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Archive for October, 2010

Honda Earnings Down, Longer-Term Forecast Up – For Now

Rising yen causing big troubles.

by on Oct.29, 2010

U.S. sales up but margins down for Honda as the dollar continues to slide against the yen.

Honda is raising its profit forecast for the current fiscal year – even as the rising yen takes a toll on its current performance.

The maker forecasts it will earn 500 billion yen – or $6.2 billion – for the fiscal year ending March 31, 2011, a sharp increase from an earlier forecast of 455 billion yen.  But the upside projection was tempered by news that second-quarter earnings fell 15%, largely as the result of a rising yen that has made it increasingly difficult to market products abroad, especially in key markets like the U.S., without slashing margins.

The project full-year numbers actually disguise the degree of trouble facing the maker, however.  Honda has now earned 408 billion yen for the first half of the fiscal year.  Net income for the final six months, it forecast, should slip to just 92 billion, despite a strong operating performance.

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The upwards pressure on the yen versus and dollar and the yen versus the euro has created what Honda executives describe as an acute market crisis, despite the rise in the company’s operating income, which increased by 149.4% in the second fiscal second quarter, ending Sept. 30.

Honda executive vice president Koichi Kondo said Honda has already been working to procure lower-priced parts from overseas suppliers. “It is natural that the strong yen is accelerating this drive,” Kondo said at Honda’s earnings press conference.

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GE Proposing Largest Battery-Car Purchase Ever

Leader in power generation plans to buy “tens of thousands” of EVs, says CEO.

by on Oct.29, 2010

GE CEO Jeffrey Immelt aims to kick-start the electric vehicle market with a purchase that could be measures in the "tens of thousands."

General Electric, the industrial giant that provides the equipment generating a third of the world’s electric power now wants to charge up the electric vehicle market.

GE CEO Jeffrey Immelt’s plan to buy “tens of thousands” of battery cars could very well kick-start the nascent market, according to industry observers, and will certainly be the largest order for battery vehicles in history.

The move isn’t entirely altruistic.  As the world’s leading provider of electric generation equipment, and as a major force in the expanding market for wind, solar and other “green” energy technologies, a GE a spokesman said the company is betting that for every dollar spent on electric vehicles it will get a dime in revenues of its own.

Speaking at a conference in London, Immelt said that half of GE’s huge sales force, a total of 45,000 men and women, will be assigned electric vehicles, though the executive declined to put a specific figure on the company’s planned battery car purchase – nor did he say whom GE would turn to for the vehicles.

The Fortune 100 company won’t be the only publicly-traded company investing in battery car technology.  A number of major utilities have plans to build electric vehicle fleets, as do firms ranging from Hollywood Studios to delivery services, many of whom drive relatively short distances in urban service and see battery cars as a way to curb rising fuel costs.  But industry watchers say they know of no company planning anywhere near the apparent size of the GE proposal.

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GE has been steadily expanding its presence, meanwhile, in green technologies, including solar and wind generators, as well as the smart-grid technology seen as critical to adequately handling the demand of a national fleet of battery cars.

GE has also formed a partnership with the battery maker A123 Systems, Inc., which is producing lithium-ion batteries for cars and trucks, as well as sodium-based batteries that can be used in locomotives.  GE is the largest shareholder in the Massachusetts-based A123.

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Driving 2011 Nissan Leaf

TheDetroitBureau.com gets a longer drive of the production battery car.

by on Oct.29, 2010

So far, more than 20,000 potential buyers have placed $99 reservations for the 2011 Nissan Leaf.

Rolling down the entrance ramp and spotting an open space between the trucks clogging up I-65, I stomp on the accelerator of my 2011 Nissan Leaf, watching it race from 60 to 70, 75 to 80, finally peaking just short of 95.

All right, I probably didn’t need to move quite that fast but I admit I was curious to see just how far I could push the new Leaf, after finally getting a chance to drive the production version, recently, down near the maker’s suburban Nashville U.S. headquarters.

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The 2011 battery-electric vehicle, or BEV, is a far cry from the cramped and sluggish battery cars I’ve driven over the years.  It’s surprisingly roomy, well outfitted and, most surprisingly, quite a bit of fun to drive.  But as I headed out for a couple hours of motoring through the fall-colored Tennessee countryside, the big question was whether the new Nissan offering was ready for prime time.

Leaf's styling is as distinctive as the Toyota Prius - but has some functional advantages, as well.

Or, perhaps the alternative way of asking the question is whether American motorists are ready for a battery car that can meet their typical daily needs but not necessarily their perceptions.

