Feb
5
2010
The immediate impact of Toyota Motor Corp.’s recalls and sales stoppages is estimated to cost the company around $1 billion, but the longer-term damage to the auto maker’s hitherto impeccable brand is set to be much larger unless the world’s biggest car maker acts swiftly to contain the fallout.
Jim Lentz, President and COO of Toyota Motor Sales, tells vehicle owners what to do in the event of gas pedal problems while the company is working to fix the issue. Courtesy Fox News.
Analysts say damage to Toyota’s brand could require the company to spend on advertising, sales incentives and possible legal bills.
Toyota began Monday to publicly discuss consumer concerns over sudden acceleration of its vehicles, following nearly a week of silence. It took out newspaper ads explaining the situation in major U.S. markets, and the head of its U.S. sales arm, Jim Lentz, began a round of television interviews. In Japan, the company is slated to hold its first press conference on the recall on Tuesday.
“Almost every company has to deal with a recall, the issue is what you do after,” said Shoichi Yoshikawa, a branding expert and managing director at public relations agency Hill & Knowlton Inc. in Tokyo. “By putting off the issue, the company’s brand value steadily goes one way: down.”
Automotive Lease Guide, a Santa Barbara, California-based company tracking the residual value of cars and brand values, believes Toyota’s perceived quality score could fall 20%, leading to a 4% drop in the residual value of its cars, if it doesn’t resolve the situation quickly and without further recalls. Toyota may have to put aside more reserves if the value of autos coming off leases declines. A fall in residual value also decreases the amount of money consumers get at trade-in or when they try to resell a used car.
A drop in brand value, according to Mr. Yoshikawa, is determined through a combination of factors including sales declines and stock price falls.
While Toyota hasn’t disclosed the impact from the production and sales halt, along with related recalls in Europe and China, the company’s market value has dropped 18%, or 2.55 trillion yen, ($28.2 billion) since it issued a second recall for the sudden acceleration problems on Jan. 21.
Kurt Sanger, car analyst at Deutsche Bank in Tokyo, says Toyota has halted production on about 60% of its North American manufacturing capacity and the sales stoppage of eight models could cost the company up to 18,600 units of sales per week.
“We think it’s a 100 billion yen [$1.1 billion] problem,” said Mr. Sanger.
He estimates that the direct costs to Toyota from the recall and factory stoppage are in the 50 billion yen to 60 billion yen range. But with the indirect costs factored in, including paying for rent-a-car costs and subsidizing dealers for inventory they can no longer sell, the total cost for Toyota could be 100 billion yen.
Those estimates don’t include less tangible factors like a weaker brand image, litigation risk and possible increase in advertising expenses.
Koji Endo, analyst at Tokyo-based research firm Advanced Research Japan, says he thinks the sales suspension could last for a month, resulting in a sales loss of about 100,000 vehicles. Since the average gross profit margin on the affected models are around 700,000 yen per vehicle, Mr. Endo estimates that it will cost Toyota about 70 billion yen.
A Toyota spokesman declined to comment on how much the sales and production suspension will cost the company.
As of the end of March 31, 2009, Toyota has set aside 429.2 billion yen for warranties on vehicles that it has sold, although the company says that reserve is different from cash set aside to pay for the cost of recalls.
Feb
3
2010
Germany’s BMW AG said Friday its 2009 revenue fell 4.7% from a year earlier, reflecting the woes luxury car makers faced as demand for their vehicles contracted sharply, but that it still expects to post a profit for the year.
The Munich-based company said 2009 revenue fell to €50.68 billion ($70.3 billion), but it still hit its targets. BMW Chief Executive Norbert Reithofer attributed the forecast profit to cost management and other measures aimed at improving profitability.
“Despite the ongoing world-wide financial and economic crisis, the BMW group has, from today’s perspective, achieved the objectives for 2009,” the Munich-based company said in a statement.
Sales in 2009 fell 10.4% from a year earlier to 1.29 million cars, but BMW retained the crown as the world’s best-selling premium car maker ahead of Daimler AG’s Mercedes-Benz brand and Volkswagen AG’s Audi AG unit. The company, which is expected to release detailed earnings figures for the fourth quarter and full year on March 17, previously had said it could avoid a loss even if sales slumped by up to 15%.
