper scrutiny in the coming months.
Skepticism regarding the wisdom of retaining Saab Cars has been around at parent General Motors Corp. almost since the day GM purchased 50 percent of Saab's automaking unit (actually underbidding future GM partner Fiat Group) in late 1989 for the paltry sum of $500 million. GM acquired the rest of the company 
in 2000, and at that time, Saab was losing money and it has been widely believed Saab has never returned a profit under full GM ownership.
But rumors and innuendo about GM cutting Saab adrift have reached a higher pitch in the past weeks as GM, openly seeking cash injections, has shopped its Hummer brand and storied AC Delco aftermarket-parts division, and recently dealt with a crumbled plan to offload its commercial-truck business to Navistar International. The potential for a government cash injection -- never mind the complication of a proposed merger with Chrysler LLC - now seems GM's best near-term option.
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Posted by Michelle Krebs at 4:23 AM under Analysis , Featured , Ford , GM | Comments (0) | digg this | del.icio.us
Millions of Jobs, Billions of Dollars Lost Across the U.S. If Detroit Three Disappear or Even Contract Some, CAR Study Says
By Michelle Krebs
As many as 3 million jobs and hundreds of billions of dollars will be lost from the U.S. economy if General Motors, Ford and Chrysler cease operations, a new report shows.
The report by the Center for Automotive Research (CAR) details the job losses and economic impact of two scenarios: if all three Detroit automakers cease operations next year; and if Detroit automakers contract by half, likely involving two automakers going out of business.
"Either of these scenarios is possible, and indeed probable, within the next 12 months," the study says.
In both scenarios, the impact is devastating for jobs, income, the nation's tax base and consumer spending that could pull the U.S. economy out of recession.
Other automakers doing business in the U.S., including Toyota and Honda, also would be hit as would Canada and Mexico.
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Posted by Michelle Krebs at 6:34 AM under Analysis , Chrysler , Companies , Featured , Ford , GM , Toyota | Comments (1) | digg this | del.icio.us
Horrific October Car Sales Plunge Industry to Post-WW II Low
By AutoObserver Staff
There were almost no words on Monday to describe how abysmal U.S. auto sales were in the woe-begotten month of October.
Bled by battered consumer confidence, by more expensive and harder-to-obtain loans, by financial-market disasters and Election Day anxieties, October sales limped in at only about 852,000 vehicles nationwide, a 32 percent plunge from a year ago.
"This level of sales is not sustainable for anyone in the industry," said Michael DiGiovanni, head of global market analysis for General Motors. "It doesn't matter how deep their pockets are. Everyone is pulling in their reins to one degree or another, but everyone is affected by this."
GM's sales slumped by a horrific 45 percent, the worst showing among the Big Six automakers selling in the United States. Chrysler's declined by 35 percent, Nissan's by 33 percent, Ford's by 29 percent, Honda's by 25 percent and Toyota's by 23 percent.
The industry total comprised its lowest sales volume for any month since 1992. And adjusting for population growth -- that is, on a per capita basis -- October auto sales were the industry's worst since World War II.
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Posted by Michelle Krebs at 2:01 PM under Analysis , Chrysler , Companies , Featured , Ford , GM , Toyota | Comments (1) | digg this | del.icio.us
October Sales Plummet; Incentives Soar
SANTA MONICA, Calif. -- While October sales are expected to plummet double-digits, auto manufacturer incentive spending is up double-digits from a year ago, Edmunds.com's analysis shows.
"Automakers have to do what they can to stimulate sales while still being fiscally responsible during these shaky economic times," stated Jesse Toprak, Edmunds' executive director. "The industry is still far below the record average incentive of $3,146, which was reached in September 2004."
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Not Optimal, but GM-Chrysler Combo Best Alternative, Grant Thornton Report Says
A merger between General Motors and Chrysler, which appears imminent, is not optimal but may be the best alternative for both automakers in the current environment, says a report by a restructuring company.
