A study reported by EurekAlert! – a science society — concludes that obese drivers are much more likely to die in car crashes than normal weight drivers.
Here’s the skinny on the study …
Archive for the ‘Autos – Travel’ Category
Motivation: A compelling reason to shed some pounds …
January 24, 2013Nums: Which luxury car brand is #1 in the U.S.?
December 21, 2012According to Business Week, Mercedes has bounced back and regained the lead from BMW.
Lexus has fallen to third.
Cadillac has halted its slide and is hanging on to the #4 slot … but, Lincoln is going, going, …
Source: Business Week
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Sweetheart deal: Board member gets a premium priced buyback
December 20, 2012In the private sector, this would be be grounds for a perp-walk.
But, not in government world, I guess.
The headline: GM to Buy Back Stock From Treasury
The story:
General Motors (aka. Government Motors) announced that it will purchase 200 million shares of stock held by the U.S. Treasury Department.
The auto maker will pay $5.5 billion for the shares.
The repurchase price of $27.50 a share represents a 7.9% premium over the closing price on Dec. 18.
After the repurchase, the U.S. Treasury will continue to own approximately 300 million shares of GM common stock, or approximately 19% of the outstanding shares on a fully-diluted basis.
GM expects to take a charge of approximately $400 million in the fourth quarter, which will be treated as a special item.
OK, let work through the pieces …
Even at the inflated price, since the Feds bought i at the $33 IPO taxpayers will incur a trading loss of $5.50 per share … totaling to $1.1 billion.
GM’s largesse in premium pricing the deal “saved” taxpayers about $400 million.
Keep in mind, this is hardly an arm’s length transaction.
And, we the people still own 300 million shares … representing a paper loss of another $2 billion.
Gentlemen start your engines …
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Follow on Twitter @KenHoma >> Latest Posts
Hybrids are so yesterday …
December 9, 2012
A pink car that prevents women’s wrinkles … really?
November 14, 2012Punch line: Honda releases a new car targeted at Japanese women, boasting features that will prevent wrinkles.
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Excerpted from psfk.com’s, “Honda’s Car For Women Prevents Wrinkles”
Honda released a new model designed especially for women, the Honda Fit ‘She’s.’
Available only in Japan, the make targets the nearly 50% of Japanese women who have decided to stay out of the work force.
The car sports a pink exterior, pink stitching on the interior, and shiny pink chrome covers on the dashboard. They have even put a heart in place of the apostrophe in “She’s” to bring the point home.
The first “designed for women” automobile since 1955′s Dodge La Femme goes beyond a superficial color treatment.
With a new type of windshield said to block up to 99% of UV rays, women can drive to the grocery store confident that they are not increasing their chances of wrinkles.
With the model’s “Plasmacluster” AC system, women can pick up their children knowing that the specially-treated air is improving their skin quality as they drive.
Whether the claims are substantiated or not, the model will be sure to provoke conversation around the age-old question, “What do women want?” and open more than one can of worms for the Japanese automaker.
Edit by BJP
What did Mitt say about the auto bailout? … “Check the record”
October 23, 2012In the last debate , Obama challenged folks to “check the record” re: what Romney said about the auto bailouts.
Ok, we did … and it’s very interesting.
Obama was talking about a 2008 op-ed in the NY Times.
Yeah, the op-ed was titled “Let Detroit Go Bankrupt”.
That’s inflammatory since most folks think that “bankrupt” and “go out of business” are synonymous.
They’re not.
Bankruptcy is a process for stabilizing a failing company … not necessarily – and not usually – a liquidation (think practically every airline).
Romney was arguing that GM should go through the process and follow the in-place bankruptcy laws … rather than having the Feds dictate the terms for winners & losers.
What Romney opposed was dishing bailout checks … and letting taxpayers pick up the tab.
Specifically, he said “Detroit needs a turnaround, not a check. “
His plan had a couple of basic components:
- New labor agreements to neutralize the $2,000 per car cost disadvantage
- New management from best of breed non-automotive industries (think Alan Mulally – the turnaround guy that Ford got from Boeing)
- A new labor-management relationship … “Getting more and more pay for less and less work is a dead-end street.”
- A strong dealer network … “When sales are down, you don’t want to lose the only people who can get them to grow. “
- $20 billion in gov’t funded research … “done at universities, at research labs and even through public-private collaboration.”
- “The federal government should also rectify the imbedded tax penalties that favor foreign carmakers. “
- “The federal government should provide guarantees for post-bankruptcy financing and assure car buyers that their warranties are not at risk.”
In short, “a managed bankruptcy … not a bailout check.”
No mention of letting the industry die.
Obama better hope that nobody in Ohio or Michigan takes his advice and checks the record.
* * * * *
While we’re at it … yes, there were winners – mostly members of the UAW.
And there were losers like:
- GM bondholders (think retirees and widows) whose secured loans were subordinated to the UAW
- The 20,000 non-union Delphi salaried retirees, who lost their pensions and benefits programs as they were headed into retirement
- The profitable GM dealerships that were closed because they spoke out against the Fed’s bailout process (I personally know the principles of one such dealership in Baltimore).
- US taxpayers who are still holding the bag for the $25 billion bailout Source
Again, Obama better hope that nobody in Ohio or Michigan takes his advice and checks the record.
I was struck by a Volt of lightning …
September 13, 2012What are the odds?
I actually (not virtually, actually) passed a Chevy Volt on the road
Note that “I passed” not “I was passed by”
Again I ask, what are the odds?
Well, according to the Detroit News, there have been about 16,000 Volts sold from its birth to date.
Note: about 2,000 have been bought by the gov’t and GE – pandering to the Feds
According to the Dept. of Transportation, There are about 250 million registered vehicles in the U.S.
So, the statistical likelihood of the next car I pass being a Volt is about .0064% … or, less than 1 in 15,000, given the geographic distribution of Volts.
According to the NOAA, the odds of being struck by lighting in your lifetime are 1 in 10,000.
Hmmm.
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Side Note
Reuters reports that nearly two years after the introduction of Volt, GM is still losing as much as $49,000 on each one it builds
It currently costs GM “at least” $75,000 to build the Volt,
According to experts, GM’s basic problem is that “the Volt is over-engineered and over-priced,”
Weak sales are forcing GM to idle the Detroit-Hamtramck assembly plant that makes the Chevrolet Volt for four weeks starting September 17
Will GM go bankrupt again?
August 24, 2012That’s the question posed in a recent Forbes article that’s worth reading.
Here are some of the underlying facts … read the article for the editorial stuff …
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Stock Market
The federal government owns 500,000,000 shares of GM, or about 26% of the company.
The stock is trading at about $20/share, so the government is holding about $10 billion worth of stock
The government’s GM stock is worth about 39% less than it was when the company went public at $33 /share
Since GM’s IPO almost two years ago, the broader S&P 500 has gone up about 30%.
During that period, Ford shares have gone down about 15%, Toyota up about 15%, Honda up about 5%, Nissan up about 35%, Hyundai up about 60% and Volkswagen up about 85%.
Source
It would take about $53.00/share for the gov’t to break even on the bailout.
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Car Market
As a company, General Motors peaked in 1965, when it commanded 50.7% of the U.S. market, and made a stunning-for-the-time $2.1 billion dollars in after-tax profits.