For 2010, the company expects a slight increase in vehicle sales, namely a single-digit percentage rise to 1.3 million cars. Growth is expected in Brazil,China and India – emerging markets where BMW also saw increased sales in 2009. The car maker also targets sales growth in Germany in 2010, and in the U.S. market as well.
Last year, BMW was hit particularly by the U.S. market downturn, as North America has been the company’s largest sales region until recently. BMW currently is expanding annual production capacity at its U.S. plant in Spartanburg to around 240,000 cars from about 160,000 vehicles previously, mainly to reduce its exposure to currency fluctuations, which have been a major concern in recent years.
Although the economic crisis will continue to affect auto makers in 2010, BMW said it will grow this year due to the gradual economic recovery and a slate of new models.
“The BMW group can start the new year with a certain amount of optimism,” Mr. Reithofer said, adding the company will remain the leading provider of premium vehicles. Continue Reading »
Feb
2
2010
Rickshaws and bullock carts may be anachronisms elsewhere, but they are the standard means of transportation in rural India. But with government incentives and aggressive salesmanship by manufacturers, cars are making inroads into these untouched markets.
India is currently the 11th-largest passenger car market, and in the next five years it will become the seventh-largest, according to Ernst & Young. By 2030, the nation is expected to be the third-biggest after China and the United States. The country adds 1.5 million cars every year to its roads, and experts say sales could explode, a move that could greatly inflate India’s greenhouse gas emissions.
“India is an underpenetrated market,” said Kapil Arora, a partner in the automotive practice at Ernst & Young. “It has nine cars per 1,000 people. In the United States, there are about 800 cars per 1,000 people.”
As the global recession hit the bank balances of urban customers, manufacturers turned their focus towards a segment that has traditionally been underserved and overlooked by the automakers: villagers. The result was that carmakers reported up to a 100 percent increase in sales in rural regions in the past fiscal year.
The car market in India is dominated by Maruti Suzuki and Hyundai Motor India, both Indian subsidiaries of foreign brands, which together hold 70 percent of the market.
‘Car carnivals’ for professionals and politicians
In 2008, after witnessing slow growth, Maruti executives decided to create demand among a rural public that is not necessarily poor. The company targeted doctors, teachers and local politicians in agrarian communities for whom the greatest problem would be maintenance of a car.
The company set up “car carnivals,” which were grand festivities sponsored by the company with games and retail stalls. The technique was typically Indian, where sales fairs take over periodically as the primary market for selling goods to a difficult-to-reach public.
“The whole challenge was to create a market,” said Mayank Pareek, the head of marketing and sales at Maruti. “The dream to own a car is with everybody, but [rural Indians] never had the opportunity of owning one.”
The marketing campaign coincided with initiatives by the government of India to create better roads and increase the standard of living in rural communities over the past few years, according to Sugato Sen, director of the industry group Society of Indian Automobile Manufacturers, or SIAM.
“The purchasing power is going up in rural India, and people are able to afford more,” he said. “Roads are improving.”
Better roads and fatter wallets
With better infrastructure, there is greater potential for growth, said Pareek of Maruti. “Three to four years back, even 50 percent of the villages were not connected by roads,” he said. “There have been huge infrastructure projects.”
Maruti saw a doubling of rural sales in the last fiscal year, with sales rising from 9 percent to 16 percent. The growth was even larger between 2007 and 2009 as car sales in rural India grew from 3.4 percent to 16, according to Pareek.
The Korean carmaker Hyundai Motor Co., which first arrived in India in 1998, saw a rise in sales from 23 percent to 29 percent. In comparison, sales dropped in urban areas, according to Arvind Saxena, director of marketing at Hyundai. Tightening credit in cities as financiers took car owners to the courts for unpaid fees was one reason, according to SIAM.
“Automobiles are aspirational products, so even if you haven’t owned one, you still want to, and it is a matter of either affordability or the availability,” said Saxena by e-mail. “So as a company, we want to make our products available as well as affordable to all potential customers in smaller towns.”
They organized “Hyundai utsavs,” meets where customers had the chance to test drive cars and were given financing options for buying the cars.