The launch of the 2011 Nissan Leaf — along with Chevrolet’s new Volt plug-in hybrid – marks a major transition in the automotive world.  Industry forecasters predict there’ll be as many as three dozen battery cars of one form or another on the road by mid-decade but these two offerings will be blazing the path and how they fare with consumers could determine the long-term acceptance of electric propulsion.

The bulging headlamps help divert wind away from the exterior mirrors, reducing wind noise.

The technology has actually been around for more than a century.  Indeed, at the first New York Auto Show, there were more battery cars than vehicles running on gasoline.  But then as now, range was the big issue, one even Henry Ford hoped to solve with the help of his good friend Thomas Edison.

The limited range issue sank California’s plan to mandate battery cars in the 1990s, but industry planners are betting that while nowhere near perfect today’s latest lithium-ion technology can boost performance enough to overcome so-called range anxiety.

Nissan uses 24 kWh of lithium-ion batteries, technology developed in a joint venture with NEC.

In the case of the 2011 Nissan Leaf there are 24 kilowatt-hours of prismatic LIon batteries onboard.  That term refers to the way the cells are packaged.  Unlike the flashlight-style cylindrical batteries used in most current hybrids – and Tesla Motors’ 2-seat Roadster – Nissan has opted for a flat pack design that makes it easier to package the batteries into the floor of the little hatchback.

That has a number of advantages.  For one thing, it lowers the center of gravity, which improves the Leaf’s on-road handling.

Though rated a compact according to is exterior footprint, the tall Leaf design yields a midsize interior.

It also reduces the impact on interior and cargo space.  Using a unique platform only loosely derived from the Nissan Versa, and nearly half a foot longer than that minicar, the 2011 Leaf may fall into the compact category but it delivers a surprisingly spacious midsize interior.

As I noted in an earlier review of a pre-production model, the cabin is well executed with a distinctly high-tech feel, with several different digital displays, including a small navigation screen atop the center stack, and others visible both between and looking over the steering wheel.

A port on Leaf's nose pops open for charging, whether using 110 or 220-volt power.

Beyond the basic navigational duties, the bigger screen can be configured to show how far you can drive without recharging – and to help you locate the nearest public charging stations.  The various LCD displays take on numerous other duties, including letting you know when you’re either hot-footing it or maximizing your energy efficiency.  Indeed, as you learn to avoid jarring lead-foot starts, a little digital pine tree will appear to grow alongside the speedometer.

I have to admit to falling into the aggressive driving category, but the various displays seem to encourage even someone like me to ease off a bit – as does the idea of getting stranded somewhere desperately looking for a place to plug in.

A small solar panel above the rear spoiler provides some additional energy.

Since comparisons are inevitable, Leaf is not quite as lavishly executed as the Chevy Volt, but that should be no surprise considering it also costs nearly $9,000 less.  (And we’ll get back to pricing shortly.)

(Click Here for TheDetroitBureau review of the Chevrolet Volt.)

One thing Nissan deserves credit for is the effort it has put in to reduce noise levels while driving the 2011 Leaf.  That may surprise some folks, as battery cars are known to be far quieter than conventional gas-powered models.  But the lack of a noisy internal combustion engine unmasks what engineers like to call the stumps-in-the-swamp, all the other sounds you normal don’t hear when your I4 or V6 is whirling away.  That required steps to deaden all sorts of sounds, from tire noise to the pulsing of the windshield wipers.

Batteries are mounted in the underbody, with the drivetrain where you'd expect it, up front under the hood.

And that often mandated some interesting innovations.  Like the Toyota Prius, Leaf has a strikingly distinct appearance – even more than Volt, you won’t confuse the new Nissan with any other mainstream automobile .  Some of that was done for marketing purposes, of course, but aerodynamics played a critical role.  Leaf has one of the lowest coefficients of drag on the market, and by reducing wind resistance designers squeezed out perhaps 20 more miles of range.

But the unusual, bulging headlights had an additional purpose.  They divert airflow away from the vehicle, and that, in turn, reduces the wind noise normally created by the exterior mirrors.

One of the biggest pluses of electric propulsion is just how quiet a car like Leaf can be.

While not quite Lexus quiet, the Nissan Leaf is a clear benchmark in its size and price class.

“Remarkably unremarkable” was the mantra for Nissan engineers, suggests Mark Perry, the maker’s electric vehicle planning chief.  Yes, there are the compromises on range and charging but essentially, the maker concluded, Leaf has to be as good or better in most categories as anything else on the road.