In the 1960s, GM averaged a 48.3% share of the U.S. car and truck market.
For the first 7 months of 2012, their market share was 18.0%, down from 20.0% for the same period in 2011.
GM is flailing in the D-car segment (Malibu, Camry) which accountd for about 20% of the U.S. car market.
Recent (and forthcoming) versions of the Malibu score dead last in Car & Driver reviews.
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Uh-oh
Holy Solyndra: Battery maker A123 Systems goes Chinese … ouch!
August 10, 2012A123 Systems was supposed to be one the U.S. companies to propel the green energy revolution … by designing, making, and supplying batteries to hybrids and electric cars (think Volts).
A123 received more than $200 million from venture investors before raising $378 million in a 2009 initial public offering.
Also in 2009, it was awarded a $249 million green-technology grant under the Obama administration’s $2.4 billion Electric Drive Battery and Component Manufacturing Initiative.
But, things haven’t been going so good for electric cars and A123.
A123 said second-quarter revenue fell 53 percent to $17 million … the company’s second-quarter loss of was $82.9 million … and cash dwindled to the point that the company can only fund its operations for the next four to five months.
So, according Auto News, China’s largest automotive parts supplier is now poised to take control of A123.
China’s Wanxiang Group Corp. plans to invest up to $450 million in A123 Systems, taking an 80 percent stake in A123.
* * * * *
Ken’s Take: So much for energy independence and government venture capitalism.
GM market share slips 3 points … now, that’s a turnaround to be proud of.
August 2, 2012The President continues to tout his prowess as the venture capitalist who engineered GM’s bailout.
Hmmm.
Last week, GM canned its VP – Marketing after less than 1 year on the job.
This week, the company released July sales results.
Bottom line: the pie grew, but GM’s sales fell 6% versus last July … and its market share dropped by a whopping 3 points … down to 17.4%
Any wonder why the share price is about half of the IPO price?
Remember GMAC? … GM going sub-prime (again)
July 31, 2012According to IBD …
Near the end of 2010, GM acquired a new captive lending arm, subprime specialist AmeriCredit.
Renamed GM Financial, it has played a significant role in GM’s growth.
Ken’s Note: Approximately 20% of GM revenues go thru GM Financial
The automaker is relying increasingly on subprime loans.
Potential borrowers of car loans are rated on FICO scores that range from 300 to 850.
Anything under 660 is generally deemed subprime.
So, lots of fleet sales to the Federal & Blue state governments … lots of self-financed sub-prime loans to move the metal
Cue the repo man … for the deadbeats’ cars … and the stock-sliding company.
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Note: GM shares are now about half of the IPO price.
GM offers no-haggle prices … and a money-back guarantee.
July 11, 2012According to Bloomberg …
Losing ground to Toyota and needing to clear out end-of-model-year vehicles, GM will offer no-haggle pricing on 2012 Chevrolet cars and trucks plus a money-back guarantee on all new Chevys .
The new promotions, which GM calls its Chevy Confidence program, address two things car shoppers dread: haggling and commitment.
“Americans aren’t great at haggling and we are expected to do so on the two biggest purchases we face: real estate and autos.”
“This Chevrolet Confidence program alleviates the issue of haggling and eliminates ‘buyer’s remorse.’”
The no-haggle program pledges to offer 2012 vehicles at the “best possible prices” in addition to current incentives.
The no-haggle sales price, called Total Confidence Pricing … harkens back to previous sales programs offered by GM.
The company’s Saturn included no-haggle buying before the brand ended as part of GM’s bankruptcy reorganization in 2009.
Such programs are “marginally effective,” according to Dennis Virag, president of Automotive Consulting Group. “There will be some buyers, but I don’t think it’s going to attract a large number of new customers for Chevy.”
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GM is trying to boost Chevy as the brand faces greater pressure from Toyota.
U.S. sales of Chevrolet, GM’s largest brand, rose 6.3 percent to 961,662 cars and light trucks in the first half, a slower pace than the industrywide increase of 15 percent; Toyota’s namesake brand gained 29 percent to 937,964.
Ken’s Note: Toyota faced what President Obama would call “headwinds” the past couple of years with a tsunami knocking out production for a few months, and Obama’s Secretary of Transportation calling Toyotas unsafe to drive … a hysterical charge that was never proven.
GM CEO Dan Akerson is pushing the company to boost operating margins and strengthen Cadillac and Chevrolet as global brands.
Anybody see a trend?
What do GM and Facebook have in common?
June 13, 2012Easy question, right?
Two high profile IPOs that have lost about of their value since their IPOs.
C’est la vie …
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GM
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Facebook
Remember the last big IPO? … You know, the one before Facebook
May 21, 2012Well, Facebook went out at $38 and closed at $38.
The pundits are whining that the IPO was a failure because there wasn’t a big first day pop.
My take: one of the rare times that the IB’s priced a deal at fair market value.
Oh my, “flippers” didn’t get a chance to earn millions by just showing up for work.
Sounds ok to me.
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What I didn’t like about the Facebook IPO is that it got most analysts talking about the Government Motors IPO.
Given the chatter, I got curious and checked out the stock price
Oops, down almost 40% from the IPO price …. during a period when the overall market was up over 10%.
Geez, since Bin Laden is dead and GM is alive, why the stock dip?
The company claimed record profits of $7.6 billion in 2011, the “highest profits in the 100 year history of that company” according to President Obama.
And, the company paid no Federal income taxes on taxes those record earnings.
Why?
Because New GM came out of bankruptcy “owning” all of the tax loss carry forwards from old GM.
That’s not supposed to be allowed when a company goes through bankruptcy — a deterrent to companies trying to simply buy losses to offset some of their taxable earnings.
How did it happen?
According to several sources:
The Obama administration quietly snuck in a special tax break for GM, which allows the company to write off approximately $45 billion in post-bankruptcy losses against post-bankruptcy profits.
It’s good for twenty years.
The $45 million tax write-off is in addition to the more than $50 billion given to General Motors in the bailout,
About that GM success story ….
May 2, 2012Team Obama is touting the rousing success of GM.
You know, Bin Laden is dead; the UAW is alive.
Oops, Imeant GM is alive.
Hmmm. Let’s see …
The original GM stockholders — you know, your grandma and the pension funds — got completely wiped out.
The secured creditors got about 65% of their principal wiped out.
And privileged folks got the opportunity to buy stock in the new GM.
Those share have declined by 30% from the $33 IPO price ,,, a 50 point spread vs, the S&P 500 which increased 20% over the same period.
That’s a loss of about $16 Billion in market cap in about 18 months.
Now, that’s what I call a roaring success … many more successes and we really will be bankrupt.
Hybrid owners: “Been there, done that”
April 26, 2012TakeAway: Recent study shows hybrid vehicles lack repeat purchasers.
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Excerpt from AdAge: “Usually No Encore for Hybrid Buyers”
Only about one out of three hybrid vehicle owners chooses to buy another hybrid, according to a study by research firm Polk.
The good news for automakers is that a high percentage of the return buyers remain loyal to the brand, even if they don’t buy another hybrid.