Feb
1
2010
Given Mitsubishi’s perennial competition with Subaru, the new Lancer Sportback was inevitable. When Subaru updated its Impreza in 2008, the basis for the WRX STI, it included hatchback and four-door versions of the car. Mitsubishi updated its Lancer, the basis for the EVO and Ralliart, on a similar timeline, but only offered a four-door sedan. The 2010 Mitsubishi Lancer Sportback Ralliart fills in the space between roof and trunk lid of the original Lancer body with a hatchback. Otherwise, the car is identical to the standard Lancer Ralliart.
The Sportback invites controversy, as it looks underdesigned. The side windows look unchanged from the sedan, while the C-pillar is merely widened to fill space and hold up the rear hatch. But it also offers the functionality of a hatchback, with easy access to the cargo area from rear seats or hatch.
Running gear
Looks aside, any sport driving enthusiast will find much to love about the car’s running gear, with the Ralliart’s standard double-clutch transmission, called SST by Mitsubishi, and the 2-liter four-cylinder engine topped by a turbocharger big enough to give it 237 horsepower and 253 pound-feet of torque.
Not surprisingly, that much turbo charging leads to excessive turbo lag. From a standing start, the car makes an initially weak effort at full throttle, edging forward for half a second or more until the turbo spools up, giving the car a mid-launch pulse of acceleration that can take you by surprise if you aren’t ready for it.
But drag-racing aside, the transmission’s automatic sport setting takes turbo lag out of the equation by keeping engine speed up around 3,000 rpm. With the car in this mode, drop your speed before a corner and the transmission downshifts quickly, letting you hit the gas and get full turbo thrust.
You can get similar performance using the transmission’s manual mode, flipping the column-attached paddles to move sequentially through the gears, experiencing shifts faster and harder than any torque converter-based transmission. The transmission’s automatic normal mode short shifts, going for fuel economy over power.
The Lancer Sportback benefits from its all-wheel-drive in the corners, which is not as sophisticated as that found in the Lancer Evo, but is still very advanced. We appreciated the grip afforded on rain-slick roads, as the car began to slide a little in a turn, but got right back in line with a little pressure on the gas pedal.
The all-wheel-drive system uses differentials on both axles and in the center of the car, allowing a wide range of torque distribution to get power to the wheels that need it most. And in its rally-bred style, all-wheel-drive can be set for asphalt, gravel, or snow, limiting the amount of wheel slip allowed as you get onto more difficult surfaces.
Although the all-wheel-drive and transmission are two stand-out performance features on the Lancer Sportback, the car is let down by its brakes and suspension. The brakes are similar to what you will find on the standard Lancer economy car, not providing the stopping power or the modulation capabilities for barreling toward a turn.
And while the suspension uses stabilizer bars to help the car maintain composure when the laws of physics tell it to go tumbling off the road, it doesn’t have the precise feel of that in the Evo, or even the MazdaSpeed 3. Instead, the suspension feels heavy, and the car reacts similar to many midsize commuter cars to hard cornering.
Recaro option
To earn its Ralliart badge, Mitsubishi also built some stiffness into this suspension, making it a little rough for the daily commute. Our car came equipped with the Recaro seat package, adding serious sport seats with high side bolsters running all the way up to the headrests. While doing an excellent job of keeping butts in seats when the car is slewing sideways, dragging yourself over the bolsters every day will start to feel like an unreasonable burden. Continue Reading »
Jan
31
2010
General Motors is offering incentives of $1,000 and low financing rates specifically for Toyota customers worried about their recalled vehicles, beginning Wednesday.
“We decided to make this offer after receiving many e-mails and calls from our dealers, who have been approached by Toyota customers asking for help,” GM said in a statement. The offers will run through the end of February.
GM is offering $1,000 rebates or up to $1,000 to help pay off current leases on Toyota products. The automaker is also offering 0% financing on most models for Toyota customers. The offers apply to 2009 and 2010 model year cars.
Such “conquest incentives” — incentives targeted at owners of other manufacturers’ vehicles — are common in the industry, GM spokesman Tom Henderson said.
In this case, however, the incentives are designed to take advantage of Toyota owner’s worries at a time when they’re concerned about the safety and quality of their cars.
Toyota announced last week that it was recalling 2.3 million cars, SUVs and trucks for a problem with a potentially sticky gas pedal. This was after the company recalled 4.2 million vehicles — many of them the same as last week’s recall — for a problem in which the gas pedal could become stuck on the floormat.
