Archive for December, 2008

Big Three Automakers wish-list for 2009

  Can you remember a year that you’d rather forget more than 2008? Everything ~ stock prices, new car dealers, housing, CD yields, job openings ~ tanked, it seemed. Good riddance. So it’s time to look forward to the coming year with some New Year’s resolutions and a wish-list. • For Detroit’s automakers, may U.S. consumers catch a chronic case of “Buy America” fever. The market has collapsed faster than the new Corvette ZR1 can rip from zero to 60 mph, so here’s hoping the Obama administration’s mother of all economic stimulus packages includes a novel financial incentive for strapped households to buy a new car. If it’s a gas miser or powered by an alternative fuel, the credit should be more generous, so we can encourage conservation at the same time. • In their rush to reinvent and develop a new generation of basic, …

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GMAC to resume auto lending for a wider range of car buyers

  GMAC said Tuesday it will immediately resume auto financing for a wider range of U.S. customers a day after the federal government committed $6 billion to stabilize the financing company. GMAC had been cracking down on auto lending amid growing losses and its inability to tap into funding. It issued 22% fewer auto loans around the globe in the third quarter compared with a year earlier. The financier said it will modify its credit criteria to include financing for customers with a credit score of 621 or higher, compared with the 700 minimum score it put in place two months ago. It won’t finance higher-risk transactions, defined by a credit score of 620 or below. The median U.S. consumer credit score is 723. “We will continue to employ responsible credit standards, but will be able to relax the constraints we put in place …

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More choose to get their cars repaired rather than buy new vehicles

  Not long ago, an $80,000 Corvette pulled into Bobby Armstrong’s garage on bald tires. “Even the people who have money aren’t spending it,” said Armstrong, co-owner of Ultimate Tire and Car Care on McGavock, who spends his days watching customers making painful decisions about how to keep their old cars running in an economy where fewer and fewer people can afford payments on a new car. Across Middle Tennessee, mechanics and garages are reporting a flood of customers looking to keep their older wheels on the road. New car sales are cratering. Not only are consumers reluctant to buy, banks are increasingly reluctant to lend as credit markets tighten. “This summer, when gas was 4 bucks a gallon, all I could think about was buying a hybrid. I don’t think about that anymore,” said Jenna Ferguson, who just bought her 9-year-old Grand Am …

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Potential collapse of Big Three Automakers caps turbulent year

  The potential collapse of the Detroit Three carmakers capped a turbulent year in the global automotive industry in which worldwide sales crashed and iconic brands swapped hands. Cash-strapped General Motors and Chrysler managed to secure a last-minute lifeline of up to 17.4 billion dollars in government-backed loans after weeks of wrangling in Washington. But analysts warned it could be a just temporary reprieve amid a perfect storm of a global credit crisis, rapidly falling demand for vehicles and a global economic slump. “Friday’s bailout does not mean bankruptcy for all of the Detroit Three has been avoided,” JP Morgan Chase analyst Himanshu Patel wrote in a recent research note. While Ford says it has enough cash on hand to see it through a moderate slump without government help, all three automakers will be at risk if sales don’t improve. Chrysler, the smallest US carmaker …

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Toyota forecasts $1.6 billion loss for this fiscal year

  Japanese auto giant Toyota said Monday that it would suffer an operating loss due to plummeting auto sales and a strong local currency. About 30 minutes after the market closed in Tokyo, Toyota said it expected to lose approximately $1.5 billion to $1.7 billion this fiscal year. Toyota reports earnings on a fiscal calendar beginning in April. This would be Toyota’s first operating loss since 1950, Toyota spokesman Steve Curtis said. Despite the likely operating loss, Toyota expects to post a $557 million net profit for the fiscal year. The profit stems, in large part, from joint ventures whose revenues are not included in the automakers’ accounting for its operating profits. Toyota’s joint ventures include a facility in Japan, operated in co-operation with Panasonic, that produces batteries for hybrid vehicles and a factory in California, operated jointly with General Motors, that builds the Toyota …