One place was in terms of urban acceleration.  What many folks don’t seem to realize is that electric propulsion actually has some distinct advantages when it comes to performance.  You get maximum torque the moment the motor starts turning.  And the numbers quoted for electric power tend to be understated when compared what to what you see with an IC engine.

A 110-volt charger comes with the Leaf.

Leaf’s motor is rated at 80 kilowatts of power, or 107 horsepower.  But it also yields 280 Newton-meters of torque, which translates into an aggressive 207 lb-ft.  While there’s no official 0 to 60 number, Nissan CEO Carlos Ghosn has suggested it’s in the range of “less than 10 seconds,” while Perry contends the 0 to 35 mph launch is more in line with a peppy V6, ala an Altima.

As with other battery cars, acceleration will then then taper off.  Though acceleration is sluggish once you get up to highway speeds, we had no problem, as earlier suggested, merging into traffic, and actually nudged a wee bit beyond the stated top speed of 90 mph.

A 220-volt optional charger should cost the typical motorist about $2,000 including installation.

Of course, as we pushed the little battery car to its limits we could see the impact on those digital displays, our Nissan Leaf’s range gauge ticking down nearly as quickly as the seconds on a countdown clock.

On average, Nissan forecasts the Leaf will get about 100 miles per charge – which takes about 15 hours on 110 volts and somewhere between 7 and 8 using a high-speed 220 volt charger.  In reality, notes Perry, range can run anywhere from 70 miles up to 140, as one of our colleagues experienced during the Nashville preview.

Drive efficiently and a little pine tree will "grow" on the upper gauge cluster.

Why the difference?  It depends, for one thing, on when you drive, and then on how you drive.  Weather is as much a factor as driving behavior, electric heat potentially cutting your mileage by nearly half if you’ve got it blasting on full on a cold Michigan winter morning.

The optimum driving situation is one in which you’re chugging along at 30 to 40 mph, occasionally braking or coasting to regain lost energy through regenerative braking, and with the climate control off.  The worst situation is with climate control on and the car creeping along in slow and heavy traffic.

Leaf is surprisingly peppy, especially from 0 to around 35 mph, where it can outrun some V6s.

Nissan has a built-in Eco Mode.  Switch to it and you’ll immediately see the range gauge jump by about 10%.  This mode reduces the responsiveness of the throttle, for one thing, softening out the spikes as a driver consciously or unconsciously blips the throttle.

Range anxiety is one of the two biggest concerns for battery car proponents.  Nissan has largely eliminated worries about battery life by providing an 8-year/100,000-mile warranty on the Lion pack.  The reality is that the vast majority of Americans will be able to more than cover their daily driving with that much range.

Leaf will likely be followed by as many as 35 battery cars by mid-decade.

“I think people would be surprised just how much they’d be able to do on battery power,” notes David Champion, head of auto testing for Consumer Reports magazine.  Nonetheless, he adds that expectations often trump real-world needs.  So, even for those who may take a long trip just once or twice a year, Leaf may not deliver what they think is necessary.

(And that will be the big selling point for Chevy, which has taken to billing Leaf as “more than” an electric car, since it can continue driving, once its smaller battery pack runs down, using an onboard “range-extender,” a 1.4-liter I4 gas engine.)

Nissan recently stopped taking $99 reservations for the 2011 Leaf.

Nissan is confident there’ll be more than enough potential buyers who either don’t care about long-distance driving or have an alternative vehicle in the household fleet for such trips.  And, longer-term, it is making a national push to set up a network of not just 220-volt, but even 440-volt public charging stations, the latter to permit an 80% recharge in less than half an hour.

But in an unusually wise move, Nissan is also pressing dealers to, in effect, pre-qualify interested customers.  A series of specific questions salesman will be encouraged to ask should determine who is a good candidate to buy – and be happy with – the 2011 Leaf.  Others will be encouraged to look at different Nissan models.

(39% of Americans will consider a hybrid or battery car. For more, Click Here.)

Nissan CEO Carlos Ghosn is one of the industry's most vocal proponents of battery power.

For those who do “qualify,” the rewards could be significant.  Leaf is a peppy little car that handles surprisingly well.  It is reasonably well-equipped and distinctive.  It’s unique styling will, for those who need validation, stand out in a crowd.