Toyota recently announced that will temporarily stop selling models affected by the most recent recall, including some of their most popular products like the Camry sedan and the Rav4 small SUV.
The problem plays to GM’s current strengths, said James Bell, an analyst with Kelley Blue Book’s KBB.com. Some of GM’s strongest products, like the Chevrolet Malibu sedan and Chevrolet Equinox SUV, are strong competitors to products Toyota is now not selling.
Jan
30
2010
Since first importing cars to the United States more than five decades ago, Toyota Motor Corp. has slowly and steadily built itself into the world’s preeminent automaker, developing a strong reputation for technical expertise and reliability.
Now two major recalls and Tuesday’s decision to suspend making and selling eight models because of a safety issue put Toyota’s gains at risk.
How well the Japanese automaker responds may determine whether it can avoid the inexorable trends that eventually sent former industry leader General Motors Corp. into bankruptcy last year — an aging customer base and a seeming inability to tackle quality issues squarely.
Unless it can quickly identify and come up with a fix for the occasional but sometimes deadly acceleration problems that have plagued its vehicle line, there will be more formerly loyal customers, such as John Whiffen of Malibu, who will flee to other brands.
Whiffen, a longtime Toyota fan who prized the vehicles for their feeling of safety, began having sudden-acceleration problems last spring with one of the two Highlander sport utility vehicles in the family, which also owns a Lexus.
But his dealer downplayed the first three incidents, and Whiffen continued driving it until a fourth incident in August sent his SUV into a wall, causing $12,000 in damage.
This week, nearly six months later, he said, the dealer’s service department called to tell him the vehicle had no problems and checked out fine. For Whiffen, a retired orthopedic surgeon, it was the last straw.
“I thought Toyota was a very good company and built good products,” Whiffen said. “Now I wouldn’t even consider buying a Toyota in the future. This whole event tells me that they don’t value my life, and that means I should never buy another car from them.”
Rivals are already plotting to steal customers from Toyota.
GM said Tuesday that it would offer special leases, discounted financing and other incentives to Toyota and Lexus owners. Ford plans to offer $1,000 incentives to owners of Toyotas, as well as Hondas, if they buy Fords, according to the Detroit Free Press.
In the near term, Toyota and its dealers stand to lose more than $400 million in sales, amounting to almost 27,000 vehicles, just from Tuesday through the end of the month, estimates Jesse Tropak, an analyst at TrueCar Inc., a Santa Monica auto sales and pricing information company.
Continue Reading »
Jan
29
2010
The Audi Q5 compact crossover appeared in early 2009 and quickly became the second biggest seller in the German company’s North American lineup of 10 vehicles. With 1,717 sales in December, it trailed the A4 sedan at 3,555.
Built from the A5 coupe and A4 architecture, the Q5 is about the same size as the A4, but with more cargo room and more command- of-the-road visibility. The Q5 isn’t a power statement for taking colleagues to lunch, but it gives a good introduction to all things Audi. And it costs about $10,000 less than the larger, seven-passenger Q7, which has a higher level of refinement.
The Q5 is a building block in the company’s lineup. Its modular, longitudinal engine setup is shared with A5 coupe and A4, and in the future A6, A7 (the sexy four-door “coupe” version of the full-size A8) and the redesigned A8 due late this year.
Most compact crossovers do a nimble job. The architecture generally provides clear sightlines over the shoulder (because there isn’t another foot of length to get in the way) and over the hood. There is adequate back-seat room for family duty and fuel economy is usually in the mid- 20s.
I spent several hundred miles in a well-equipped Q5 3.2 quattro Tiptronic, which in Audi terms is the 270-horsepower, 3.2-liter V-6 engine with six speed automatic transmission and all-wheel drive. Sold in trim lines of Premium, Premium Plus and Prestige, the 2010 Q5 pricing ranges from $38,175, including the $825 freight charge from Ingolstadt, Germany, to $49,675 for the top line Prestige. The Premium Plus tester was $47,350 with options, and the extras were features most buyers in this luxury segment would want to have, such as a panorama sunroof, rearview camera, power tailgate and a powerful Bang & Olufsen audio system.
The new 2010 Cadillac SRX is priced at about the same level. Other competitors include the Acura RDX, BMW X3, Lexus RX, Lincoln MKX and Mercedes-Benz GLK.