In the case of hybrids, rising fuel prices, to more than $4 a gallon in some places, has so far had “little impact” on hybrid buying decisions, the report said.
“The lineup of alternate-drive vehicles aren’t appealing enough to consumers to give the segment the momentum it once anticipated.”
Edited by ARK
Ride, Sally, ride …. Mustang’s coming back.
April 19, 2012TakeAway: Ford’s Mustang brand is being refreshed to target Gen-Y consumers who have to taste the the freedom of driving.
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Excerpt from WSJ: “Old Mustang Is Put Out to Pasture”
The Mustang today strongly hews to the look of the 1964 original. But Ford is working on radical makeover of its signature youth-market car, people familiar with Ford’s plans said.
The next generation would retain the shark-nosed grille and round headlights, but would look more like the new Ford Fusion.
The change is part of a bid to make the Mustang appeal to Generation Y, the roughly 80 million people who were born between 1980 and 1999. This demographic group is entering its peak car-buying years.
For Ford, Gen Y may prove a difficult target.
For many in this group, cars and driving just aren’t that cool in an era of iPads and Facebook.
A 2011 study by the University of Michigan found that just two-thirds of all 18-year-olds had driver’s licenses in 2008, down from 80% in 1983.
Edited by ARK
Obama better buy his Volt now …
March 13, 2012On a campaign stop a couple of weeks ago, after a photo op sitting in a Volt, President Obama told a crowd of United Auto Workers:
“It was nice. I bet it drives real good,” he said. “And five years from now, when I’m not president anymore, I’ll buy one and drive it myself.”
Well, he might want to place his order now …
WSJ reports that despite advertising galore, Chevy has sold under 10,000 of the green machines so far — less than 1,000 per month — and GM has decided to idle production of the battery-powered car for five weeks.
The plant had just resumed production on Feb. 6 after a prolonged holiday shutdown.
Former GM Vice Chairman Bob Lutz the main force behind the Volt, said recently that GM’s lofty targets for the Volt are its main problem.
“The Volt is a bases-loaded home run,” Mr. Lutz said. “It will overcome.”
Another GM spokesperson says:
“This technology is here to stay, we have all kinds of people who want to copy it and go after it. We are not re-evaluating anything … The only question here is what the rate of sales will be.”
In other words, great dog food …. it’s just that the dogs aren’t eating it.
Thanks to SMH for feeding the lead
Toyota targets new hybrid launches at young buyers …
January 20, 2012Question: How many total hybrid cars or trucks sold in the US are Toyota Priuses?
Answer: Nearly 50%.
Toyota hopes to grow its share of the hybrid market with new product launches, such as the Prius C – “c” for city, to attract young buyers.
* * * * *
Excerpted from brandchannel.com, “NAIAS Action: Toyota Woos Younger Buyers with Hybrids”
Toyota and Honda … have been gearing up new products they’re hoping will begin attracting Americans back to their brands this year …
Toyota showed off its new Prius c — the “c” in the name is for city — a small entry in its growing “family” of Prius hybrids, and bowed its NS4 concept plug-in hybrid that should see the market around 2015.
… Toyota is reaffirming its commitment to the long-term future of a type of propulsion that it pioneered with the Prius hybrid.
Toyota also plans to introduce a “plug-in” Prius, a la the Chevrolet Volt, sometime this year, as well as a Scion iQ EV and a second generation of its Toyota RAV4 EV, an SUV, in small volumes.
“Young buyers on a budget have seen hybrids as out of reach… The next three years … will be a critical period for gauging consumer interest in other advanced technologies.
Cost and convenience will remain the key challenges during this period. [Also], refueling infrastructure remains a distinct challenge“ …
Edit by KJM
Looks like a hybrid, runs like a hybrid … it’s eAssist.
January 17, 2012Punch line: Buick is ducking some common perceptions by calling its new LaCrosse hybrid a “LaCrosse with eAssist”.
Excerpted from BrandChannel …
American consumers remain decidedly lukewarm to hybrid vehicles.
Buick is hoping to get around this obstacle by positioning its latest hybrid, a version of the LaCrosse sedan, as a non-hybrid. Instead, GM is touting the “light electrification” system it uses for the car and has come up with a unique brand name for it: “eAssist.”
“When you say ‘hybrid,’ many times that comes with baggage.”
“So for us, the focus was to put an emphasis on the car itself and what this car delivers and how technology enhances the ownership experience.
We’re selling a LaCrosse that happens to have this great [eAssist] technology.”
For example, Buick and its dealers are emphasizing: the quiet ride… and the car’s “start-stop” capability which halts operation of the engine at stoplights, saving fuel, and then starts it up again when the driver punches the accelerator.
The LaCrosse with eAssist retains a feature that has proven popular with most hybrid purchasers: a screen on the instrument panel that helps them track … fuel economy.”
The eAssist gauge “is a way for people to show they’ve got something unique, and they can show their friends and families.”
That’ll fool a lot of folks, won’t it?
Good riddance: Electric car subsidies expire … at least, some of them.
January 3, 2012According to the Wash Post …
Two of the most wasteful subsidies ever to clutter the Internal Revenue Code went out with the old year when Congress declined to renew either
- The 45-cent-per-gallon tax credit for corn-based ethanol.
- A credit that gave electric-car owners up to $1,000 to defray the cost of installing a 220-volt charging device in their homes.
But, he $7,500 tax credit that the government offers purchasers of electric vehicles did not expire at year’s end.
The Obama administration says that the credit helps build a market for EVs, which helps create jobs.
Sales of electric vehicles were disappointing in 2011, with the Volt coming in below the 10,000 units forecast.
Evidence is mounting that President Obama was overly optimistic to pledge that there would be 1 million EVs on the road by 2015.
More prosaic fuel-economy innovations such as conventional hybrids, clean-diesel cars and advanced gasoline engines all show much more promise than electrics.
Frito-Lay says: “Gentlemen, start your (electric) engines.”
December 13, 2011Punch line: Frito-Lay is building the largest fleet of electric cars in North America
According to Today’s Trucking …
PepsoCo’s Frito-Lay North America has turned the ignition on ten new electric trucks in Orlando.
The electric delivery trucks are set to be part of the largest planned fleet of commercial all-electric trucks in North America.
Frito-Lay plans to deploy 176 electric trucks this year, making them the largest commercial fleet of all-electric trucks in North America.
The trucks are by Smith Electric Vehicles, and designed to operate at peak effectiveness in urban environments.
The trucks generate zero tailpipe emissions and each truck emits 75 percent less greenhouse gases than a conventional diesel truck.
The trucks operate for up to 100 miles on a single charge.
GM: The Volt isn’t about how many you sell … say, what?
December 2, 2011According to the WSJ:
- The company sold 1,139 Volts in November, bringing sales to 6,142 this year.
- GM will miss a target to sell 10,000 Volts in 2011.
- GM has 134 day’s supply of the Volt, while the Nissan has a 21 day supply of the Leaf, the only other electric car on sale in the U.S. mass market.
GM’s reaction: “The Volt isn’t just about how many cars we sell …. This car is revolutionary.”
Speaking of revolutionary …
GM offered to buy back Volts from any owner who fears the car is a fire risk amid a U.S. safety investigation of its lithium-ion battery.
