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Archive for March, 2011

Saab Re-Starts Plant After Unpaid Suppliers Temporarily Halt Deliveries

Shutdown hints at other challenges facing Swedish maker.

by on Mar.30, 2011

Production of the Saab 9-5 was temporarily halted over unpaid parts bills.

Saab assembly operations in Trollhattan, Sweden got back to normal – more or less – this morning, following a day long shutdown triggered by suppliers who refused to deliver parts pending payment of outstanding bills.

Company officials insist they are working to “resolve these issues,” but there is no question the Swedish maker is struggling in its attempt to rebuild itself after nearly shutting down permanently last year.

Operations at the facility, which produces Saab’s flagship 9-5 sedan, ground to a halt, yesterday, when a number of suppliers refused to deliver more parts until they were paid.  It’s unclear precisely what arrangements were made to get those vendors to restock the plant and let it reopen this morning.

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But a statement from Saab says it “expects to resolve these issues in the short-term.”

The brief shutdown is the latest twist in an ongoing saga of a company that has long struggled for survival.  Going into its 2009 bankruptcy, former owner General Motors Corp. announced plans to sell or close Saab – while eventually also shutting down its Saturn, Hummer and Pontiac brands.  Initially, with no buyer coming through with the necessary deal, GM began shutting Saab down.

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Tesla Sues Top Gear

Battery car maker claims show “maliciously” lied about Tesla Roadster.

by on Mar.30, 2011

Top Gear's hosts shown pushing a Tesla back into their garage during the disputed program.

Battery car start-up Tesla Motors has sued the popular BBC program, “Top Gear,” claiming it maliciously lied about the company’s 2-seat Roadster.

The legal action, taken in the U.K. aims to have the widely-syndicated show stop rebroadcasting an episode in which one of Top Gear’s hosts claims the Tesla Roadster experienced a series of “breakdowns” while being tested.

A senior Tesla executive cites a comment made by Top Gear host Jeremy Clarkson claiming that, “in the real world, it doesn’t really work.”

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But that line, according to a blog by Tesla Vice President Ricardo Reyes, was “written before the cars were tested.”

In the Top Gear episode, the show claims their test vehicle ran out of power after just 55 miles, rather than the 211 Tesla claims, experienced catastrophic brake failure, overheated, and had to be pushed into a garage when it became inoperable.

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Analysts: Expect Moderate Auto Sales Growth

Economic woes continue to keep shoppers from buying new cars.

by on Mar.30, 2011

CAR's Sean McAlinden, left, and Canadian auto analyst Dennis DesRosiers answer questions about the state of the U.S. auto industry.

While some still hold out for huge buildup in auto sales, a pair of analysts said they believe the recovery will be moderate and steady through most of the current decade.

Speaking at the Center for Automotive Research’s Road to Renewal II conference in Dearborn, Canadian auto analyst Dennis DesRosiers said many consumers remain skeptical about buying a new car as the economy continues to come back from the worst recession since the Great Depression of the 1930s.

“It’s hard to sign up for a new vehicle when you see the value of your house going down every year,” DesRosiers said.

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Sean McAlinden, CAR’s executive vice president of research and chief economist, agreed that sales growth will be moderate. He projected 13.4 million vehicle sales in 2011, rising to 14.4 million in 2013 and 14.9 million in 2014. Then again, DesRosiers said he made his projections before the current crisis in Japan where the recent earthquake and tsunami threaten to stop production at auto plants all around the world.

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Small Car and Hybrid Sales Struggle – Yet a Few Models Exceed Expectations

Toyota Prius, Lincoln MKZ are the rare, hot hybrids.

by on Mar.29, 2011

Demand for the 2011 Lincoln MKZ Hybrid has significantly exceeded expectations.

With fuel prices nudging $4 a gallon again, the first time that has happened since the energy crisis of mid-2008, industry observers had been anticipating a sharp run-up in small car and hybrid sales.

With rare exception, it isn’t happening.  Indeed, demand for pickups and big SUVs soared during February, even fuel prices made a rapid run-up.  That follows a modest decline in the fuel economy of the average vehicle sold in the U.S. last year.

But there are a few bright spots for those hoping to see Americans embrace more fuel efficient products.

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The Toyota Prius experienced a 47% surge in demand during the first two months of 2011, and indications are that this sales boom has continued in March.  The other exception is the Lincoln MKZ Hybrid, the first gasoline-electric model offered by Ford Motor Co.’s luxury marque, which is handily outselling the automaker’s most optimistic expectations.

Nearly one in four of the MKZ sedans sold so far this year have come equipped with a battery-electric driveline, 762 hybrids out of the 3,343 MKZ models so far sold.