The Q5 is compact, but it drives with the presence of a full size luxury vehicle. It doesn’t seem like a “baby Audi.” It is comfortable as a long-distance commuter with styling that emphasizes function over fashion. The Cadillac SRX, for example, has much more flash and makes an overall style treatment. The Audi may appear plain by comparison, but the design is subtle with creative lines and arcs in a restrained German functional presentation.
There are 39.4 inches of front headroom (38.1 with the sunroof), plenty of rear foot space and a generous 37.4 inches of rear legroom. The center position is compromised on foot space by the tall transmission tunnel, but there is an adjustable head restraint. The back seat is nicely equipped with lights, storage, cup holders, coat hooks and grab handles. Seat comfort is firm with decent thigh support for smaller occupants.
Other important specifications include five-star NHTSA crash ratings for front occupants and front and rear side impact as well as four stars for rollover.
Audi electronics are an ongoing learning curve for me. I have mastered the company’s engineering of multifunction buttons, in which one knob will control fan speed, seat heaters, temperature and automatic temp control. It is an efficient use of space, once you remember to first select the mode/function than twist the knob. I also understand the central controller — multimedia interface — for its range of cabin and car functions, but it, too, is distinct in operation from other such systems. This system and the navigation system will not be intuitive for someone new to Audi electronics, so pay attention during the dealership tutorial. In time, the process will seem logical.
It may also take a few days to adapt to what I call Audi’s precision engineering. At first, the accelerator response may seem soft and vague. I had to push through what feels like drive-bywire sponginess to get to the power. But in time, the Q5 trained me to not be so rough in my actions. By the end of the week, I was in tune with the electronics — and my next test car seemed almost crude by comparison. Continue Reading »
Tags: Acura RDX, Audi A4, Audi A5, Audi A7, Audi A8, Audi Q5, Audi Q7, BMW X3, Cadillac SRX, Lexus RX, Lincoln MKX, Mercedes-Benz GLK | 
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Comments (0) Jan
28
2010
Mitsubishi aims to sell 100,000 units in the US 2010, nearly double what Mitsubishi sold in 2009. According to Ward’s Auto, Mitsubishi sold just under 54,000 units in 2009; 97,257 units were sold in 2008 and 128,993 in 2007. American consumers have so far not shown a lot of interest in Mitsubishi’s lineup. It appears that the products apparently aren’t the only component to blame and that when it comes to the Lancer and Outlander models, the company has to “work hard to enhance their perception and desirability,” according to Mitsubishi spokesman Maurice Durand.
The Lancer Sportback, a five-door hatchback, has apparently not been promoted sufficiently. Sales of the recently refreshed Outlander SUV and the upcoming Outlander Sport are expected to make an impact on Mitsubishi’s US sales. It can be recalled that the Outlander Sport is the compact crossover that will be introduced at the Geneva Motor Show this March. In Europe, the car will be powered by a 1.8L direct-injection turbo diesel. However, expect variations of existing US gas-powered engines under the hood of this five-passenger Honda CR-V fighter. Within the next three years, Mitsubishi will have an easy time in achieving its 100,000-unit sales goal if it gains the R&D resources to introduce new products. The models that are being floated around include the Endeavor midsize crossover, Mitsubishi Eclipse, and Galant midsize sedan.
Jan
21
2010
The Japanese government recently agreed to open its “cash for clunkers” to U.S. automakers after receiving strong pressure to do so. Japan has offered to provide a $2,830 tax cut to those scrapping a car that is at least 13 years old for a new vehicle that meets Japan’s
fuel efficiency requirements. Those who do not scrap a car will receive a $1,130 tax cut. U.S. automakers were originally blocked from the program because they use special import rules that don’t require emissions testing in Japan. Now, they will be able to use emission test results from the U.S. Environmental Protection Agency in order to qualify for the Japanese “clunkers” program. It is widely expected that not all U.S. vehicles will qualify.
Senator Debbie Stabenow had this to say about the policy reversal:”For too long, Japan’s ‘cash for clunkers’ program discriminated against our automakers, hurting American jobs. Now, after excluding our vehicles for months, Japan is finally doing what is fair.” A representative of the Japanese embassy in Washington retaliated by saying that U.S. automakers could have participated before if they had simply followed the same rules as other automakers. He also denied that the policy reversal wasn’t a result of U.S. pressure: “We decided that we wanted to make the procedures easier and quicker.”
