The car business has endured a lot of bad news over the last several years, as finance-fueled sales crashed with the credit market, and automakers around the world scrambled for government aid. The so-called “Carmageddon” has touched everyone even remotely involved with the automotive industry, not to mention everyone who pays taxes, but from a strictly  consumer perspective, it hasn’t been all bad. Certainly the deals have been good, as programs like Cash For Clunkers and the wind-down of several brands have helped savvy shoppers find some of the best deals in a long time. So here’s the reality check: according to Booz & Co.’s Global Innovation 1000 study, spending on research and development by the auto sector was down $12b last year. That’s $12b that should have been spent making your car faster, smarter, safer, cleaner, better that’s no longer being spent. Still feeling untouched?

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When is it a good time for a CEO to step down from an automotive company? This year we’ve already learned that ditching mere months before a major IPO was not a great move for GM CEO Ed Whitacre. But that surprise drop-out may just have been topped by CODA Automotive’s Kevin Czinger, who just resigned a month before his firm starts sales of its very first vehicle. The firm is in the midst of its pre-sales marketing, and is also currently pursuing $125m in financing from Morgan Stanley and others, making this a highly unusual time for a CEO to leave. Czinger, a Goldman Sachs alum, was crucial in bringing investments to CODA from other Goldman alums, including former Treasury boss Hank Paulson and John Bryson. Czinger will stay on as an adviser to the firm, as co-chairman Steve Heller will take over as interim CEO and COO. Earlier this year, Czinger called the CEO position his “dream job” (see video above).
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Fleet sales data can be some of the toughest numbers to find, but thanks to a post from commenter GarbageMotorsCo, we’ve got some pretty comprehensive numbers for last year’s fleet performance [courtesy: automotive-fleet.com, PDF list here]. Overall fleet levels have been higher this year, but by identifying the most popular vehicles with fleet buyers (in terms of fleet sales as a percentage of overall sales), we’ll at least have some hints about this year’s performance. To help give a more accurate picture, we’ve left out obvious commercial vehicles (mainly large vans, and the queen of all fleet queens, the Ford Crown Vic (95% fleet)), as well as discontinued models like Chevy Uplander (57%) and Pontiac G6 (44.7%). We also left out hybrid or CNG versions of nameplates. Two vehicles with limited sales last year (GMC Terrain and Kia Forte) are on the list, even though they may not be on a similar list for 2010 (the Honda Insight is not on the list, despite selling all 193 of its 2009 sales to fleets). Hit the jump for our full list.

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Germany’s new car market continues to be anemic. In September, sales for the first nine months were down 27.5 percent. Official October data are expected later in the day, or tomorrow.  Nobody expects sudden growth. (The whisper number is -20 percent.) Nevertheless, the German car industry runs extra shifts and out of cars.

Why? (Read More…)

Did we mention that there is a steady drumbeat by Japanese companies that openly think about, or deny (with huge qualifications) moving more and more production outside of Japan? Did we imply that a lot of this noisy thinking might be targeted at the current Japanese administration with which the carmakers are as much at odds as a carmaker can be with an administration that comes with full union backing and is full of former union officials? (Oops, never mind.) Anyway, Japanese carmakers are accusing their government of losing the war of the soft currency (led by the U.S. that lets its dollar slide while accusing others of  manipulating their currencies – a good offense beats any defense.) Now the rhetoric is getting less circumspect. (Read More…)

America’s “jobless recovery” is a strange economic phenomenon: though businesses are returning to profitability, jobs are not trickling down to lift all economic boats. Though the causes and consequences of this economic conundrum are beyond the scope of a humble car blog, a snapshot of luxury/premium brand sales (via Truecar) show a similar dynamic at play in the world of car sales: luxury sales are recovering while year-to-date sales of mainstream standbys like Honda and Toyota are sitting flat (up 1.1% and 1.4% respectively). Of course the other dynamic at play in the first three quarters of 2010 is the recovery of domestic brands, but even among those successes, the luxury-premium brands are doing best (witness Cadillac sitting atop this chart, and Buick’s even faster recovery (up 57.5% YTD)). At least if you look at year-over-year percentage improvement rather than overall volume levels. Unlike past eras of economic and energy uncertainty, luxury cars, not spartan compact pickups and fuel efficient hatchbacks, are spurring recovery in the auto sector.