Not exactly a textbook example of Crossing the Chasm …
GM goes all-electric in 2013
November 16, 2011More precisely, GM will launch it’s first all electric car – the Spark – in the U.S. in 2013.
Technical note: the Volt is a combo electric with an ICE (internal combustion engine) in reserve.
GM will sell its first production all-electric car in the U.S. in 2013.
It will be battery EV version of the coming Spark mini-car.
The Spark is a tiny city car that is smaller than Chevy’s new subcompact Sonic.
The EV version will be sold in “limited quantities” in select U.S. markets.
Ken’s Take: “Limited quantities” ? I’m betting the under.
Chevy Volt’s battery catches fire … oops.
November 15, 2011The Detroit Free Press reports that a Chevrolet Volt caught fire several weeks after a crash test.
The electric vehicle had been subjected to a low speed (20 mile-per-hour), side-impact test for its crash safety rating.
Apparently, the crash punctured the Volt’s lithium-ion battery, and though it took a couple of weeks, the vehicle eventually self-combusted – i.e. it went up in flames.
General Motors believes the fire occurred because the testers didn’t drain the energy from the Volt’s battery following the crash, which is a safety step the automaker recommends.
Government officials are weighing the need for new safety rules that could require first responders to drain electric vehicles’ batteries after a crash.
Note, they’re not investigating how to make the Volt safer, they’re determining whether fire-fighters have to drain the batteries when they arrive at an accident scene.
Cmon man …
Tracking the progress at GM …
October 12, 2011The U.S. Treasury aimed to sell more of its 26.5% stake in GM by August or September.
Then, the stock started tanking.
GM stock would need to hit $53 a share for the U.S government to break even on its $50 billion bailout of the auto maker.
At $30 a share, the U.S. would lose more than $10 billion on its $50 billion bailout of GM.
So far this year, GM stock is down about 40%
It was trading just over $22 this week,
Than makes the loss about $15 billion … but, who’s counting?
Ford ads a new benefit: buying from a company that stands on its own.
September 19, 2011Punch line: Ford hit the airwaves with a potentially controversial ad touting the fact that it’s an American company that stands on its own … unlike its bailed out competitors.
I like it …
Excerpted from US News: Ford TV Ad Slams Obama Auto Bailouts article & video
America is still fighting over President Obama’s costly bailout of Chrysler and General Motors. Especially the owners of Ford, the only member of Detroit’s “Big Three” who rejected the government dole and emerged perfectly healthy.
In its most political ad in the so-called “Drive One” ads where real drivers are thrust before cameras to explain why they picked Ford, a real Ford F-150 pick-up driver is featured.
His name is Chris. After he sits down the “reporters” bark “Chris, Chris.” One asks him to explain why “was buying American important to you.”
Sitting and looking sincere and serious, Chris says:
“I wasn’t going to buy another car that was bailed out by our government.
I was going to buy from a manufacturer that’s standing on their own: win, lose, or draw.
That’s what America is about is taking the chance to succeed and understanding when you fail that you gotta’ pick yourself up and go back to work.
Ford is that company for me.”
Now, let’s see if Chris the Ford buyer gets tax audited like Joe the Plumber …
Timmy shelves the sale of GM shares … for now, at least.
August 10, 2011The Obama administration has put on hold plans to sell the rest of its stake in GM because the auto maker’s shares have slumped this year.
The U.S. Treasury aimed to sell more of its 26.5% stake in GM by August or September.
GM stock would need to hit $53 a share for the U.S government to break even on its $50 billion bailout of the auto maker.
At $30 a share, the U.S. would lose more than $10 billion on its $50 billion bailout of GM.
So far this year, GM stock is down 31%.
On Tuesday, GM stock closed at $25.54, up 97 cents.
OUCH !
How many Chevy Volts sold in July?
August 5, 2011According to Electric Cars Reports …
Despite thousands of dollars of government rebates, GM’s Chevrolet Division sold just 125 Volts in July — the worst monthly total for the Volt since it was introduced last year.
Birth-to-date, GM has sold only 3,196 units …Haven’t heard much about the Volt lately – have you?
Remember the Feds stake in GM ?
August 3, 2011Several post-debt deal articles have lumped it with the President’s other successes: ObamaCare, auto bailout …
According to the WSJ …
“To break even, the U.S. Treasury would need to sell its remaining stake — about 500 million shares—at $53 apiece.”
Bad news: Stock closed on Aug. 2 at $27.05 … approximately 20% below the IPO price … about a $13 Billion loss.
A mockery of longstanding bankruptcy law …
July 11, 2011When the history is written on Pres. Obama’s strained relationship with American business leaders, I think that the GM non-bankruptcy bankruptcy will be tagged as the the first critical shot fired (by the President).
Just in case you forgot, here’s a recap excerpted from Reason:
Many experts suspect that GM could have obtained private bankruptcy financing if it had presented a credible restructuring plan addressing the cause of its malaise: the uncompetitive costs of its unionized work force.
If it couldn’t, then the government could have offered guarantees to private lenders for the amounts they loaned, which likely would have been smaller than the bailout.
But the administration took matters in its own hands, using taxpayer dollars to commandeer the bankruptcy process to protect key constituencies, while giving short shrift to others.
- It gave Chrysler’s secured creditors, who would have had priority in a normal bankruptcy, 29 cents on the dollar.
- Chrysler’s unions, on the other hand, got more than 40 cents, even though they are equivalent to low-priority lenders.
This made a mockery of longstanding bankruptcy law, something that will make credit markets wary of lending to political sacred cows in the future.
I think CEOs could have lived with Obama firing Richard Waggoner as CEO … and then firing his replacement, Fritz Henderson … and then firing his replacement, Ed Whitacre.
But, ignoring the rule of law and subordinating secured creditors to one of Obama’s core constituencies — overpaid union hacks – was over the top.
If there were any hopes of turning around the relationship, the Administration’s moves to keep Boeing from operating a plant in right-to-work South Carolina dashed them
Hybrid car sales respond to high gas prices … with a thud.
June 22, 2011The last time that gas prices soared, hybrid cars were selling above their sticker prices.
Not so much this time.
According to USA Today, hybrid sales fell to only 1.6% of total auto sales – down from their 3.6% peak in 2009.
Why?
“Even with the fuel savings, it doesn’t make sense to buy a hybrid” for many buyers.”
Sure, gas prices hit $4, creating “economic value” versus conventional gas-engine cars … but the fuel savings has narrowed with the introduction of compacts that get 40 mpg and sell for considerably less than hybrids.
Sales of high-gas-mileage, conventional compacts such as the Hyundai Elantra, Ford Focus and Chevrolet Cruze are hot.
The new conventionally powered cars use various strategies to boost gas mileage to near hybrid levels — without the batteries and electric motors that can add $6,000 on average to a vehicle’s cost.
* * * * *
Volt update: Chevy sold 481 Volts in May … pushing it’s total since January up to a whopping 2,184.
* * * * *
GM’s Volt need a jolt …
April 22, 2011One of Gov’t Motor’s main focuses has been the Obama-sponsored Chevy Volt, but …
- Consumer Reports says GM’s hybrid “just doesn’t make a lot of sense.” … ouch.