It is not likely that Japan’s new policy will help U.S. automakers much. It is expected that their sales under this program will only be in the hundreds. Last year, only 9,000 U.S. vehicles were sold in Japan. This is an especially poor result in consideration that Japan is the world’s third largest auto market and sold 4.6 million vehicles last year. However, automakers view this is a tactical win in their campaign to open up Japan’s market to U.S. automakers. Detroit’s automakers had this to say in a joint statement: “Japan still remains the most closed automotive market in the world. We hope Japan’s willingness to address this issue is a sign of future cooperation to remove additional non-tariff barriers, including currency manipulation.” Continue Reading »
Jan
20
2010
GM might be able to make up for its years of dismal sales performances in the U.S. with its market in China. Although its sales were down 30% in the U.S. last year, they were up by 67% in China, to the tune of 13.6 million. Also in GM’s favor is that, for the first time ever, China passed the U.S. in number of vehicles sold for 2009. This is a trend that is expected to continue due to government stimulus programs and a rapidly growing middle-class. Last year alone, China increased its auto sales by 45 percent. It is expected that China will sell roughly 15 million autos this year, while the United State is expected to sell no more than 12 million.
GM has 14 factories in China and sold 1.8 million vehicles there last year in joint ventures with the Chinese government. It reports strong sales for its Chevrolet, Cadillac, Wuling and Buick brands. The Buick has proved especially popular among China’s young people and middle class. In the U.S., in contrast, this car tends to appeal to an older consumer. GM also has an advantage in the Chinese market because they do not have a negative impression of the automaker, as they do in the U.S. U.S. buys remember quality control problems that happened with GM in the past. They also do not like the fact that the automaker had to take U.S. government aid because it was in bankruptcy protection.
Jan
18
2010
Mitsubishi recently announced that it will partner with Hydro-Quebec to launch the largest electric-vehicle trial that Canada has ever seen. This three year project will road-test 50 electric Mitsubishi i MieV’s on the streets of Boucherville, for a total of $4.5 million. A spokeswoman for Hydro-Québec stated: “this is a major step for us. We want to make sure we can support this kind of transition with the necessary infrastructure.”
The trial will study driver satisfaction, along with the electric car driving experience and how the vehicles behave when they charge. The CEO of Hydro-Quebec, Thierry Vandal, stated: “This new pilot project is part of our action plan for the electrification of vehicles. It will allow us to advance our knowledge of the technology and its integration into our grid, which in turn, will help us plan the necessary charging infrastructure for homes, offices and public places.” Charging electric cars is currently somewhat of a problem for drivers, since electric cars take a few hours to charge. Nobody wants to have to stop to charge their car for a few hours while on the road. A faster charging battery would appear to be the solution. However, this poses risks for the car battery; such a fast charge might cause it overheat and pose a safety risk. The grid is a concern as well: it could face a power failure if too many cars decide to fast-charge at the same time. This is why it is essential that the interaction between user behavior, the electric car and the grid be studied.
Mitsubishi has chosen the province of Quebec for its trials partially because of the province’s harsh winter climate. Previous tests have shown that the battery life of an electric car is reduced considerably in cold climates. Winter temperatures in Quebec are known to range between -10 and -25 degrees. This study will explore the extent to which these low temperatures impact car performance, along with how drivers respond in these situations and how satisfied they are with their electric cars.
Jan
16
2010
Nissan recently announced that it will donate over $100,000 to assist with earthquake relief efforts in Haiti. The money will be provided in part by its relief program Nissan in the Americas. Nissan North America has pledged to donate $25,000 while Nissan Canada is donating $5,000. Nissan has also set up a dollar-for-dollar gift matching program for the first $25,000 that its employees donate. This could add up to a total of $50,000. The company itself is giving $52,000 to Habitat for Humanity International so that it can construct houses as part of the rebuilding effort. $30,000 has also been donated directly by Nissan to the Red Cross.
