Archive for October, 2008

Chinese Auto Makers Bid to Conquer Detroit Still on Hold

  It’s been more than three years since Chinese auto makers first sent chills down Detroit’s spine with plans to sell cars in the United States beginning last year. China, now the world’s second-largest automobile producer, was already selling low-cost vehicles in dozens of countries around the world at the time – with jarring success.But with 2008 nearing an end, not a single Chinese-made car sits in a U.S. showroom – nor is there likely to be one anytime soon. China’s ambitious plans to crack the U.S. market are woefully behind schedule. The reason: the country’s cars still haven’t met the emissions and safety standards necessary to export to the United States. Chery, the country’s largest independent carmaker, has twice delayed its U.S. rollout. Brilliance Auto, a smaller Chinese carmaker that sells sedans in Europe, and Geely, China’s third-largest independent automaker, have …

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Increased Lithium Ion Battery Demand in Electric Cars could result in shortage of Metal Lithium

  The headlong rush to create electric cars for green-minded consumers may come with a significant economic and environmental cost. Lithium ion batteries – the same used in electronic gadgets and laptops – have become the preferred battery type for plug-in hybrids and electric cars now starting to come to market. That swelling demand has some industry observers concerned that there will be a shortage of the metal lithium, the material used to make the batteries. “You can solve the transportation problem but end up creating an equally vexing commodity problem,” said Matthew Nordan, president of emerging technology consulting firm Lux Research. “It’s a big concern.” In the short term, auto companies will be able to bring plug-in hybrid cars to market as planned in the next few years. Production of lithium has increased since the 1990s to meet the demand for batteries in power …

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Large Auto Retailers Post Third Quarter Losses

  Three major U.S. auto retailers swung to big losses in the third quarter, the latest sign that the nation’s auto dealers are no longer insulated from economic turmoil hammering Detroit’s auto makers. Sonic Automotive Inc. (SAH) on Tuesday said it lost $25.3 million in the third quarter, compared to a profit of $26.1 million a year ago. Sonic, the third- largest dealership chain, said Tuesday it will cancel plans to improve dealerships and build new stores. Group 1 Automotive Inc. (GPI) reported a $20.6 million net loss for the third quarter, compared with earnings of $20.8 million a year ago. The fourth-largest U.S. auto retailer in terms of sales, Group 1 said it has begun cost-cutting moves intended to save $35 million a year. Lithia Motors Inc. (LAD) lost $2.4 million in the third quarter, compared to an $11.2 million profit a …

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Local car dealers feel impact of economic downturn

  Local car dealerships have felt the economic pinch over the past few months, but are faring better than many dealerships across the nation that have had to close their doors. Steve Easler, owner Mac Easler Ford, said he has seen a steady decrease in sales. “The most drastic drop actually came this month,” he said. “The big problem is consumer confidence. Right now consumers are not sure if they will even have a job in the coming months, so they are sitting tight with what they have.” Easler said that while sales are down, the amount of repairs performed by technicians has been good. “People are still getting their cars serviced,” he said. “They are doing the routine maintenance, but that is about it. They are not getting any of the extra stuff done.” While some people may turn to alternative-fuel cars and hybrid models, …

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Some Used Car Lots Thriving as Credit Tightens

  Tighter conditions for U.S. consumer credit have pounded new and newer-used car sales alike but have helped some small, lower-end operators like Rite On Used Cars.”People who can’t get loans from the bank are the ones who come running to us,” said Steve Salem, owner of Rite On, which operates car lots in this blue-collar suburb of Detroit as well as one in Motown itself. “After years of slow decline, this year is definitely better than last year,” Salem said. Salem founded Rite On a decade ago and sells older used cars ranging from $1,500 to $35,000, though the average price is between $3,000 to $4,000. About 20 cars sit on the lot, ranging from an old Jaguar to pickup trucks and sport-utility vehicles. Banks have declined to underwrite loans to Salem for his inventory or to his customers since the attacks of Sept …

