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Archive for August, 2009

Administration Crows about Clunkers Success

So it ends the stimulus program with no plans to continue it?

by on Aug.26, 2009

Tk

"American consumers and workers were the clear winners." Okay, so why not extend the rebates?

The CARS program, aka Cash for Clunkers, ended last night as almost 700,000 vehicles were removed from U.S. roads at a cost to taxpayers of $2.9 billion dollars based on an analysis of submissions by the 8 p.m. deadline.

“American consumers and workers were the clear winners thanks to the cash for clunkers program,” said U.S. Transportation Secretary Ray LaHood.

“Manufacturing plants have added shifts and recalled workers. Moribund showrooms were brought back to life and consumers bought fuel efficient cars that will save them money and improve the environment,” he said.

The Obama administration in spite of the clear success of the stimulus program apparently has no plans to extend the rebates. The Administration is facing unprecedented federal deficits that grew by another $2 trillion, according to a report issued yesterday by the White House to Congress.

According to a preliminary analysis by the White House Council of Economic Advisers, the CARS program will:

  • Boost economic growth in the third quarter of 2009 by 0.3-0.4 percentage points at an annual rate thanks to increased auto sales in July and August.
  • Sustain the increase in GDP in the fourth quarter because of increased auto production to replace depleted inventories.
  • Create or save 42,000 jobs in the second half of 2009. Those jobs are expected to remain well after the program’s close.

About 84% of consumers traded in trucks and 59% purchased passenger cars, according to the DOT. The average fuel economy of the vehicles traded in was 15.8 miles per gallon and the average fuel economy of vehicles purchased is 24.9 mpg — a 58% improvement.

 Top 10 New Vehicles Purchased

  1. Toyota Corolla
  2. Honda Civic
  3. Toyota Camry
  4. Ford Focus FWD
  5. Hyundai Elantra
  6. Nissan Versa
  7. Toyota Prius
  8. Honda Accord
  9. Honda Fit
  10. Ford Escape FWD

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Chrysler Suing Daimler Over Parts for 2010 Models

Shortage of diesels, other parts could halt production.

by on Aug.26, 2009

Chrysler has gone to court to force former partner Daimler AG to continue supplying the heart of the Grand Cherokee Diesel - its engine.

Chrysler has gone to court to force former partner Daimler AG to continue supplying the heart of the Grand Cherokee Diesel - its engine.

The frosty split between former partners Daimler and Chrysler just got a lot colder, with the U.S. maker suing the German firm over its decision to stop supplying parts needed for some of Chrysler’s 2010 models.

This is the second time this month the two former allies, known for nearly a decade as DaimlerChrysler AG, have squared off in court.  Earlier in August, unsecured creditors who suffered significant losses as part of the Chrysler bankruptcy, laid out claims that Daimler fraudulently diverted $9 billion in assets immediately before divesting itself of its American arm, with the sale of Chrysler to Cerberus Capital Management.

Free to Subscribe

Free to Subscribe!

In the latest action, Chrysler went back to U.S. Bankruptcy Court Judge Albert Gonzalez to seek an order requiring Daimler to continue providing diesel engines, steering columns and torque convertors used in some of the American company’s 2010 products.  Without them, Chrysler asserted, it would be forced to halt production of some models.

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Consumer Confidence Up, But Oil Prices Slip Back Down – For Now

No $4 gas in sight…not yet, anyway.

by on Aug.25, 2009

Oil prices have been moving up in recent months, but suffered an unexpected setback, Tuesday.

Oil prices have been moving up in recent months, but suffered an unexpected setback, Tuesday.

The good news threatened to turn bad, Tuesday. Driven by improving consumer confidence and a small but measurable improvement in the devastated U.S. housing market, stocks resumed their upward path, with the Dow Jones Industrial average closing the day at 9539.  That was a modest 30-point gain, but marked a 404-point jump over the last six days.

The Conference Board, a widely-quoted research firm, announced Tuesday that consumer attitudes have taken an upturn after two monthly declines. In July, the figure stood at a revised 47.4, surging to 54.1 in August – significantly better than observers had expected and the highest point since May. Whether this means anything as the U.S. economy continues to shed jobs, businesses continue to fire people and government deficits reach the stratosphere remains to be seen.

Let TDB Pump You Up!

Let TDB Pump You Up!

Oil traders were hoping to capture some of that magic, since consumer confidence is one of the strongest indicators of near-term spending. With consumers driving less and factories turning out less, prices collapsed last December, but things may be reversing course. See Ken Zino’s analysis of the oil pricing roller coaster and our failed energy policies by clicking here.

As anyone with a car knows, fuel prices have been steadily increasing this year.  The oil industry has been seeing a number of opportunities over the last few weeks, including increased demand in China, to raise prices. And that has nudged prices steadily higher in recent trading. It’s beginning to look like another price spike could be looming.

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Fear and Loathing Mount Around NUMMI

California’s last assembly plant is on the bubble.

by on Aug.25, 2009

tk

Toyota is reportedly prepared to make an announcement as soon as this Friday.