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Any Car as Long as it is Not Black…

Automakers face a pigment panic.

by on Mar.29, 2011

Ford is running out of some of the more popular colors for products like the new Fiesta.

Nearly a century ago, automotive pioneer Henry Ford was fond of telling customers they could order a car “in any color, as long as it’s black.”  Right now, his great-grandson William Clay Ford, Jr. has to tell buyers they can order a new Ford in almost any color as long as it is not Tuxedo Black…or several shades of red.

The Japanese disaster trifecta that was touched off by a massive earthquake – then followed by a tsunami and a partial nuclear meltdown – damaged scores of parts plants and put production by most major Japanese automakers temporarily on hold.  (Click Here for more.) Not only are conventional car parts, like engines, plastic panels and electronic chips gone into short supply but now it appears the world’s automakers could be facing a serious pigment panic.

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Nearly three weeks after the earth first shook, a key plant in northeast Japan run by chemical company Merck is still down and a spokeswoman for the German company says it could be as much as two months more before the facility is back in operation.

“For both the timing of the repair start and for its timely completion, we are dependent upon the availability of infrastructure and utilities, as well as upon developments at the Fukushima power plant,” Merck’s Phyllis Carter told the Associated Press.

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Is Kia Readying a Miata-fighter?

Korean officials hint they want their own MX-5.

by on Mar.29, 2011

Kia is looking to enter the small roadster segment with its own take on the Mazda MX-5 Miata.

Mazda may soon be facing some serious competition in the affordable roadster market.

After having the segment virtually all to itself as European roadsters have migrated steadily up-market, Mazda’s little MX-5 Miata may soon face challenges from Subaru, Toyota and now, it seems, even the Korean carmaker Kia.

“I’d like to have a Kia MX-5,” Paul Philpott, president of the maker’s European operations, acknowledges.

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How soon?  Not immediately, as “2011 and 2012 are about establishing the brand,” which is undergo huge growth in both Europe and the U.S.  “But for 2013 and 2014, we’re thinking about halo models that stretch the company forward.”

While observers might initially dismiss that as little more than wishful thinking, Kia’s global design director Peter Schreyer also weighed in during an interview with the British publication, Auto Express, asserting, The brand deserves a sporty car, like a roadster.”

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Ford Lines up European Buyers for Transit Connect Electric Van

Fleet buyers helping push demand for battery power.

by on Mar.29, 2011

The Transit Connect Electric has a range of up to 80 miles per full charge, and can be recharged using 110 or 220 volts.

Ford Motor Company and Azure Dynamics have announced that the Norwegian Post has becomes the first European customer of the Ford Transit Connect Electric, placing an order for 20 of the battery-electric vans, or BEVs.

“The Norwegian Post will be an environmental leader in the mail and logistics industry by taking advantage of the latest technology available,” said Dag Mejdell, CEO of the Scandinavian nation’s postal service.

“In signing a contract for delivery of the new Ford Transit Connect Electric, the Norwegian Post is taking an important step towards its goal of reducing 150,000 (metric) tonnes of CO2 annually,” Mejdell said, noting his agency has an option to purchase more.

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Norwegian Post is the largest provider of mail and logistics services and the biggest employer in Norway.

Ford and its partner Azure Dynamics, of Oak Park, MI recently began a pilot program for the Transit Connect Electric last December.  (Click Here for more.) A conversion of the standard Transit Connect van, sales officially begin in the summer of 2011.

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Second Odyssey Recall Worsens Honda Problems

Newest problem: faulty front windows.

by on Mar.29, 2011

Honda announces the second Odyssey recall in just two weeks, this one involving faulty windows.

If any automaker benefited from the crisis at Toyota, last year, it was Honda.  Data suggests it was the only manufacturer to pick up a significant number of once-loyal Toyota owners during the industry giant’s problems with unintended acceleration and other safety-related issues.

But suddenly, it seems, Honda is having a spate of quality-related setbacks of its own – which could complicate matters as the company struggles through the effects of the earthquake, tsunami and nuclear meltdown trifecta that have so far shut down its Japanese operations for nearly three weeks.

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The latest problem: the recall of 2,800 Odyssey minivans because of a defect that can result in the front windows coming off their tracks, rendering them inoperable.  It’s the second recall of the latest-generation Honda van in just two weeks, following the callback of 33,000 Odysseys due to faulty windshield wipers.

The latest numbers are small – though any safety-related issue involving family-oriented minivans can be problematic beyond the actual number of vehicles recalled.  What’s especially significant is the fact that, according to data filed with the National Highway Traffic Safety Administration, Honda had the third-highest number of vehicles involved in recalls of any automaker operating in the U.S. last year – and second-highest among Japanese — 2.4 million covered by 15 separate actions.  (Nissan had 16 separate recalls but they involved just 2.1 million vehicles.)