America has always been a land of extremes, and our automotive scene is no different. While current automotive debate obsesses over a high-efficiency halo car, our domestic auto industry is mounting a comeback largely on the back of pickups and large cars and crossovers. Meanwhile, we’re falling behind in the quest to make all cars more efficient with practical “bolt-on” systems like “stop-start” or “microhybrid” systems that turn off gas engines at stops. So what are we missing out on? According to a report from SeekingAlpha, stop-start systems provide

estimated fuel savings range from 5% in government mandated tests and 10% under real world city-highway driving to almost 20% in congested city traffic

Which would provide a hell of a lot more fuel savings than any high-price, limited-production eco-halo car. But, as Mazda has complained, the US EPA test cycle doesn’t provide any Monroney Sticker advantage to stop-start systems, even if they provide real-world improvements in fuel efficiency. Maybe instead of trying to keep EVs and plug-in halos on subsidy life support as long as possible, our government should be looking at ways of incentivizing across-the-board efficiency improvements like those offered by stop-start systems.

A report in Japan’s Kyodo news agency [via Reuters/Automotive News [sub]] must have raised a few eyebrows in Japan: thanks to a rising Yen, Toyota is reportedly eying an end to Corolla exports from Japan by 2013. Toyota has since emphasized that

it has made no decision to halt production in Japan of its Corolla automobiles for overseas sales but said it was always considering an optimum global production structure.

The yen hit 81 to the dollar today, both on Yen strength and dollar weakness. ( A Euro buys 1.41 dollars again – get ready for Eurotrash invading Manhattan.)

Toyota has already shifted the bulk of its Corolla production overseas: last year it built 815k Corollas outside of Japan, and only 235k in its home country (60 percent of which were exported). Still, Toyota has long considered stability in its Japanese workforce as core institutional value, and previous currency rises led to changes in design and quality philosophy rather than reductions in Japanese production levels. But then Toyota is no longer in a position to release currency pressure by targeting “fat” or “overquality” product the way it could in the early 90s. The “overquality” simply isn’t there anymore. Like everyone else, Toyota’s major competitive option is to move production closer to cheap labor and large markets.

Possibly having caught word of the fact that Americans are all-too willing to spend up to $500 extra for hatchbacks, Hyundai-Kia are aiming a load of trunkless wonders at our shores. First up should be Kia’s Forte Five-Door (above), which will probably hit dealers next year, alongside a new six-speed automatic transmission and optional navigation. These new options and the Forte5’s subtly slick looks should help the nameplate keep up its sales momentum. Sometime after the Forte5 (actual name may vary) drops, Hyundai’s new Accent should be joined by a five-door version as well. It’s not yet 100% clear if that model is headed stateside, but at this point, we’d be surprised if it didn’t join America’s burgeoning hatchback party. And finally, Hyundai should bring out one of the strangest little hatches in the business when its “Veloster” (again, actual name may vary) hits the market, likely in the next year as well. Recently-captured photos of its weird glass access-door-cum-hatchback are almost as intriguing as its claimed target of 40 MPG highway, possibly out of a turbocharged version of Hyundai’s direct-injection 1.6 liter engine. In any case, if Ford is to be believed and hatchbacks are back, Hyundai-Kia will (once again) be poised to make hay on the trend. And as far as we’re concerned, it’s all good news: the hatchback has been wandering the desert for too long.

According to our latest sales data, the Detroit Three have enjoyed something of a comeback relative to the “foreign” competition this year. And though it’s not clear how long that trend will last, the media is catching the Detroit-boosting bug again.  The NYT’s Bill Vlasic epitomizes the mood, focusing on improvements in GM and Ford’s products in a piece titled American Cars Are Getting Another Look. Between IQS score improvements and anecdotal evidence of consumer interest in Ford and GM’s “gadgets” and “value,” Vlasic’s sidekick, Art Spinella of CNW Research, forwards an interesting theory for the death of the “perception gap” (a construct he helped create, by the way):

Ford has become almost the ‘halo brand’ for G.M. and Chrysler. Because of Ford’s success, people are less resistant in general to considering all of Detroit’s products.