- More important, it isn’t selling — only 1,210 Volts have sold this year through the end of March … double ouch
In technical marketing jargon, the dogs ain’t eating the dogfood …
Full article: NY Post, ‘Government motors’ is still a lemon, April 18, 2011
Gov’t Motors’ shares hit new low… even gov’t is bailing
April 21, 2011Where are the lemon laws when you need them?
Here’s a shocker: even a reconstituted company that’s stuck with the UAW doesn’t do very well.
GM had been showing some life, largely on the back of fuel guzzling pick-ups and SUVs. But, increasing gas prices have (again) slowed that market down.
Surprise, surprise, surprise.
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Excerpted from WSJ: U.S. Hurries to Sell GM Stake, April 19, 2011,
The U.S. government plans to sell a significant share of its remaining stake in GM. this summer despite the disappointing performance of the auto maker’s stock.
A sale within the next several months would almost certainly mean U.S. taxpayers will take a loss on their $50 billion rescue of the Detroit auto maker in 2009.
To break even, the U.S. Treasury would need to sell its remaining stake — about 500 million shares—at $53 apiece.
GM closed at $29.59 in trading Tuesday, hitting a new low since its $33-a-share November initial public offering.
Analysts say that GM shares have been hurt by rising fuel prices, industry production disruptions and management turnover.
GM share price could become further depressed after investors holding bonds of the now-bankrupt “old-GM” receive warrants and stock for existing GM shares. That will happen April 21.
LaHood: “I wouldn’t want anybody in my family driving a Chevy Cruze”
April 13, 2011Just dreaming …
Remember when the Secretary of Transportation took to the airwaves to to tell people not to buy or drive Toyotas because they were unsafe?
Turned out that the problem was an auto service guy sticking the wrong floor mat in a car and a couple of folks hitting the accelerator instead of the brake.
But, since the gov’t owned GM – one of Toyota’s main competitors – LaHood just let it fly.
Now the plot thickens.
The Chevy Cruze is being recalled because its steering wheel comes off.
That’s right. it steering wheel can become detached.
No driver error. No servicing mistake.
The steering wheel comes off.
Oops.
Do you think LaHood will issue another driver’s alert?
I’m betting ‘no’.
The solution is high-speed rail … what, pray tell, is the problem?
February 16, 2011Seriously, have you heard anybody (except Reid & Obama) say “man, what this country needs is a $53 billion “national high-speed rail system” ?
I sure haven’t.
Except for connecting liberal bastions DC, NYC and Boston .., and Disneyland and Las Vegas … I can’t figure out where it would run … and more important, who would ride it ?
Robert Samuelson of Newsweek sees a few other holes in the program …
The rail proposal casts doubt on the administration’s commitment to reducing huge budget deficits.
High-speed rail would definitely be big.
Transportation Secretary Ray LaHood has estimated the administration’s ultimate goal – bringing high-speed rail to 80 percent of the population – could cost $500 billion over 25 years.
For this stupendous sum, there would be scant public benefits. Precisely the opposite. Rail subsidies would threaten funding for more pressing public needs: schools, police, defense.
How can we know this? History, for starters.
In 1970, Congress created Amtrak to preserve intercity passenger trains. The idea was that the system would become profitable and self-sustaining after an initial infusion of federal money. This never happened. Amtrak has swallowed $35 billion in subsidies, and they’re increasing by more than $1 billion annually.
Despite the subsidies, Amtrak does not provide low-cost transportation. Fares on Amtrak’s high-speed Acela start at $139 one-way; A comparable roundtrip bus fare: $21.50.
Nor does Amtrak do much to relieve congestion, cut oil use, reduce pollution or eliminate greenhouse gases. Its traffic volumes are simply too small to matter.
Measured by passenger-miles traveled, Amtrak represents one-tenth of 1 percent of the national total.
The reasons passenger rail service doesn’t work in America are well-known: Interstate highways shorten many trip times; suburbanization has fragmented destination points; air travel is quicker and more flexible for long distances.
Even if ridership increased fifteenfold over Amtrak levels, the effects on congestion, national fuel consumption and emissions would still be trivial.
What’s disheartening about the Obama administration’s embrace of high-speed rail is that it ignores history, evidence and logic.
The case against it is overwhelming. High-speed rail is not an “investment in the future”; it’s mostly a waste of money.
High Speed Rail a Fast Track to Waste, February 14, 2011
Simple question: Why hasn’t Obama fired Ray LaHood?
February 10, 2011Ray LaHood is Obama’s Transportation Secretary.
The guy who excorciated Toyota for making unsafe cars.
“I wouldn’t let anybody in my family drive one. They’re not safe.”
No evidence. Just hearsay.
No investigation. Just anecdotes and ambulance chasers.
Toyota loses millions. Government-owned GM surges.
Now, it’s “pedal misapplication”. Not electronics.
Either LaHodd is totally irresponsible or frightfully conniving.
Either way, he should be fired
Let’s see if Obama has the moral clarity and ‘nads to do what’s right.
I’m taking the under on the bet …
GM’s UAW workers get windfall bonus … and, oh yeah, Toyota’s innocent.
February 9, 2011From the ‘makes your blood boil’ file:
Yesterday, there were 2 seemingly unrelated news stories … I say ‘seemingly’ because the mainstream media hasn’t picked up on the connection.
First, the WSJ reported that GM (aka, Government Motors) is planning to pay its hourly workers at least $3,000 each in profit-sharing payouts, the largest amount ever. Why? Because the company miraculously returned to profitability in 2010. The profit-sharing checks will go to 45,000 workers as part of the auto maker’s contract with the United Auto Workers union.
Now, let’s stop and think for a moment.
How did GM return to profitability?
Through increased UAW productivity?
Nah.
First, GM wiped out shareholders and – completely ignoring contract law — moved the union pension claims ahead of its bona fide secured creditors. Get rid of your debt – and its related interest – and your economics change a bit.
Then, toss a couple of billion dollars of excess plants & equipment into a new corporate entity … just get it off your books.
Then, have one of your owners – in this case the Federal government – make some bogus claims against one of your major competitors. Maybe have the President and Secretary of Transportation declare that the competitor’s cars are unsafe to drive. That might dampen their sales … and increase your’s.
So what if the claims are largely unfounded. Go for it.
Now, for the other news story.
The WSJ reported that NASA and the National Highway Traffic Safety Administration conducted a 10-month-long study on Toyota’s apparent acceleration problems.
Based on the study they absolved the electronics in Toyota’s vehicles for unintended acceleration, and said driver error was to blame for most of the incidents.
While floor mats sometimes got caught under the throttle, the most common problem was drivers hitting the gas when they thought they were hitting the brake, which the NHTSA called “pedal misapplication.”
So tell me again why the overpaid, over-pensioned UAW workers are getting bonuses …
Does the Volt have enough power to cross the chasm?
January 31, 2011TakeAway: Like many new, innovative products, there is an adoption chasm between the early adopters and the early majority.
While the new Chevy Volt has already demonstrated appeal to the early tech adopters, there are some issues that could spell trouble.
One, the short battery range doesn’t really offer a complete solution to eliminating the need for gasoline.