It’s not quite as much car as Volt, but considering the price differential, the 2011 Leaf is a better deal.  The base price of $32,780 is almost immaterial, thanks to a $7,500 federal tax credit.  And if you live in any of 13 states, such as Washington, which waves the sales tax on battery cars, or Colorado, which offers a $6,000 incentive of its own, your price will keep tumbling.  Some communities and even some employers, such as Sony studios, offer their own subsidies.  It is possible, under the right circumstances, to get a Leaf for as little as $12,280 (Click Here for the full story.)

The Nissan Leaf is an admirable breakthrough and, if proponents are right, a true game-changer.  Yes, it has its limitations and, yes, for some those might simply be too much to accept.  But for a sizable chunk of the American population it will do better than folks might imagine meeting their daily expectations.  If it’s any indication, I’m looking forward to getting another opportunity to drive the little battery car back home.

Toyota Secretly Bought Back Defective Cars, Claims Lawsuit

Maker denies it hid defects.

by on Oct.29, 2010

Revised lawsuit cites internal documents, including one in which a Toyota tech experienced unexplained problems with a 2009 Tacoma.

Toyota secretly repurchased vehicles from consumers when it found their cars had sudden acceleration problems, hoping to hide the defects from federal regulators, the media and the public, claims a revised lawsuit.

While it is not entirely uncommon for a maker to occasionally buy back vehicles that have problems, the revised lawsuit filed in U.S. District Court in Santa Ana, a Los Angeles suburb, claims the Japanese maker specifically targeted vehicles that it found did have problems with sudden acceleration.  And plaintiffs’ attorney Steve Berman contends that part of the repurchase agreement was a confidentiality agreement requiring owners to keep quiet and not sue the maker.

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Toyota largely denies the claims, saying only that on some occasions it did agree to repurchase vehicles from consumers, requiring that they then agree not to file a liability claim against the company.

The maker says it was, “unable to duplicate the condition (the claim of a sudden acceleration incident) and the vehicles were repurchased from the customers for further engineering analysis,” not to hide the defect.  It also says it reported the two vehicles in question to the National Highway Traffic Safety Administration, or NHTSA.

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Chrysler Struggling To Update Line-up, Resolve Quality Issues

Maker to spend nearly $2 billion at three key plants.

by on Oct.29, 2010

Chrysler is investing $1 billion in Sterling Heights to produce future midsize models, like the 200. The plant was originally set to close in 2012.

It’s been a busy – and costly – week for Chrysler, which has announced nearly $2 billion in investments aimed at updating an admittedly outdated and problem-plagued line-up.

Among the two key spending programs announced in recent days is a $600 million investment in an under-utilized assembly plant in Belvidere, Illinois, where Chrysler is expected to begin producing a new small car late next year.  Based on the little Alfa-Romeo Giulietta produced by its Italian affiliate, Fiat Automotive, the new offering is expected to get 40 miles per gallon. (New small car will permit Fiat to up its stake in Chrysler; Click Here for more.)

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The automaker has been releasing a series of updates on its revised product line-up, in recent days, with models like the Dodge Avenger and various Chrysler minivans getting some interior tweaks and additional technologies designed to enhance their appeal.  But the new investments only underscore that the real breakthrough promised by Sergio Marchionne, CEO of both Chrysler and Fiat, is still just in the making.

Not that it would come a moment too soon, as Consumer Reports made clear this week.

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First drive: Ford Mustang GT

The 5.0 is back and the original pony car has never been more fun.

by on Oct.29, 2010

The 2011 Ford Mustang GT in Grabber Blue turns a lot of heads.

The number 5.0 holds a hallowed place in Ford lore. For more 25 years, Ford’s 5.0-liter V-8 powered everything from Thunderbirds to F-150 pickups to Broncos. But most notably, they powered Mustangs.

Now, after 16 years in exile, the 5.0 is back. Ford retired the old 5.0, also known as the 302 for its displacement in cubic inches, in 1995, replacing its venerable V-8 with the decent 4.6-liter. But while the 4.6 did a decent job, it didn’t have that beloved number attached to its valvecovers.

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Don’t think for a moment that Ford’s decision to bring back the 5.0 isn’t partly driven by nostalgia. Automakers decide how big a new engine design will be based on a lot of factors such as the power characteristics it needs, fuel economy and smoothness. But they also make decisions based on what the marketers say will help sell cars.

With this new engine, there was one other important consideration: It had to produce horsepower comparable to the 6.2-liter V-8 in the Chevrolet Camaro SS.
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CEO Akerson Leaves IPO Shrouded In Secrecy

But maker clearly taking steps towards stock sale.

by on Oct.29, 2010

GM will invest $190 million at the Cadillac plant, in Lansing, Michigan, to launch production of a new small luxury car.