“Recovery in Haiti will be very difficult and will take years to accomplish after a disaster of this magnitude,” noted Scott Becker, senior vice president of Nissan North America. “We want to do our part immediately and in the future to help those affected by the earthquake in a time of critical need.” This effort is part of Nissan’s long history of providing humanitarian funds for charities such as the Second Harvest Food Bank, Salvation Army, the American Red Cross and Habitat for Humanity.
Jan
11
2010
Vice chairman Bob Lutz claimed recently that 2010 is the dawn of a bright new decade for General Motors. The last 18 months have not been kind to General Motors, during which it was forced to declare bankruptcy. However, Lutz believes that this period allowed GM to completely retool and gear up for its bright future. Remarked Lutz on GM’s emergence from bankruptcy: “It is kind of like the phoenix rises from the ashes because this is the first time when we can deploy the full power of GM without the burden of all those horrible legacy costs and the crushing debt load that’s all gone now. Now we’re under a new ownership and a much, much healthier company.”
Lutz noted that GM emerged from bankruptcy protection last year with a “new and more competitive labor situation,” an “essentially debt-free balance sheet,” radically lower fixed costs, an “outstanding” product portfolio. The facts bear his statement out: GM used the $50 billion in government aid that it received last year to eliminate$78 billion in debt, cut 34,000 jobs and build up a cash hoard of almost $43 billion. Lutz also believes that dropping four of GM’s brand has made it more focused, since it is only has four core brands to focus on now (Chevrolet, Cadillac, Buick and GMC.)
To make a profit in 2010, GM would need to sell between 11 million and 12 million vehicles, its targeted goal. Last year, it posted a sale of only 10.4 million vehicles as a result of the economic downturn. This was GM’s worst performance in nearly three decades, during which it regularly sold between 15 and 17 million cars. GM enters 2010 on the heels of the modest successes of December, during which retail rose 7% overall and 13% for its four remaining brands. The last time GM achieved a profit was in 2004. Since 2005, GM has lost $88 billion. Whether GM is able to return to profit in 2010 depends on if the slow economic recovery continues.
Tags: Buick, Cadillac Converj, Cadillack, Chevrolet, Chevrolet Cruze, Chevrolet Volt, GM, GMC |
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Comments (0) Jan
10
2010
For the first time since World War II, the number of cars on the road in the United States declined. Fourteen million cars were scrapped while only ten million new cars were sold, which a caused a two percent decline in the American auto fleet. This report was released by the Earth Policy Institute. Its president, Lester Brown, called the news “unprecedented.”
The recession was largely to blame for this development, since people do not buy cars during lean times. However, broader economic and social forces were also at play: the American market has been saturated by cars during recent years while America’s youth has reported a declining interest in cars. Although the country might recover from the recession, these last two forces are expected to continue throughout the following decade. If current trends persist, the number of cars in the United States could fall by 10 percent during the next ten years.
The United States is not the first nation in the world to experience a shrinking auto fleet. Japan and many European nations experienced a decline or stabilization in their auto fleets several years ago. These losses are more than offset by rising car sales in developing nations, particularly China and Asia. These sales are sure to keep the number of cars worldwide growing for the near future. In 2009, China’s auto sales surpassed those of the United States for the first time ever.
Jan
8
2010
Audi’s strong sales performance in December – a 17.1% jump in sales – has made it the “luxury brand on the move.” The German automaker’s 9,030 sales of luxury performance cars and SUV’s guaranteed Audi the title of automaker with the largest market share gain of any imported luxury brand. In 2008, Audi’s market share registered as 7.1%. When the December 2009 totals are factored in, it is likely that its market share will approach a record level of higher than 8%. Despite the recession economy, Audi sold a total of 82,716 vehicles during 2009, down only slightly from its total of 87,760 in 2008.
The Audi Q5 and A5 reported their best sales ever for the month of December 2009. The Q5 sold 1,717 units in December, which also broke its record for the month of November. The A5 not only achieved a record of 1,382 units sold in December, it was also awarded the title of “2010 Best Luxury Car Resale Value” by Kelley Blue Book’s (kbb.com). The Audi A3, A4, A6 and Q7 also reported having their strongest sales of the year for that month. President of Audi of America Johan de Nysschen stated that: “The exceptional consumer response to the Audi Q5 crossover, the exhilarating R8 5.2 quattro, the all-new A5 and S5 Cabriolet models, and the all-new S4 performance sedan provided compelling proof of our progress.”