Two, once you have exhausted the battery, it’s just another car. Until the battery technology improves, the “killer application” seems to be lacking.
* * * * *
Excerpted from NPR, “Electric Cars Steal the Spotlight at Auto Show,” by Sonari Glinton, January 14, 2011
When the North American International Auto Show opens in Detroit on Friday, there’s going to be electricity in the air. …
… the star of the show is the Chevy Volt, the electric car with a backup gas engine. It won the top prize — the 2011 North American Car of the Year. …
GM has high hopes that the Volt will be adopted by a mainstream audience.
“Today a lot of our customers are early tech adopters — typically the first on the block to have an iPhone or an iPad,” says Tony DiSalle, the head of marketing for the Chevy Volt. He thinks those numbers will improve over time.
“The most important thing is to get consumers — mass-market consumers — to understand the benefits of the Volt,” DiSalle says.
GM expects to sell about 10,000 Volts this year. In 2012, the company will ramp up production to about 45,000 cars. But even that figure is small compared with the more than 2.2 million cars and trucks that GM’s four brands sold in 2010. …
One of the barriers to the adoption of the electric car is a phrase that keeps coming up at the auto show — range anxiety. Many of the cars on display can only travel under electric power for short ranges. Analysts say that until the big car companies can conquer consumer fears of running out of charge, electric vehicles will remain on the fringes.
“Look, the electrification of the American fleet is not going to happen overnight,” says Bob Lutz, who retired as vice chairman of GM in May.
… He says electrification will be a gradual process, predicting that it will take until 2025 for electric vehicles to account for 10 percent to 15 percent of the overall market. …
Edit by DMG
Does the Volt have enough power to cross the chasm?
January 31, 2011TakeAway: Like many new, innovative products, there is an adoption chasm between the early adopters and the early majority.
While the new Chevy Volt has already demonstrated appeal to the early tech adopters, there are some issues that could spell trouble.
One, the short battery range doesn’t really offer a complete solution to eliminating the need for gasoline.
Two, once you have exhausted the battery, it’s just another car. Until the battery technology improves, the “killer application” seems to be lacking.
* * * * *
Excerpted from NPR, “Electric Cars Steal the Spotlight at Auto Show,” by Sonari Glinton, January 14, 2011
When the North American International Auto Show opens in Detroit on Friday, there’s going to be electricity in the air. …
… the star of the show is the Chevy Volt, the electric car with a backup gas engine. It won the top prize — the 2011 North American Car of the Year. …
GM has high hopes that the Volt will be adopted by a mainstream audience.
“Today a lot of our customers are early tech adopters — typically the first on the block to have an iPhone or an iPad,” says Tony DiSalle, the head of marketing for the Chevy Volt. He thinks those numbers will improve over time.
“The most important thing is to get consumers — mass-market consumers — to understand the benefits of the Volt,” DiSalle says.
GM expects to sell about 10,000 Volts this year. In 2012, the company will ramp up production to about 45,000 cars. But even that figure is small compared with the more than 2.2 million cars and trucks that GM’s four brands sold in 2010. …
One of the barriers to the adoption of the electric car is a phrase that keeps coming up at the auto show — range anxiety. Many of the cars on display can only travel under electric power for short ranges. Analysts say that until the big car companies can conquer consumer fears of running out of charge, electric vehicles will remain on the fringes.
“Look, the electrification of the American fleet is not going to happen overnight,” says Bob Lutz, who retired as vice chairman of GM in May.
… He says electrification will be a gradual process, predicting that it will take until 2025 for electric vehicles to account for 10 percent to 15 percent of the overall market. …
Edit by DMG
That sound you don’t hear is the rush to electric cars …
January 6, 2011Interesting article in Business Week titled “Electric Cars Get Charged for Battle” … worth reading.
Here are a couple of points that caught my eye …
P.S. Is it just me, or has Business Week been swinging left since being bought by Bloomberg?
* * * * *
After 10 years as the world leader in hybrids, Toyota has never sold more than 187,000 Priuses in the U.S. in a year.
- Prius sales peaked in 2007, just before the financial meltdown, and have dropped since then as fuel prices retreated.
Nissan manufactures its own batteries in a joint venture with NEC, and they account for roughly half the cost of the car,
78% of drivers go less than 40 miles daily; 95% drive fewer than 100 miles a day.
The best guess is that 80 percent of charging will take place at home.
- Charging an electric car with a standard 120-volt outlet can take up to 18 hours; 5 to 8 hours to charge one with a more powerful 240-volt outlet.
- But, buying a 240-volt charger requires contacting a utility to see if the neighborhood transformer can handle the load, getting a contractor to install the 240-volt charger in your garage, and having the city inspect it.
- It can cost anywhere from a few hundred dollars to $3,000 and take a month or two.
There are 106,000 gas stations coast to coast in the U.S. … 13,000 public chargers are expected to be in the ground by the end of 2011;
- Cracker Barrel restaurant chain recently announced that it would install chargers at 24 of its interstate locations
Question: Think Cracker Barrel & electric cars attract the same demongraphics?*
Nissan sorted potential launch markets according to three main criteria.
- (1) places that had EV incentives left over from the late 1990s-early 2000s.
- (2) places with a high density of hybrid customers. (Of the early Leaf buyers, almost half have owned Priuses.)
- (3) states where the local utilities were willing to upgrade their grids if needed.
Wave One: Washington, Oregon, California, Arizona, Tennessee, Texas, and Hawaii.
Business Week, Electric Cars Get Charged for Battle, December 29, 2010
http://www.businessweek.com/magazine/content/11_02/b4210048400234.htm
* Thanks to JMH for question
Why the auto companies let the UAW drive the bus …
November 9, 2010Insightful article by Megan McArdle, business and economics editor for The Atlantic …
Punch line: Both the auto companies and the UAW took the most obvious course at any given time, while not realizing that their cumulative decisions were entirely toxic. They created a non-competitive cost structure that lured foreign competition that wasn’t burdened by high labor costs/
* * * * *
The Atlantic, New GM, Same Old Union?, Oct 5 2010
In the mid-1950s the Big Three had settled into a relatively stable relationship with the UAW.
When contract time came around, the UAW picked off the company it perceived as the least able to survive a strike; used the threat of a strike to get a good contract; and then demanded the same from the other two.
Management bought union peace with concessions that seemed cheap at the time: tax-favored pension and health care benefits.
Those companies were now in a bad position, because if they risked a strike, their competitor, who already had a contract, would take all their customers.
This relationship essentially meant that the Big Three simply didn’t compete on labor cost, work processes, or any of the other labor-side innovations that have enhanced productivity over the last forty years.
This was good for the UAW and good for the auto manufacturers, because arguably it actually helped cement their cosy oligopoly by removing one of the major competitive pressures.
In hindsight, this was stupid for many reasons.
- Automation made it possible to produce more cars with fewer workers.
- Foreign competition cut into market share — the Big Three had about 90% of the US market at the end of World War II, versus about 45% today.
- Workers started living a lot longer than they were expected to. Now, GM has a little over 50,000 hourly employees–and about a half a million retirees.
- Soaring health care costs made the health care benefits even more of a problem than the pensions.
Had there been no foreign competition, this wouldn’t have mattered so much.