All signs point towards the upcoming General Motors IPO, but the planned General Motors stock offering remains shrouded in secrecy.

Though GM announced plans to reduce its debt by $11 billion on Wednesday (Click Here for more) chief executive Dan Akerson pointedly ducked questions on speculation GM will wrap up its initial public offering of stock by mid-November.

Akerson remained “on message,” as his public relations handlers might have described it, focusing on the announcement of a new Cadillac model and refusing to talk not only about the IPO but also about GM’s third quarter financial report.

Nonetheless, the maker’s anticipated July – September profit, which would be its third quarterly earnings report to show black ink, is widely anticipated to be the finally piece of the jigsaw puzzle that will trigger GM’s long-awaited return as a publicly-traded company.

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Former Obama administration auto czar Steve Rattner, in the midst of a tour to promote his book on last year’s GM and Chrysler bailouts, said recently that he expects GM to launch the IPO on November 17.

“I’m not going to comment on the IPO,” said Akerson, while surrounded by reporters following the announcement GM plans to spend $190 million for new tooling and equipment for a new small car project at the Grand River Assembly plant in Lansing, Michigan.

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Study Says 39% Of Americans Considering Hybrid Or Plug-In

But will they actually buy one?

by on Oct.28, 2010

Consumers are charged up about battery vehicles, but will they actually buy one?

American motorists: (will buy electric vehicles)…(won’t buy electric vehicles)…(don’t even know what electric vehicles are).

If that lead seems confusing, don’t worry, a spate of new surveys suggests you’re not alone.

Earlier this week, the well-respected J.D. Power and Associates predicted battery-based vehicles will be largely ignored for at least the next decade, accounting for no more than 7% of the global market by 2020.  But now, a new report from the equally well-regarded Consumer Reports says that 39% of American motorists will consider a hybrid, plug-in or battery-electric vehicle the next time they go shopping.

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Among the CR survey’s other findings:

  • 63% of the respondents said they travel less than 40 miles a day, which would make them candidates for both battery cars and plug-ins, like the Nissan Leaf or Chevrolet Volt, respectively;
  • 51% said being green is an increasingly important factor in their car buying decisions;
  • Even so, quality, price and value are more important factors, being environmentally-friendly ranked only 11th of 12 factors on the CR survey;
  • Among the 39% who are considering some form of battery power, 60% are leaning in favor of a conventional hybrid, while the rest are looking at some more advanced technology.

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GM Reducing Leverage By $11 Billion

Actions should save $500 mil in annual interest – and enhance appeal of IPO.

by on Oct.28, 2010

The General continues prepping for its IPO.

In a series of actions clearly designed to improve the maker’s balance sheet in advance of its planned IPO, General Motors has announced it will reduce debt and improve its pension funding position by a total of $11 billion — reducing annual costs by $500 million, in the process.

While GM has yet to provide details of its planned stock offering, company insiders make no secret of the need to present as positive a picture as possible if investors are to come up with the billions needed to begin paying back the federal bailout that pulled the maker out of bankruptcy last year.

Among the most significant steps GM announced today, it will repay $2.8 billion to the retiree medical trust run by the United Auto Workers Union, a move that will result in a $200 million non-cash gain in the fourth quarter of this year.

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It will complete a $5 billion “revolver,” or revolving credit line with a syndicate of banks.  Though the maker claims it does not plan to tap the line, it provides a back-up source of liquidity, something potentially quite useful considering the uncertain economy.

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GM Confirms Plans For New Caddy

Investing $190 million, adding 600 jobs.

by on Oct.28, 2010

The ATS will join an expanding line-up of Cadillac models, including the new CTS Coupe.

General Motors has confirmed a report published by TheDetroitBureau.com, yesterday, announcing plans to produce a new, smaller Cadillac model at the maker’s luxury car assembly plant in Lansing, Michigan.

The move will require the investment of $190 million and will result in the addition of a second shift at the Lansing Grand River factory – and the creation of 600 new jobs.

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“America’s fastest-growing luxury brand this year is about to get even more competitive with the addition of an all-new small luxury car,” GM Chief Executive Officer Dan Akerson said during an announcement at plant, which he attended along with Michigan Gov. Jennifer Granholm. “This investment demonstrates GM’s commitment to Cadillac and to a strong U.S. manufacturing base.”

The automaker noted it has added about 7,000 new jobs since emerging from bankruptcy protection in July 2010.

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