"Chrysler, as we know, it will cease to exist very soon," said Kimberly Rodriguez, principal of Grant Thornton's automotive practice, which issued Thursday a report on the state of Chrysler and an analysis of a combined Chrysler and GM. "At this point, there are very few options available to either company."
Rodriquez believes it's in both companies' best interest to announce a decision that a merger will go forward by Election Day, with specifics to be hammered out later.
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Posted by Michelle Krebs at 10:32 AM under Analysis , Business , Chrysler , GM | Comments (3) | digg this | del.icio.us
Blame Sales Woes on Crushed Confidence, Not Crunched Credit
By Dale Buss
As automakers dig for the bottom of the industry's dire situation, they're trying to answer a fundamental question: Is this increasingly steep nosedive in sales mainly the result of consumers' lack of confidence in the economy and in their own financial future? Or is the squeeze on credit availability -- by defeating willing auto buyers -- largely to blame?
An Edmunds.com analysis has arrived at the answer: The crushed economic expectations and heightened financial fears of most Americans are causing the preponderance of the damage. And it's only going to get worse, judging by the announcement Tuesday that a leading measure of U.S. consumer sentiment, the Conference Board's consumer confidence index, plunged to 38 in October, its lowest level on record -- a 41-year record.
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Posted by Michelle Krebs at 10:31 AM under Analysis , Companies , Featured | Comments (1) | digg this | del.icio.us
Interest in Car Purchases Perks Up Late Month, Edmunds.com Reports
October wound up being two months in one, with the latter part of the month showing a promising pickup in consumer interest in car buying.
In addition, the frenzied shopping for fuel-efficient small and midsize cars as well as hybrids that occurred through the spring and summer months, when gas was $3.50 a gallon, has abated. Shopping for large cars, sporty cars and trucks has rebounded somewhat.
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Divided by Credit Scores, Buyers' Experiences Diverge Even More
By Dale Buss
Lender executives insist that every auto-loan deal is as individual as we are, so there remain lots of variables in the market. But here's how the auto-lending environment has changed for each of three broad tiers of American consumers:
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Credit Unions May Shine Through Today's Lending Gloom
By Dale Buss
Observing the reactions by other automotive lenders to today's mess -- ranging from extreme cutbacks to mere caution -- the nation's credit unions have a dual opportunity. They can take on a leadership role in maintaining the flow of credit through the U.S. car industry and pick up a significant chunk of market share to boot.
That's certainly the aim of Tom Shafar, loan manager for the TAPCO Credit Union, in Tacoma, Washington. "We haven't changed our rates or fees or standards in months, and we're still underwriting just as we did before," he said. In fact, Shafar added, the institution for city and county workers actually granted a few more car loans to its members in September than a year earlier. Only demand for TAPCO loans by non-members, Shafar said, were down slightly.
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Posted by Michelle Krebs at 1:26 PM under Analysis , Business , Companies | Comments (0) | digg this | del.icio.us
Industry Headaches Starting To Affect Product Plans
By Bill Visnic
The belt-tightening in the global auto industry is beginning to make itself shown in new-product plans in practically every region. Replacement models are being delayed, proposed new models are being canceled or reconsidered, and new-product investment, in general, begins to suffer the results of sagging sales and ever-tightening access to credit.
It seems to be getting more difficult for General Motors Corp., for one, to disguise the fact minimum comfortable levels of operating income have been reached. The company is enacting its first white-collar layoffs in decades and is seems increasingly desperate to find a ready cash stream.
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Posted by Michelle Krebs at 4:43 AM under Analysis , Chrysler , Companies , Featured , GM , Toyota | Comments (0) | digg this | del.icio.us
Auto Advertisers Take Varying Tacks To Navigate Sobering Times
By Dale Buss
Two things are for sure about the humorous ongoing Volkswagen of America advertising campaign, "Das Auto": It polarizes many viewers into groups who love it or hate it; and it's one of the few examples of an automaker relying on comedy as the fulcrum of its marketing strategy these days.
