Category: News Blog
According to a study by the Consumer Federation of America (PDF), relatively low gas prices haven’t done much to change consumer trends towards more fuel-efficient vehicles. This revelation comes amid claims that small car demand was artificially inflated by high gas prices and increased truck production from General Motors. The survey asked respondents to rate the importance of gas prices, global warming and US dependence on Middle East oil over the next five years, with 76 percent reporting “great concern” for gas prices and energy independence.
An increasing number of media reports are indicating that instead of a single “car czar,” Obama will appoint a team to oversee the auto industry turnaround effort. Current reports indicate that Democrat fundraiser Steve Rattner will likely take the top oversight position, but his total lack of (non-political) qualifications for the job is considered an issue. Which is where Stephen Girsky comes in. “They clearly need an adviser who knows the industry,” former Chrysler president Thomas Stallkamp tells Bloomberg. “Girsky certainly knows the industry, and he was close to both GM and the union.” And though I have questioned whether Girsky’s UAW affiliations are best described in the past or present tense, this 2004 presentation (PDF) to Original Equipment Suppliers Association is decidedly prescient. Especially for 2004. And this December 2008 presentation to UAW Local 14 seems to indicate that his recent advising stint with the UAW was a mission of truth and reconciliation rather than one of conniving and obfuscation.
The Detroit News reports that GM’s Political Action Committee has temporarily halted political donations. And you might be tempted to think that this is a move of propriety, so as to not run afoul of Obama’s standards on lobbying by TARP recipients. But you’d be wrong. “As we have done in previous years following an active election cycle, we are holding off on making contributions in the first quarter as we replenish employee contributions,” says GM’s Greg Martin. But this isn’t a normally scheduled stop for GM’s busy DC operatives. According to the DetN, it’s the first such halt in six years, but “GM, like the other automakers, has cut its salaried ranks by thousands of workers, losing many donors to its political action committee.” And let’s not forget that those who are still there are being paid by federal bailout money. A look at GM PAC’s 2008 contributions and expenditures helps explain why a bailout happened at all (they gave money to everybody), but a few interesting questions also arise. Like why did Bob “Crock of Shit” Lutz donate over ten times as much as CEO Rick Wagoner and other executives? And how are so many of those Detroit-hatin’ southern Republicans on the payroll? Probably because the old standbys no longer have the clout they once did. Besides, now that the public is invested in GM, the chances that congress will cut GM loose to go bankrupt are slim.
A commentator recently accused TTAC of posting a CarMax superbowl ad just because the company owns a panel on our home page. Uh, no. Short of not accepting any advertising and switching to a pay-per-view model—which our Best and Brightest rejected like a high school quarterback talking to an ugly misfit frump in a low-budget horror movie—we’ll take what ad support we can get. But we give our advertisers no quarter. I’ve seen plenty of GM, Toyota, Ford and Chrysler ads on TTAC, and you know how we roll in that regard. Some of you may also recall negative comments from buyers who felt they were boned to the max by CarMax. Personally, I really like Chris Wilmore and his crew. I also like every PR person I’ve ever met (on the personal level). Ça fait rien. No one has ever successfully messed with TTAC’s editorial independence. Nor will they. It’s our USP. It’s what we do. K? Now, CarMax ran an interesting survey asking the question above. Their results after the jump. My take: not asking TVR how long their half-sized underfloor battery could hold a charge. Yours?
Same as it ever was. Green Car Congress covers a DOE report (pdf) to the U.S. Congress on its $1.2b Hydrogen fuel cell development caucus, and the conclusion is clear: keep waiting. The DOE had harbored a shockingly naive hope that OEMs would be able to field 100k fuel cell vehicles by 2010, but the new report seems pretty clear on the chances of that happening. According to the report, “a 2008 independent study estimated that the high-volume manufacturing cost of automotive fuel cell systems (using current technology and assuming 500,000 units per year) would be $73/kW, which equates to almost $6000 for an 80-kW system. This current technology would be more than twice as expensive as internal combustion engine systems. And, based on the highest demonstrated durability to date, fuel cell systems would have a lifespan of approximately 1900 hours, which equates to about 57,000 miles and is still substantially lower than today’s estimated vehicular lifespan of 150,000 miles.” Sound familiar?