Unfortunately for the Big Three, there was competition, from foreign automakers who didn’t have the same legacy cost structure.
Critics of the union say that the union should have been willing to give back more on labor. That’s easy to say, but hard to do; unlike many unions, which put their retirees on inactive status, UAW’s bylaws gave retirees considerable power. Naturally, by the time 90% of your membership is retirees, those bylaws are not going to be altered.
Critics of the company say that the company could have dealt with these problems by making better cars. How, exactly, were they supposed to make better cars when they were burdened by these huge legacy costs?
The company was burdened with these costs simply because it had made extraordinarily generous promises in an era when health care was cheaper — and when the firms and the union had a cozy arrangement that allowed them to pass any increase in their labor costs onto consumers.
Full article:
http://www.theatlantic.com/business/archive/2010/10/new-gm-same-old-union/64088/
Mission Accomplished at GM? … We’ll bet ‘under’ (with a caveat).
September 8, 2010GM is rushing to IPO before the mid-term election to “prove” the wisdom of the bailout.
Pundits are saying that the company’s politically motivated IPO could jeopardize taxpayer ”investment.”
Here’s why:
- Taxpayers have somewhere between $40 billion to $60 billion “invested” in Gov’t Motors
- For taxpayers to come out whole, the Treasury’s 304 million of the company’s 500 million common shares would need to average $131 to $197 per share
- That would put GM’s implied valuation at somewhere between $65 billion to $98 billion.
- Ford has a market value of only $40 billion.
- Ford’s near-yerm earnings are expected to be six times those of GM.
- If investors valued both companies the same … taxpayers would incur a 50% loss.
- And, oh yeah, the market isn’t looking all that good these days.
Ken’s Bet: Watch the Administration to rush the IPO and then strong-arm Goldman et. al. to buy up GM shares at inflated prices and either push the share on clients (think CDOs) or eat them in their proprietary accounts.
* * * * *
Post inspired by: Obama’s ‘Mission Accomplished’ Moment At GM, 08.30.10
http://www.forbes.com/2010/08/30/general-motors-ipo-elections-opinions-columnists-shikha-dalmia.html?boxes=opinionschannellatest
Auto sales are booming … or are they ?
August 11, 2010The initial headlines were that US auto sales were up big in July.
Not so fast.
Yeah, they were up versus July 2009, but …
- Industrywide deliveries dropped to an 11.1 million pace
- GM’s sales rose 1.5% … they were expected to rise 10%.
Ford’s sales fell 0.7 %, trailing analysts’ estimates for a 10% gain.
Chrysler sales gained 1.1%, versus a 2.2% expectation
Toyota and Nissan sales dropped, but topped expectations.
The results show GM’s turnaround efforts may be slowing after last year’s bankruptcy.
Bloomberg, GM, Ford and Chrysler Sales All Lag Estimates, Aug 3, 2010 Aug. 3
http://www.bloomberg.com/news/2010-08-03/gm-s-july-u-s-auto-sales-rise-5-4-falling-short-of-analysts-estimates.html
Why didn’t they just name it Edsel ?
August 3, 2010Punch line: The Chevy (oops, I meant to say Chevrolet) Volt will have a $41,000 sticker price while offering the performance and interior space of a $15,000 economy car.
Maybe nobody will notice …
* * * * *
Excerpted from NYT: G.M.’s Electric Lemon, July 29, 2010
GM introduced America to the Chevrolet Volt at the 2007 Detroit Auto Show as a low-slung concept car that would someday be the future of motorized transportation. It would go 40 miles on battery power alone, after which it would create its own electricity with a gas engine.
Oops.
For starters, G.M.’s vision turned into a car that costs $41,000 before relevant tax breaks (projected to be about $7,500 per car). Tthe Volt’s main competition, the Nissan Leaf ends up costing $8,000 less as a result.
And instead of a sleek coupe , the Volt looks suspiciously similar to a Toyota Prius.
It also requires premium gasoline, seats only four people (the battery runs down the center of the car, preventing a rear bench) and has less head and leg room than the $17,000 Chevrolet Cruze, which is more or less the non-electric version of the Volt.
In short, the Volt appears to be exactly the kind of green-at-all-costs car that some opponents of the bailout feared the government might order G.M. to build.
Though President Obama’s task force reported in 2009 that the Volt “will likely be too expensive to be commercially successful in the short term,” it didn’t cancel the project.
So the future of General Motors (and the $50 billion taxpayer investment in it) now depends on a vehicle that costs $41,000 but offers the performance and interior space of a $15,000 economy car.
If G.M. were honest, it would market the car as a personal donation for, and vote of confidence in, the auto bailout. Unfortunately, that’s not the kind of cross-branding that will make the Volt a runaway success.
Full article:
http://www.nytimes.com/2010/07/30/opinion/30neidermeyer.html?_r=1&ref=opinion
Told you so: Closing auto dealers cost jobs without saving GM any money …
July 20, 2010Punch line: A government watchdog slammed the Obama administration’s handling of auto dealer closings that were pushed through last year to speed the bankruptcy proceedings of Chrysler and General Motors.
This is neither new news, nor surprising.
HomaFiles reported on these dealer closings when they were going down.
A local dealer told us at the time:
- There would be no savings to the car companies since the bulk of their dealer support costs are variable costs, e.g. cooperative marketing programs
- In fact, the companies would lose “floor plan” inventory – the cars that dealers have to buy, finance, and keep on their lots. Fewer dealers translates to fewer cars on lots.
- The major criteria for closing were political … dealers who opposed Obama’s plan were warned … and if they continued to make waves, they were put on the “to be closed” list.
- Surviving car dealers might become more profitable since fewer dealers means less price competition
- The biggest impact of dealer closings would be the dealerships’ employees. As the guy told me:
”I’ll still have my foreign nameplate stores … may have to sell one of my beach houses … but that’s no big deal. I worry about th 50 to 100 employees per store … some have been with me for 30 years … I can’t absorb them into my other stores … and I don’t think any surviving dealers will pick many of them up.
* * * * *
Excerpted from Dow Jones: Watchdog Criticizes Treasury’s Role In Auto Dealer Closures, July 18, 2010
The decision by Treasury’s auto task force to reject the companies’ plans for gradual dealer closures in favor of an accelerated process may have exacerbated job losses in the midst of a recession.
The office of special inspector general Neil Barofsky, set up to monitor the $700 billion financial bailout known as TARP, took the administration to task for failing to sufficiently oversee the closures and weigh the broader economic impact of its decisions.
“Treasury made a series of decisions that may have substantially contributed to the accelerated shuttering of thousands of small businesses and thereby potentially adding tens of thousands of workers to the already lengthy unemployment rolls — all based on a theory and without sufficient consideration of the decisions’ broader economic impact.”
The audit said “only time will tell” whether the accelerated closures will help the companies’ profitability. But Treasury should have “taken every reasonable step” to ensure the closures were necessary and that the benefits to the companies outweighed the economic costs of “potentially tens of thousands of accelerated job losses”
But many dealers and their congressional representatives said the process by which GM and Chrysler chose which dealerships to cut was arbitrary.
Full article:
http://online.wsj.com/article/BT-CO-20100718-703295.html
Making quirky profitable … the Subaru way.