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Ford To Get “Deal of the Year” Award

Maker cited by Ex-Im bank.

by on Mar.28, 2011

Ford Explorer to benefit from Ex-Im program.

Ford Motor Co. will receive the Deal of the Year award from the Export-Import Bank of the United States this week at the Bank’s 36th Annual Conference.

The Export-Import Bank cited Ford for the company’s use of a $250 million Ex-Im Bank-guaranteed working capital line of credit to finance the sale of 200,000 vehicles, valued at $3.1 billion, to buyers in Canada and Mexico.

“Ex-Im Bank’s line of credit will enable Ford and hundreds of its small business suppliers to support thousands of high-paying American jobs, and maintain competitiveness in global markets,” said Ex-Im Bank Chairman and President Fred P. Hochberg.

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Prior to this transaction with Ex-Im Bank, Ford had not financed its short term exports from the U.S. to Canada and Mexico.  By utilizing its vehicles as collateral, Ford now is making strategic use of Ex-Im Bank’s formula-based working capital line of credit.

“We are absolutely committed to using our U.S. manufacturing plants as a vibrant and growing source of exports around world,” said Ford Credit CFO Mike Seneski.

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Japan Auto Crisis Quickly Going Global

Entire Japanese auto industry likely to lose money, key analyst forecasts.

by on Mar.28, 2011

Honda braces for plant closings in North America, which could play havoc with the upcoming launch of the 2012 Civic.

It’s not going to be a good spring for Japanese automakers, the ongoing industry shutdown likely “push all companies into the red” for at least the first half of the year, warns a key industry analysts.  But the impact, which has already struck General Motors, is rapidly spreading through the rest of the automotive world.

In North America and Europe – as well as Japan – supplies of key Japanese-made parts and components are rapidly dwindling.  That has led several Japanese makers, Toyota and Subaru, to pare back U.S. production, as well as to a week-long shutdown at a General Motors truck plant in Louisiana. Two GM plants in Europe are now being impacted, as well, while Volvo is warning its production plans are also in jeopardy.

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“This is the biggest impact ever in the history of the automobile industry,” said Koji Endo, managing director at Advanced Research Japan in Tokyo.

The worst effects, however, are being felt by Japanese makers.  With only a few exceptions, auto assembly operations in the home market remain shut down.  In large part, that’s a direct result of damage from the March 11 earthquake and tsunami which hammered many parts and component plants in the northeast corner of Japan.

As much as 20% of Japanese automotive semi-conductor production may have been lost for months due to the damage to one particular plant, but other silicon-based operations have also suffered at least short-term damage.

Even the production of paint pigments has been impacted, Ford Motor Co. last week forced to temporarily stop taking orders for a number of models in Tuxedo Black and three shades of red.  Chrysler is also taking steps to restrict orders for some colors using Japanese pigments.

“We see the situation as severe but definiable,” said Deutsche Bank analyst Kurt Sanger.  “We assume the impact to production should push all (Japanese car) companies into the red” for the first half of the fiscal year which, for makers like Toyota, Honda and Nissan, begins on April 1.

Collectively, Sanger estimated that Japanese production, initially forecast at 23 million vehicles, will come in about 15% lower.

Barring significant additional setbacks, however, the DB analysis projects the makers will be able to return to profitability during the second half of the fiscal year, beginning on October 1, “and we do not see permanent impairment to corporate value.”

But other analysts have warned that shortages of products and delays in the resumption of production could make Japanese brands more vulnerable to their European and North American competitors.

That’s especially worrisome to Honda, which on Friday issued an advisory to its North American employees that production could soon be interrupted due to parts shortages.  The timing couldn’t be worse considering the upcoming launch of the 2012 Honda Civic.  Long a mainstay in the compact segment, the Civic is now facing tough new competition from rivals like the new Ford Focus, Chevrolet Cruze and Hyundai Elantra.

Honda was the only Japanese automaker to report an earthquake-related death at one of its facilities.  And the Tochigi technical center where that occurred is expected to be out of operation for months, which could delay future product development programs.

Toyota has announced the delay of the Japanese launch of its Prius V, a new model that will share the well-known Prius badge with a current, smaller hybrid.  It is unclear whether Toyota will have to postpone the U.S. roll-out of the Prius V, scheduled for late summer.

Goldman Sachs estimates the shutdown of production has been costing Japanese automakers a collective $200 million a day.  Toyota is suffering a disproportionate share of the impact not only because of its overall size but because it depends more heavily on a Japanese production base than major rivals.

Nissan may, in fact, be able to leverage its North American operations to help restart production back home.  The company is considering the possibility of increasing production of engines at a plant in Decherd, TN, which would be shipped back to Japan to replace output lost when the quake and tsunami damaged a home market engine plant.