A reader writes:
Several weeks ago, I took my 18-year-old daughter to Pennsylvania to find her a used car (I don’t believe in buying a new car for a kid). We found a Honda dealership that had a nice, clean 1998 Civic for about $4000. My daughter had $3000 saved up from working at the mall. We gave the salesman the cash and I asked if I could get a loan for the balance. “No loans”, he replied. “We had a guy in here this morning that had an 800 credit score that had to walk away from the car because he couldn’t get approved.” I then agreed to give the salesman a personal check from my account and we were able to buy the car (which, by the way, has been a real gem). The Honda dealership is right across the road from a Cadillac store. “I sold more Hondas myself in December than all the salesman over at Cadillac combined,” he told me. I think this experience is a good indicator of what’s happening in car sales in the USA right now. It’s a bloodbath.
Or so goes the logic of Brent Snavely and friends over at the Detroit Free Press. Sales down 37.1 percent? The lowest seasonally adjusted annual selling rate (SAAR) since 1982? No way is it going to get worse before it gets better! “This is not real. This is artificially low,” says Jesse Toprak, executive director of industry analysis for Edmunds.com, who goes on to warn that “the industry might not recover without some sort of external stimulus.” Not here, not now! And yet in the midst of all this turmoil, a strained and unconvincing optimism abounds. Well, at the Freep anyway . . .
An overview of what happened in other parts of the world while you were in bed. TTAC provides round-the-clock coverage of everything that has wheels. Or has its wheels coming off. WAS is being filed from Tokyo this week.
GM flirting with FAW: GM is holding discussions with major Chinese automaker FAW Group to form a partnership for light commercial vehicles, Reuters reports. The two parties have already registered a name with the State Administration for Industry and Commerce, which is the first step of Chinese joint venture courtship. GM already makes light commercial vehicles in China in a three-way tie-up with SAIC and Liuzhou Wuling. GM manufactures Buicks in Shanghai with SAIC, China’s largest auto maker. FAW, one China’s three biggest automakers, operates car manufacturing ventures with Volkswagen and Toyota. SAIC is also in a joint venture with VW. SAIC and FAW have been considered bitter rivals, although there are reports of a thawing. GM said its commercial vehicle venture in China sold 19.7 percent more vehicles in January than a year earlier, helped largely by sales of the Wuling Sunshine minivans.
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When a car salesman tells you an expensive model’s pointless, nine times out of ten, it’s pointless. If he proffers this opinion in the depths of a recession, with new car sales lower than Bernie Madoff’s morals, it’s a dead cert. I’ve experienced this vehicular vertigo twice in the last week. First, when contemplating a zero-mile Honda Civic Mugen Si gathering dust in an otherwise empty former Saturn showroom. Second, whilst sitting in an Acura RL, moments away from an extended test drive. The salesman told me flat out that the Acura TL is a better car than the RL, hinting that anyone who buys an RL is a sap. As I’ve rated the TL as a one-star car, where do you go from there?
Automotive News [sub] reports that General Motors pulled tooling from 50 parts makers during its winter shutdown. The pullout took place after GM was awarded $13.4b in TARP bailout money in December. GM spokesman Dan Flores reveals that one such supplier was metal stamping firm SKD, but refused to reveal other names. “Based on SKD’s financial distress and uncertainty, GM had to take action to protect our business interests,” said Flores. Hello? Pot? Kettle? Anyone? Bueller? But it’s all good in the hood. Remember folks, this is 2009. The worse the news, the bigger the bailout.
For the eighth year in a row, the MVP of the Super Bowl has received a free Cadillac of their choice. This year, Pittsburgh Wideout Santonio Holmes picked out Caddy’s priciest SUV, an $85k Escalade Hybrid Platinum. But instead of presenting the ‘llac at an on-field postgame ceremony, the terms of Cadillac’s sponsorship were fulfilled behind closed doors. Why? “Given the current business environment, it was much more appropriate we not do that,” Caddy spokeswoman Joanne Krell tells the New York Daily News. “We made the decision not to actively participate in the Super Bowl. We congratulate the MVP, it is a great achievement. We are very sensitive to the federal assistance loan we have received and we want to carry on our fiduciary responsibility. The Super Bowl was not a place for us to be this year. That is not to say it’s not a great platform.” But GM still gave a man who makes over $2m per year an $85k vehicle after having received $7.4b in government bailouts. From a PR perspective that’s not great, and from Deadspin on down, people are taking notice. And based on the fact that Caddy defends the decision on the basis of the bailout being a loan that will be repaid, it’s obvious that they realize how bad this looks.
Curious about the price tag on the current round of auto industry bailout mania? An updated TTAC Bailout Scorecard (pdf) is now available.
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