Well, that’s not the dumbest thing ever said about the destruction of the perception gap… but it sure is a head-scratcher. Did Nissan and Honda just spend the last several decades skating by on Toyota’s sterling reputation (RIP)? Still, it might be interesting to hear Ford’s perspective on all this.

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Bloomberg reports that the credit rating firm Fitch Ratings has given GM a BB- credit default rating, the same as Ford Motor Credit. The difference: Ford has over $20b in debt, while GM is sitting on less debt and more cash. So why the identical rating? Fitch’s Stephen Brown explains:

Although they have similar ratings, you sort of get to them from different paths. GM doesn’t have a whole lot of debt, but they have very large pension obligations. Ford’s pension obligations are significant, but they’re lower than GM’s by quite a bit. But Ford has a lot of debt.

At the end of the first half of 2010, GM had $32b in cash and $8b in debt, while Ford had $22b in cash and $27b in debt. GM’s pensions, on the other had, are underfunded to the tune of $27b, while Ford’s are underfunded by $6.1b. Analysts have consistently suggested that GM’s IPO valuation should be in the neighborhood of Ford’s $40b market cap, and an identical credit rating seems to confirm the wisdom (or at least the popularity) of the comparison. Unfortunately, a $40b GM valuation would fail TTAC’s last standard for even marginal bailout “success.” After all, if GM is worth less than the $50b taxpayers put into it, there’s going to be no chance of spinning the IPO as a success.

With GM repositioning its IPO to target US retail investors, we find ourselves motivated to once again sound the alarm about one of the major drains facing The General’s taxpayer-provided cash pile: the restructuring of its European Opel division. Opel slated its Antwerp, elgium plant for closure earlier this year, but at the time GM was trying to find a buyer for the plant. In May we noted that automotive overcapacity on the continent made finding a buyer for Opel Antwerp a tall order, and sure enough, Bloomberg reports that a buyer has not been found. What Bloomberg leaves out of its write-up: GM is now stuck with the €400m ($530m+) bill to pay off all those unemployed workers. A half-billion here, a half-billion there… soon you’re talking about real money.

Despite not having spent a dime on the US firm, Fiat is widely credited with “rescuing” Chrysler. Here’s another way of looking at it: the United States taxpayers bailed out Fiat, an Italian firm with no presence in the US market. For no money down, Fiat got a 20 percent stake in a Chrysler that, although troubled, had been rinsed clean in bankruptcy. Now, analysts looking at Fiat’s spin-off of its automotive unit are telling Automotive News [sub] that

If you think China’s auto growth is scary, then you find yourself in rare agreement with China’s central government. China’s 30 (!) major (!) auto makers had a production capacity of 13.59m vehicles by the end of 2009. Chinese bought 13.64m units. This year, it will be much more. By July, Chinese had already made and Chinese had already bought more than 10m units, according to data released by China’s Ministry of Industry and Information Technology.

Chinese buy more than just cars. They have bought (well, leased) enough land, buildings and machinery in order to more than double car output by 2015. With the current expansion and investment plans exercised, China will have production capacity for a mind-blowing 31.24m units by the end of 2015. That according to Chen Bin, head of industrial coordination at the National Development and Reform Commission, the nation’s economic regulation agency.That’s more than six (!) times the U.S. production in 2009, and three times the U.S. auto production in the heydays of 2007. You are not the only one to get worried now. Even China’s NDRC thinks that might be a bit much. (Read More…)

We can’t pretend to be overly enamored with former “car czar” Steve Rattner, who oversaw the auto bailout before being disgraced for his role in a New York pension fund pay-for-play scandal. Still, the guy was in the thick of things during last year’s negotiations over Detroit’s rescue, so he knows where the bodies are buried. And in his new book, Overhaul, which has been released to select outlets ahead of its October 14 publication, he tells a whole lot of stories about the months of bailout proceedings that led to the rescue of GM and Chrysler. Of course, Rattner has an agenda in all this, namely proving that

so he’s not necessarily an unbiased source. But with grains of salt at the ready, let’s dive into his spilled guts and see if what secrets lie beneath.

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