June 24, 2010Punch line: By maintaining the quirky persona of its brand and keeping prices low, Subaru has quietly, but aggressively, increased growth … even through the recession.
* * * * *
Excerpted from: Bloomberg Business Week, At Subaru, Sharing the Love Is a Market Strategy, May 20, 2010
While much of the U.S. auto business is just beginning to emerge from retrenchment mode, sales at Subaru are climbing.
“Our customers were not affected by the recession … They have a better financial situation.”
By courting financially solid buyers with a taste for the quirky, has grown steadily and, for the first time, its unit sales exceed those of such better-known brands as BMW, Lexus, Mazda, and Volkswagen.
Subaru has long been popular with a core of professorial drivers in tweed in the Northeast and flannel-clad outdoor enthusiasts in the Northwest. Lately, however, the carmaker has been aggressively moving beyond the snowy, soggy, and mountainous regions that are its stronghold.
Subaru’s secret is that it understands the customers who drive its cars and has gotten smarter and more aggressive about reaching out to new ones who would feel at home as part of that clan.
- The average household income of a Subaru owner is $88,000, the same as Honda Motor and $10,000 more than Toyota.
- Subaru buyers are three years younger than the industry average and a quarter more likely to have a college degree.
- They are a thrifty lot, traditionally buying less car than they can afford. Some 36 percent pay cash.
Much of the automaker’s marketing focuses on cementing its connection to customers.
- Subaru’s research shows them to be an eco-friendly bunch who value the freedom to go where they want, when they want.
- Subaru supports causes such as the American Canoe Assn. and the Leave No Trace Center for Outdoor Ethics. Unlike luxury car buyers, Subaruers are “customers who are not buying things, but experiences.”
- “In their marketing they’ve been focusing on what creates love between the owner and the automobile.”
- “They are basically adding people who are Subaru buyers in their hearts, but don’t know it.”
The bottom line: By maintaining the quirky persona of its brand and keeping prices low, Subaru has quietly, but aggressively, increased growth.
Full article:
http://www.businessweek.com/magazine/content/10_22/b4180018655478.htm
Your green neighbor wants an electric car … get out your wallet!
May 14, 2010This week I was again struck by the irony: the US Feds – who have no money and are deeply in debt — are going to borrow still more money from China to bail out the Greeks – who are deeply in debt. That’s nuts.
And, the few remaining US taxpayers are going to asked (make that ‘told’) that they (and the Chinese lenders) subsidize their neighbors new green rides.
And incumbents wonder why voters are dispatching them one after another …
* * * * *
Excerpted from WSJ: Welfare Wagons The new electric cars are powered by taxpayer credits, May 12, 2010
Congratulations. You’re about to buy a fancy new Nissan Leaf or Chevy Volt . . . for someone else.
The all electric Nissan Leaf is a car for a wealthy hobbyist — good for a trip of 100 miles after which it becomes an inert lump at the end of your driveway (or behind a tow truck) for the many hours it will take to recharge.
The Leaf will roll out in December with a surprisingly modest price of $25,280. That’s after a $7,500 federal tax credit is counted.
Buyers will also have to spring for a $2,200 charging station, but another tax credit ($1,100) cuts the cost in half.
Some states – e.g. bankrupt California, Georgia and Tennessee — will chip in additional consumer tax credits as high as $5,000.
- Note: total tax credits = $13,600
By pricing low and going for volume, Nissan is making a calculated grab for the lion’s share of the available tax dollars — and also pressuring Washington to extend the program when the money runs out.
iPad lust applies to cars too, and early adopters can be expected to line up around the block.
But it is insane to subsidize these vehicles with taxpayer dollars.
Tax handouts for electric vehicles are emblematic of an alarmingly childish refusal to take account that the U.S. government is deeply in debt. Running up more debt to subsidize electric runabouts for suburbanites is not such a sign.
* * * * *
Even if you believe saving gasoline is a holy cause, subsidizing electric cars simply is not a substitute for politicians finding the courage to jack up gas prices.
Think about it this way:
- You can double the fuel efficiency of any car by putting a second person in it.
- You can increase its fuel efficiency to infinity by refraining from frivolous trips.
These are the incentives that flow from a higher gas price.
Exactly the opposite incentives flow from mandatory investment in higher-mileage vehicles. If you paid a lot for a car that costs very little to operate, why not operate it? Why bother to car pool? Why not drive across town for a jar of mayonnaise?
* * * * *
Full article:
Mercedes, BMW … and Lincoln?
May 14, 2010TakeAway: Just because Ford calls Lincoln its luxury brand doesn’t make it so. Luxury is in the eye of the beholder and Ford faces the challenging task of changing customer perceptions of its stodgy, “upscale” brand. So far, the results have been disappointing.
The less-than-luxury perception of Lincoln is not just the result of a communications gap. Ford has been slow to update the Lincoln product line with original designs not based on middle-market Ford-branded models.
Training Lincoln dealers to offer “high-touch” service is important for the luxury segment, but shouldn’t Ford first figure out how to get customers to the dealerships? The new models launching this summer will tell us if they got it right.
* * * * *
Excerpted from Bloomberg Businessweek, “With Lincoln, Ford Isn’t in the Lap of Luxury,” by Keith Naughton, May 6, 2010
Business is booming in Jack Kain’s Ford dealership in London, Ky. Not so much, though, at his Lincoln showroom, where new models … go begging for buyers …
Ford is on a roll, as mainstream car buyers embrace the American brand that didn’t go bankrupt. Now that CEO Alan Mulally is unloading Volvo, however, Ford’s upscale ambitions are riding on Lincoln. Sales at the unit are down 64% from its 1990 peak and buyers average an industry-high age of 62 … “To younger generations, that’s grandpa’s car,” says auto analyst Jesse Toprak … “That doesn’t help when you’re going up against Mercedes and BMW.”
Ford is trying to give Lincoln a hip implant. It’s outfitted four new models with more-dramatic design and installed high-tech features including a voice-activated phone and entertainment system …
The new look isn’t helping much. Lincoln’s U.S. market share is stuck at a paltry 0.8% this year, while the Ford nameplate grew at its fastest rate since 1977 … Lincoln is still defined by the black Town Car that has ferried generations of business travelers to the airport,
Ford long ignored Lincoln, in part because … it bought a stable of European luxury brands that seemed to hold more potential: Jaguar, Land Rover, Aston Martin, and Volvo. But … Mulally began dismantling what he called Ford’s “house of brands,” selling off the European lines at fire sale prices. The idea was to first fix its largest franchise, the middle-market Ford brand … Lincoln, whose models are based on Ford’s mechanical platforms and built in Ford plants, would be kept and fixed later.
Ford is retiring the Town Car next year and launching new models aimed at younger buyers like the MKX sport wagon this summer. It’s infusing Lincoln advertising with Gen X-friendly music from the 1980s. And Lincoln dealers are being trained to offer the high-touch service given by some European manufacturers …
The bottom line: Ford dumped its luxe brands to focus on its core vehicles. Now it’s left with aging Lincoln just as luxury demand is set to take off.
Edit by DMG
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Full Article
http://www.businessweek.com/magazine/content/10_20/b4178023174411.htm
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