Archive for July, 2008

GM and Ford to Scale Back Auto-Leasing Business

  Detroit’s money troubles are starting to put a key part of the American dream – a pricey new car – out of reach for some people. Squeezed by falling used-vehicle prices, as well as continued tumult in the credit markets on Wall Street, Ford Motor Co. and General Motors Corp. are significantly scaling back their auto-leasing business. Ford on Tuesday began telling dealers that it is essentially ending leasing deals on most trucks and sport-utility vehicles. GMAC LLC, GM’s financing arm, is also expected to rein in leasing offers in the U.S. soon, possibly this week, people familiar with the matter said. On Tuesday, it said it will no longer offer subsidized leases in Canada. Chrysler last week said it is ending all leasing deals in the U.S. Leases at the Big Three auto makers account for about 20% of their total new-vehicle …

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BMW wants to reduce reliance on leasing new vehicles

  Bayerische Motoren Werke AG, the world’s largest maker of luxury vehicles, is increasing incentives to purchase cars as a way to reduce reliance on leases that make up 60 percent of its U.S. sales. The automaker several weeks ago began offering buyers 0.9 percent loans of as long as five years, said Jan Ehlen, a spokesman for its U.S. unit in Woodcliff Lake, New Jersey. BMW also raised its lease prices an average of 3 percent on May 1. “We are offering a broader variety of purchasing options,” Ehlen said today in an interview. “One of the intentions is to have a more balanced relation between financing and leasing,” he said, adding that Munich-based BMW doesn’t have a target figure. BMW’s changes reflect the effect of rising lease costs on luxury-vehicle sellers. The company’s push began after it booked first-quarter costs of …

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Cars that plug into electric sockets continue to move forward

  Felix Kramer is in the right place, at the right time, hawking the right product.As gasoline has risen to nearly $5 per gallon, Kramer’s advocacy of plug-in hybrid electric cars has caught the public’s and automakers attention. Indeed, who wouldn’t want a car that uses a fraction of the gas of traditional cars and twice the equivalent mileage of regular hybrid cars? Through his nonprofit California Cars Initiative, Kramer, 59, is urging the auto industry to build a new generation of hybrid car that plugs into an electrical socket. These cars have an extra set of lithium ion batteries that act as a range extender for the electric motor. On an average 30-mile commute to work, for instance, the electric engine can handle the drive by itself; no gas is used. For the commute back home after work, the car can …

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July auto sales are expected to continue the downward trend

  Take automakers’ inability to finance leases, combined with gas prices, the weak economy and other problems facing the industry, and you have the makings of what could be one of the worst months for auto sales in more than 15 years.Auto companies report their U.S. sales for July on Friday, and the results are expected to continue the downward trend that has plagued the industry all year. Auto consulting company J.D. Power and Associates predicts the industry will see its worst July since 1992, with little chance for a recovery in the next 12 months. That forecast is shared across the industry. “There doesn’t appear to be any indication that we’re going to have a second-half recovery to any great extent,” said George Pipas, Ford Motor Co.’s top sales analyst. Jesse Toprak, the chief economist for the automotive information site Edmunds.com, predicts …

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Dealers want more small cars available sooner

  Only one thing could have made local Ford dealers happier about Ford Motor Co.’s Thursday announcement that the company plans to start building six more fuel-efficient cars in North America. If only Ford could start making them sooner than 2011. “It’s hard to say if it will be soon enough,” said Shawn Collins, general sales manager of Downtown Ford Inc.. “They have to make do with what they have. I guess it’s better than hearing they are not going to make any changes. “I wish it would happen sooner, but I understand there are some logistics involved,” he said. Collins would love to immediately start selling the smaller cars, which Ford has sold in Europe for years. Sales of new cars at his dealership are down about 10 percent to 15 percent this year from a year ago, he said, though sales of used …

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Battery power remains the main stumbling block to the viability of electric cars

  One of the Big Ideas that’s gotten a boost from the recent oil price shock is the notion that the energy for transportation should come from the electric grid, not an oil well in the Middle East. A number of big, established car makers have announced plans to produce cars that will pull from the electric grid all or part of the energy needed to make them go. They join a flock of upstart companies, such as Tesla Motors, trying to prosper by defining a new generation of mobility technology starting with a blank sheet of paper – or rather a blank video display screen. For everyone excited about electrifying the morning commute, Robert C. Stempel, the former chairman and chief executive officer of General Motors Corp., has a few sobering words. Mr. Stempel believes in the idea of electric-drive cars – he …

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Recent off-lease SUVs are back on dealer lots with low resale values

  Auto executives just can’t catch a break. Add to slumping sales and lofty gasoline prices a ticking time bomb in their auto leasing operations. During the past several years automakers from General Motors to Nissan Motor to BMW leased millions of cars and trucks. As those leases end, the companies have to take back the vehicles—many of them the gas-guzzling SUVs, pickups, and luxury models people don’t want anymore. You know what that means: more pain as the automakers offload those vehicles at a loss. Art Spinella, president of CNW Marketing Research, estimates that this year alone the industry will lose $4.7 billion on sales of previously leased SUVs. “This caught everyone by surprise,” he says. And it’s a problem that will keep on giving because many automakers only recently started to write fewer leases. So there are plenty of newly …

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Ford plans to shift product mix away from trucks and SUVs and toward fuel efficient cars

  Ford Motor Company tallied the financial impact on Thursday of falling sales of its big pickups and sport utility vehicles, which contributed to the worst quarterly loss in its 105-year history. While Ford’s auto operations lost $1 billion in the second quarter, the bulk of the company’s $8.7 billion loss came from write-downs in the value of its truck factories and lease portfolios. The huge charges reflect the diminishing value of both the plants and the vehicles they produce. “These write-downs are another result of the tremendous movement in the marketplace away from trucks and S.U.V.’s,” Ford’s chief executive, Alan R. Mulally, said in an interview. As expected, Ford announced sweeping changes in its future product plans, to shift its focus more to smaller, more fuel-efficient cars, rather than trucks. But the costs of the unprecedented drop in demand for trucks will likely ripple through …

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Toyota sells more vehicles than General Motors in first half of 2008

  General Motors Corp. said its global sales fell 5 percent in the second quarter of the year, sapped by a steep decline in U.S. sales, even as Toyota Motor Corp. widened its lead in its race to lead worldwide sales for the first time. GM said it sold more than 2.28 million vehicles worldwide in the quarter, thanks in part to a total overseas increase in sales of 116,000 vehicles, or 10 percent. Several GM brands posted strong overseas growth: Cadillac was up 14 percent, while Chevrolet was up 19 percent on strong growth in emerging markets. GM said it sold 4.54 million vehicles in the first half of 2008, a 3 percent decline over the first six months of 2007. GM’s North American sales are down 15.3 percent through the first half of the year. Toyota said it sold 4.8 million vehicles …

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Top Auto executives expect a severe downturn in car and truck sales to continue into 2009

  As tough as this year has been for the auto industry, next year doesn’t look any better. Carlos Ghosn, head of the Renault-Nissan auto-making alliance, joined a growing list of top executives who now expect a severe downturn in U.S. auto sales to persist into 2009 and possibly beyond. “I think we’re going to have a challenging couple of years ahead of us,” Ghosn, CEO of Renault SA and Nissan Motor Co said Tuesday at the grand opening of Nissan’s North American headquarters. He said he expected U.S. auto sales to fall to 14.3 million cars and light trucks this year, down from a previous forecast of more than 15 million, and he said he doesn’t see the market recovering in 2009. Last week, General Motors Corp. also issued a gloomy forecast, assuming sales of 14 million cars and trucks for 2009. …

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