One ad depicts "Max," an ancient VW Beetle, as a talk-show host poking fun at the global credentials of actor David Hasselhoff -- with the hoary celebrity playing along -- as it points out that Volkswagen is adored worldwide, especially in Europe.
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Posted by Michelle Krebs at 6:43 AM under Analysis , Companies , Featured | Comments (0) | digg this | del.icio.us
Ford Reliability Gains on Honda, Toyota; Chrysler Down; GM a Mixed Bag, Consumer Reports Says
DETROIT - Consumer Reports magazine delivered more bad news to Chrysler Thursday, noting the automaker's vehicle reliability has dropped since Cerberus Capital Management took over the company just over a year ago.
In contrast, Ford's reliability is now approaching that of Toyota and Honda with almost all of its vehicles achieving above-average reliability in the magazine's annual survey. General Motors' results were mixed.
"There has been a systematic, structural change within Ford,'' said David Champion, director of the magazine's auto test center, said. Champion revealed the magazine's survey results Thursday at the Automotive Press Association meeting in Detroit.
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Posted by Michelle Krebs at 12:37 PM under Analysis , Chrysler , Companies , Ford , GM , Toyota | Comments (0) | digg this | del.icio.us
October Auto Sales to Be the Lowest Since January 1992, Edmunds.com Forecasts
SANTA MONICA, Calif. - October auto sales are turning out to be every bit as bad as 
forecasters predicted early in the month.
Edmunds.com forecasts October new vehicle sales, including fleet and retail, will again fall below the 1-million mark to 872,000 vehicles sold - about 30 percent below October 2007. October 2008 will mark the U.S. auto industry's lowest sales level since January 1992.
And the industry should brace itself for a terrible November, typically one of the lowest sales months of the year.
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Posted by Michelle Krebs at 4:31 AM under Analysis , Chrysler , Companies , Ford , GM , Toyota | Comments (0) | digg this | del.icio.us
The World Without Chrysler As We Know It -- And the Road Kill Left Behind
By Michelle Krebs
Talk of possible mergers between General Motors and Chrysler or Nissan-Renault and Chrysler are reaching a frenzied pitch. Word is a deal could happen at least by Election Day, Nov. 4.
So what automaker would benefit most from a partnership with Chrysler, or which would benefit most if ailing Chrysler simply went away? To which automaker would Chrysler buyers turn for their future purchases?
An analysis of consumer shopping trends by Edmunds.com, parent of AutoObserver.com, shows Chrysler buyers would likely go to GM vehicles if Chrysler simply went away, as GM vehicles are high on the shopping lists of Chrysler, Dodge and Jeep shoppers.
Yet that also means if GM and Chrysler merge, the combined company would have the most model overlap. That undoubtedly would result in the massive slashing of duplicate vehicles, closure of plants that make those vehicles, elimination of the jobs of people who work in those operations and demise of dealers that sell them.
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Posted by Michelle Krebs at 6:31 AM under Analysis , Chrysler , Companies , Featured | Comments (1) | digg this | del.icio.us
Renault Styling Plays It Safe, But Only Bold Moves Will Ensure the Company's Survival
By Nick Kurczewski
PARIS - At the recent 2008 Paris Auto Show, Renault unveiled its new C-segment Mégane hatchback and coupe. Sized and priced to compete with Europe's best-selling vehicle, the Volkswagen Golf, the Renault Mégane is vital to the French automaker's financial health that has been in decline in recent months.
As designers pulled back the covers on the new Mégane to reveal its quirky-turned-conservative styling, the world's financial markets were spinning out of control, taking Renault's already downward spiraling fortunes with it.
As Renault plays it safe with the styling of its Mégane and other models, only a bold move -- as speculation has it with Chrysler or Ford -- may bolster its shot at survival.
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Posted by Michelle Krebs at 4:23 AM under Analysis , Chrysler , Companies , Featured , Ford , GM , Personalities , Rumors | Comments (0) | digg this |