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Pickups and SUVs will outsell cars this month as gas prices fall

  After nearly a year of flagging sales, low gas prices and fat incentives are reigniting America’s taste for big vehicles. Trucks and SUVs will outsell cars in December, according to researchers at the automotive Website Edmunds.com, something that hasn’t happened since February. Meanwhile the forecast finds that sales of hybrid vehicles are expected to be way down. “Despite all the public discussion of fuel efficiency, SUVs and trucks are the industry’s biggest sellers right now as a remarkable number of buyers seem to be compelled by three factors: great deals, low gas prices and winter weather,” commented Michelle Krebs, Senior Editor of Edmunds’ AutoObserver.com. This month, trucks and SUVs will make up 51% all vehicles sold in the U.S., according to Edmunds.com. Before the spike in gas prices earlier this year, market share for trucks and SUVs had been even higher than that, …

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What will Obama do with Big Three Automakers going forward

  President Bush has agreed to lend GM and Chrysler $17.4 billion on the condition these firms complete a plan to accomplish financial viability. The agreements set goals for automakers: converting two-thirds of their debt into equity; paying company stock to fund one half of the Voluntary Employee Benefits Associations, which fund retiree health care benefits and remove these costs from future liabilities; aligning wages, benefits and work rules with U.S. Nissan, Toyota or Honda operations. These goals are generally consistent with the conditions I outlined as necessary for the Detroit Three to achieve viability when I testified before the Senate Banking Committee on November 18. For example, laid off workers could no longer sit in the Jobs Banks collecting 90 percent of pay and benefits indefinitely and engaging in productive activities like pinochle. Financial viability requires projecting a positive net present value, taking …

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France to unveil new plan to help its struggling auto industry

  France is to unveil a new plan to help its struggling auto industry by the end of next month, President Nicolas Sarkozy said Tuesday during a visit to Brazil. “A plan for the French automobile sector before the end of January is not a protectionist measure, it’s to help our industries build the cars of the future,” he said, evoking the development of electric vehicles. Sarkozy already, in early December, announced 1.5 billion euros (2.0 billion dollars) in aid to France’s automobile industry, while not ruling out that more measures might follow. He has asked his industry minister, Luc Chatel, to come up with a plan by the end of December to save a sector which directly or indirectly employs 10 percent of the workforce in France. Facing a collapse in car sales, Renault, PSA Peugeot Citroen and their suppliers have dramatically cut production, …

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Hong Kong’s sports car dealers say sales have skidded to a halt

  It’s a business with a history of riding out economic slumps, but Hong Kong’s sports car dealers say sales have all but skidded to a halt. While the city’s ubiquitous sports cars and luxury vehicles may not be an official economic indicator, they have symbolized the amount of money that’s flowed into this Asian financial hub in the last decade. Now they’re showing just how much money has flowed out. “This car usually wouldn’t last here for more than a week,” said Edmund Cheung, who manages a used car dealership, as he passed a silver 2007 BMW convertible priced at HK$698,000 ($90,000). “It’s been a month now.” Even in 2003, when Hong Kong’s economy was hit by the SARS virus outbreak, dealers say slick, pricey cars still zoomed off the lots. But the city, like the many other parts of the world, is in …

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Automakers to cut back on motor sports spending in 2009

  The bond between Detroit and Daytona Beach, Fla., began 60 years ago when production cars, replete with cigarette lighters and working radios, rolled off U.S. assembly lines and onto racetracks. In 21st-century NASCAR, Camrys compete against Chevys and “win on Sunday, sell on Monday” — the adage in American showrooms that you retail what you race — is a concept outdated by the evolution of a Sprint Cup vehicle that bears little in common with its street-ready counterparts. The identity of the country’s largest auto racing series, though, remains as tied to its ailing auto industry as to the names Earnhardt, France and Petty. “This sport has become driver- and personality-based, but it’s still been about Ford vs. Chevy vs. Dodge vs. now Toyota,” says Ray Evernham, ESPN analyst and founder of Gillett Evernham Motorsports. “This sport was built on the competitiveness of …

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