California state legislators in Sacramento are planning to introduce a resolution calling on Toyota to keep open the New United Motor Manufacturing Inc. plant in Fremont.

The legislation is being marked as a legislative priority and supporters are hoping to have it adopted before Toyota makes any kind of announcement about the fate of the plant, which employs 5,300 workers.

Toyota is reportedly prepared to make an announcement as soon as this Friday, setting out a timetable for closing the factory, which is last auto plant on the West Coast.

“We’re still trying to be optimistic,” said Tracy Rosen, a spokeswoman for “Friends of NUMMI,” which is described as a group of families, workers, suppliers and local businesses from throughout the state of California. The group is trying to persuade Toyota and the newly reorganized General Motors Company to consider the total loss in jobs, the impact on suppliers, local businesses and families that will be devastated by the plant’s impending closure.

The group estimates more than 50,000 jobs in California are now connected to the NUMMI plant and its shutdown will have a huge impact on the state’s distressed economy, which already has double-digit employment rates.

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Budget Review Shows Deficits Growing $2 Trillion!

Government to sell auto companies “as soon as practicable.”

by on Aug.25, 2009

t

The fiscal situation continues to worsen. Now economic growth isn't predicted until 2010.

Today the White House Office of Management and Budget (OMB) released the mid-session review to the House of Representatives. The latest update to  the Administration’s economic forecast, last done in February, and its budget projections going out until 2019 shows a somewhat smaller federal 2009 deficit, but much larger subsequent deficits than previously projected.

It also shows two more years of 10% unemployment rates, and a -2.8% drop in the nation’s economy this year instead of  the previously forecast growth.

Executive summary devoid of spin: the economy is in bad shape with no immediate relief in sight. This is bad news for the nation’s shrinking middle class, for the automobile business and our whole consumer-spending based economy.

“Overall, it underscores the dire fiscal situation that we inherited and the need for serious steps to put our nation back on a sustainable fiscal path,” said Peter R. Orszag, Director of the OMB.

The report is certain to be attacked by the Republican party whose popularity along with the Democrats continues to decrease as economic woes continue and jobs are being lost.

The Obama Administration now predicts that taxpayer expenses for financial system bailouts will be less than anticipated. In addition, an open item for a possible further financial stabilization program has been removed. The cost of the FDIC bank rescues have also been lowered.

The bottom — red-ink — line is a slight $262 billion improvement in the 2009 deficit, now projected to be whopping $1.58 trillion – or 11.2% of Gross Domestic Product – down from a previously projected $1.84 trillion or 12.9% of GDP.

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VW Eyes Ad Agency Switch In Bid To Grow

Crispin Porter + Bogusky was sought by VW. Now rejected?

by on Aug.25, 2009

Klaus Gmelin, Head of Quality Volkswagen de México, releases the last of the tradtional Beetles.

Klaus Gmelin, Head of Quality Volkswagen de México, releases the last of the old Beetles in 2003.

With ambitious plans to expand in the U.S. market now beginning to unfold, Volkswagen of America is putting the company advertising work up for review as part of a plan to expand beyond the niches from which it pulls most of its sales.

The company will need a broader message if it plans to more than double its sales over the next decade, VW officials have said.

Steve Keyes, Volkswagen spokesperson, said VOA has not selected a list of agencies that will be asked to make a bid for the VW. However, VOA has recruited an outside firm, Roth Associates of New York, to begin the review process, Keyes said.

Automakers have all been under intense pressure to cut costs. General Motors, for example, recently put vice chairman Robert Lutz in charge of reviewing its marketing efforts with the specific goal of recharging its advertising.

Review Us!

Review Us!

Chrysler-Fiat also is expected to take a broad look at its advertising and Ford Motor Company. marketing experts said recently that the company planned to move away from the expensive television time, which has been one of the hallmarks of automotive advertising in the past.

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Chrysler to display with Fiat at Frankfurt Show

The company has quiet since its emergence from bankruptcy.

by on Aug.25, 2009

Sunrise or sunset for the newly formed Chrysler Group?

Sunrise for the newly formed Chrysler Group?

There is good news of sorts for people trying to understand how the new Chrysler Group will revive itself going forward. The privately held company will have a display of vehicles as part of Fiat’s display at the Frankfurt Auto Show in September. There will be no press conferences, though, in keeping with the company’s external silence since it emerged from bankruptcy in June.

Chrysler Group LLCwas formed in June 2009 from an “alliance” with the Fiat Group, and produces Chrysler, Jeep, Dodge, Mopar and Global Electric Motors (GEM) brand vehicles and products. Observers note that it has been internally focused in trying to sort itself out since then.

Traditionally Fiat, Chrysler’s new owner since June, has a significant presence at the Frankfurt auto show through press conferences and media interviews. In addition, we would speculate that around this time it would be ideal for the Group to launch itself publicly. It needs to generate some positive momentum.

Chrysler has been unusually silent given its long standing flare for media events, publicity stunts and new model introductions. It stopped its long-standing monthly sales calls after it emerged from bankruptcy, cancelled a new model preview, and was absent from the Woodward Dream Cruise.