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GM and Chrysler ask U.S. Government for $10 Billion in Aid

  General Motors Corp and Cerberus Capital Management have asked the U.S. government for roughly $10 billion in an unprecedented rescue package to support a merger between GM and Chrysler LLC, two sources with direct knowledge of the talks said on Monday.The government funding would include roughly $3 billion in exchange for preferred stock in the merged automaker, according to one of the sources, who was not authorized to discuss the matter publicly. The U.S. Treasury Department is considering a request for direct aid to facilitate the merger and a decision could come this week, sources familiar with the still-developing government response said earlier on Monday. An injection of $3 billion in equity to support a GM acquisition of Chrysler would be roughly equivalent to the current, depressed value of the top U.S. automaker. It would also give U.S. taxpayers a large stake in …

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Used Car Dealers face tough winter

  Used car dealer Vincent Borrello said that all the bad economic news of the past few weeks have made doing business especially challenging. “It’s a tight market,” he said. Used car dealers like Borrello, but also local new car dealerships, are facing a slowdown as the nation adjusts to the constraints of a recession. Raynham’s Route 44 “auto mile,” for example, has had two significant new vehicle vacancies for the better part of 2008. One of those, the site of the former Classic Chrysler Center, became empty when the franchise merged with Central Dodge. The other, Jimmy’s Suzuki, simply went out of business. Used car dealers in Greater Taunton — despite the fact that their vehicles are less expensive — aren’t immune to the rippling effect of Wall Street losses, the threat of layoffs and a housing market that remains staggered. “I think we’re in for …

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North American Auto Industry Woes Continue

  The financial crisis has brought the U.S. auto industry to a breaking point, but the trouble began long ago. Paul Ingrassia on disastrous decisions, flawed leadership and what the Motor City needs to do to survive. With little fanfare, a new car factory opened in America earlier this month. The new Honda assembly plant in Greensburg, Ind., will produce 200,000 compact Civic models annually after reaching full capacity late next year. The contrast couldn’t be starker between Detroit’s woes and the continuing U.S. expansion of Japanese, German and Korean car companies — in both market share and manufacturing capacity. There are two American auto industries, one generally thriving and the other drastically shrinking. The shrinking is accelerating dramatically. Just yesterday Chrysler said it would ax 25% of its white-collar employees, about 5,000 people, next month. General Motors is cutting thousands more jobs …

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Automakers increase New Car incentives even on small cars

  They’re this year’s hot vehicles. But as the effects of the financial crisis deepen, even small and midsize cars’ sales have declined — and that means better deals for prospective buyers. Manufacturers had generally pulled back on incentives for smaller vehicles this year, after record-high gas prices spiked demand. And the discounts still aren’t as juicy or widespread as those on fuel-thirsty sport-utility vehicles, or even car-based crossovers. But customers can now get good deals — including cash-back offers, low-interest-rate financing and lease specials — on some best-selling cars. And they have newfound leverage when negotiating, as dealers are desperate to move vehicles off their lots. The best deals will likely be found on cars made by General Motors, Ford and Chrysler, as Detroit has suffered the worst of the sales downturn. The Big Three have also had trouble competing with Asian …

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That new car smell is not good for you

  As environment-friendly Martha Stewart might know, that new car smell is not a good thing. In fact, inhaling the fumes from your new car can be toxic and are created from a literal soup of chemicals such as arsenic and formaldehyde, which can take years to completely be “out-gassed” from your new car’s interior materials. In fact, Americans spend so much time in their cars, the “out-gassing” of so-called volatile organic compounds (VOCs) from new car interiors and new car seat parts like the steering wheel, dashboard, seats and carpets are a big concern as these are known contributors to acute and long-term health problems. Unfortunately, with the auto industry slowdown on the minds of car execs and politicians, combating indoor air pollution in new cars is not getting much play. Interestingly, automakers in Europe and Japan are serious about making their cars …

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