Jim Press, the chief sales executive who was brought in from Toyota, has not been out in public, except to defend the closing of 789 dealers in front of a critical U.S. Congress, leading to media speculation that he would leave the company by year’s end.

The company, of course will not comment on such speculation, but a spokesperson did confirm the self-imposed silence as the company establishes procedures on how it will run itself under what are five new owners with Fiat’s Chief Executive Officer Sergio Marchionne, also as CEO of the new Chrysler Group.

In addition,  the newly formed nine-member Board of Directors is itself new, with three directors from Fiat, four directors appointed by the U.S. Government, one director designated by the Canadian Government and one director appointed by the United Auto Workers’ Retiree Medical Benefits Trust. Automotive experience on the board is scant.

Frankfurt Bound!

Frankfurt Bound!

Unlike Ford Motor and General Motors Company, Chrysler, whose sales are off 42% year-to-date through July, has not announced any adjustments to its production since its plants came back online at the end of July, when it had only a 42-day supply of vehicles.

Chrysler’s position is thought to be tenuous at best by many analysts since its car sales are much weaker than average and large truck and sport utility vehicle sales have collapsed. New offerings with Fiat’s help are at least two years away. It is in essence a company built around three vehicle lines — Dodge and Chrysler minivans, the Dodge Ram pick-up truck, and the Jeep Grand Cherokee sport utility vehicle.

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Now What? Industry Needs to Keep Clunkers Momentum Going

Dealers frantic to get claims in before CARS wraps up.

by on Aug.25, 2009

It's all over but the payback.  While dealers wait for their money from the government, industry analysts try to figure what impact the CARS program will have on sales during the months to come.

It's all over but the payback. While dealers wait for their money from the government, industry analysts try to figure what impact the CARS program will have on sales during the months to come.

By noon today, U.S. auto retailers will have to submit the final paperwork for their last Cash-for-Clunkers deals or forfeit the refunds they expect from the federal government.

The Cash Allowance Rebate System, or CARS, as it’s more formally known, has come to a close, barely one month and $3 billion after it began. As of midday Monday, dealers had already submitted claims covering 625,000 vehicles, which would generate at least $2.6 billion in voucher payments for dealers.

Your Inside Source!

Your Inside Source!

A sizable number of claims have yet to be submitted, however, and dealers were working frantically into the night trying to get the last paperwork completed, despite the decision to extend the deadline until midday Wednesday. In fact, that extension was largely due to the repeated crashes of the government’s own computer system, on Monday.

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Marty’s Marketing Minutia

Clunkers, Concurs, Comments & Critiques

by on Aug.24, 2009

OK, 489,269 New Cars Were Sold, Now What?

Now what?

Now what?

What’s a dealer to do? Now that the program has all but ended, many dealers selling small, energy efficient and environmentally efficacious vehicles have no cars on their lots to — hmm, that is the question, isn’t it?

With the end of free money is there still a pent-up demand for new cars of any size going to continue? 

Will the IRS tax those who got the $3,500 or $4,500 special payment to buy a new car, it was income?

Will the car gift fairy return and wave the magic Congressional wand for another spate of free money?

Will there be a return of the giant incentives from manufacturers?

What about another round of zero, zero, zero programs?

Who has new, 2010 cars in production that might capture American’s interest in a new car soon?

Or, has the CARS program, while temporarily important, sated the appetite for new cars of those few American’s who need, want and can afford a new vehicle without the bonus of a free money incentive in an economy that has barely started to respond from its semi-comatose state with trillions in financial aid?

And speaking of finances, when will the government kick the golden goose into action to pay dealers who now know what it means to have a severe case of negative cash flow. Could the good news affect of the Cash for Clunkers be diminished by slow pay?

No answers, just questions, lots and lots of questions.

Pebble Beach Concours d’Elegance: Some Old Cars Have Really Big Prices

No government funding, financing or free-bee’s were need at the recently concluded antique-exotic-autos auctions galas on the Monterey Peninsula this year as upwards of $125 million worth of vehicles were sold at auction I was told by McKeel Hagerty, CEO of Hagerty Insurance and his colleague Dave Kinney, Publisher of Hagerty’s Cars That Matter Price Guides. This amount was down slightly from published figures of the 2008 auctions.

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Live on Tonight’s PBS NewsHour: TDB’s Paul A. Eisenstein

What happens now that Clunkers is wrapping up?

by on Aug.24, 2009

Sorry, but they wouldn't take the camel for a Clunkers trade-in.

Sorry, but they wouldn't take the camel for a Clunkers trade-in.

Wondering about the impact of Cash-for-Clunkers?  Curious whether the auto industry can maintain its momentum?  Should automakers ramp up production or keep inventories unusually lean?  TheDetroitBureau.com’s founder and Bureau Chief Paul A. Eisenstein will address those and other questions, tonight on the PBS NewsHour.

Check your local guide for the correct time, but the interview will be live at approximately 6:25 on many East Coast stations.  And, no, Eisenstein won’t have his camel on hand for this interview.