Auto News From Around the Country

Chrysler could lose more than 100 additional dealerships
Automotive News
November 20, 2009 - 12:01 am ET

DETROIT (Reuters) -- More than 100 Chrysler Group U.S. dealerships face possible closure if they cannot reach new financing deals with GMAC Financial Services or another lender, people involved in the process said.

Still, the automaker was "optimistic" all or nearly all of the dealerships would find financing for vehicle inventories and other expenses by the end of November whether through GMAC or other lenders, Chrysler spokeswoman Kathy Graham said.

Chrysler emerged from a government-funded bankruptcy in June with about 2,400 dealerships and had 2,366 at the end of October, about right for its expected 2010 sales, she said.

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Ford Fusion named Motor Trend 2010 car of year
Automotive News
November 17, 2009 - 2:01 pm ET

DETROIT (Reuters) -- Ford Motor Co.'s Fusion mid-size sedan today was named Motor Trend magazine's 2010 "car of the year," adding to the perception that changes to the No. 2 U.S. automaker's vehicle lineup are gaining traction.

The Fusion was chosen best of 23 new or significantly upgraded vehicles that were eligible for the award after a week of testing, Motor Trend said.

The magazine said the full range of Fusion models was impressive to the judges, from the four-cylinder entry level vehicles to the all-wheel drive sport and hybrid versions.

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Toyota fails to land 'top safety pick' rating; Ford leads with 6
Chrissie Thompson
Automotive News
November 18, 2009 - 12:15 am ET

For the first time in three years, none of Toyota Motor Corp.'s vehicles received "top safety pick" ratings from an insurance group, as tougher criteria pared the number of selections from 94 last year to 27 this year.

Ford Motor Co. led all automakers for the second year in a row with six 2010-model top safety picks from the Insurance Institute for Highway Safety, including four from Volvo, a brand that's being sold. Subaru and Volkswagen AG finished next with five qualifying vehicles, and Chrysler Group had four. Offerings from General Motors, Mercedes-Benz, Honda, Kia and Nissan also made the list.

The nonprofit insurance group, funded by auto insurers, tightened its top pick criteria for the second time since it started the award for the 2006 model year.

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Chrysler to fight Ford compact van with Fiat Doblo
Luca Ciferri
Automotive News
November 17, 2009 - 12:01 am ET

TURIN -- Chrysler Group's new Ram brand will sell a version of the new Fiat Doblo compact van in the United States.

The Fiat-sourced Ram van will go up against Ford Motor Co.'s Transit Connect, which Ford started selling in the U.S. in July.

Chrysler is separating the Ram pickup range from the Dodge brand and adding Ram-badged vans.

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Toyota to fix accelerators in U.S. recall, report says
Automotive News
November 16, 2009 - 12:01 am ET
UPDATED: 11/14/09 2:00 P.M.

TOKYO (Reuters) -- Toyota Motor Corp. will soon offer to fix the accelerator pedals of up to 4 million vehicles in the United States that are subject to the company's largest ever safety recall, Kyodo News reported.

Toyota is believed to have agreed with U.S. authorities to repair the accelerator pedals voluntarily, the Japanese news agency said today, citing sources familiar with the matter. It was unclear what the fix would involve.

Toyota spokesman Hideaki Honma denied that the company had reached an agreement with the U.S. National Highway Traffic Safety Administration and said the talks were proceeding.

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Buick hopes Regal revives Buick's performance pedigree
Rick Kranz
Automotive News
November 12, 2009 - 12:15 am ET

Can Buick capitalize on its performance history from over a generation ago?

That's the intent of the 2011 Regal, a German-assembled, front-drive sedan that is essentially a rebadged five-passenger Opel Insignia. U.S. sales begin in the second quarter of 2010.

The Regal name was associated with several high-performance models in the 1960s, '70s and '80s.

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NHTSA may probe Grand Cherokees over fuel tank hazard
Neil Roland
Automotive News
November 10, 2009 - 1:51 pm ET

WASHINGTON -- The Jeep Grand Cherokee from the 1993 to 2004 model years may be investigated by federal safety regulators after a complaint that its fuel tank is an exposed fire hazard that may have contributed to hundreds of deaths.

Last month the nonprofit Center for Auto Safety complained that the SUV's fuel tank extends below the rear bumper and is inadequately protected from crashes and rollovers.

The vehicle's fuel filler neck also tears off in crashes, said the center's petition for an investigation and recall.

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GM restarts production of Hummer H3 SUV, pickup
Jamie LaReau
Automotive News
November 9, 2009 - 4:17 pm ET

DETROIT -- General Motors Co. today started production of the 2010 Hummer H3 SUV and H3T pickup for the United States at Shreveport, La.

Production comes as some dealerships are out of the best-selling vehicle in Hummer's small lineup.

Inventory "is very low," said Hummer spokesman Nick Richards.

As of Nov. 1, Hummer had 1,138 vehicles on the ground in the United States, according to the Automotive News Data Center.

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NHTSA probes timing of Honda airbag recalls
Neil Roland
Automotive News
November 6, 2009 - 4:18 pm ET
UPDATED: 11/6/09 5:38 p.m. ET

WASHINGTON -- Honda Motor Co.'s recalls of 444,000 Accord and Civic vehicles for potentially lethal airbag defects are under investigation by federal safety regulators.

The National Highway Traffic Safety Administration said it wants Honda and Takata Corp., the airbag supplier, to help explain why the automaker didn't include vehicles from the second recall in the earlier one nearly eight months before.

The agency "requires additional information from Honda and Takata to more fully evaluate the scope and timeliness" of Honda's recalls for the same defect, NHTSA said in a posting today on its Web site.

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Ford's Explorer to get airbags built into rear belts
Richard Truett
Automotive News
November 5, 2009 - 3:24 pm ET

DETROIT -- The 2011 Ford Explorer will be launched with rear seat belts that include small built-in airbags.

The inflatable belts will be optional on the Explorer, which is switching from a truck-based body-on-frame platform to a unibody or one-piece body and chassis. Ford safety officials today said the belts are designed to reduce head, neck and chest injuries in young children and the elderly.

Ford officials said infants and seniors are the passengers most likely to ride in the back seat and most susceptible to injuries in a crash.

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Toyota denies allegations of floor-mat cover up
Automotive News
Hans Greimel
November 5, 2009 - 9:14 am ET

TOKYO -- A senior Toyota Motor Corp. executive denied allegations the automaker tried to sidestep engineering or design defects that led to its unprecedented safety recall of 3.8 million vehicles.

Toyota Executive Vice President Yukitoshi Funo said the company is working closely with the National Highway Traffic Safety Administration to pinpoint the problem's cause.

"It is not a part of Toyota's culture and the Toyota Way to cover up anything. And we are proceeding with open and frank discussions with NHTSA," Funo said.

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GM, citing improved financial health, decides to keep Opel
Automotive News
November 3, 2009 - 5:21 pm ET
UPDATED: 11/03/09 8:50 p.m. ET

DETROIT (Reuters) -- General Motors Co. has decided to keep Opel, undoing months of painstaking negotiations to sell the European unit to a Russian-backed group led by Canada's Magna International Inc.

GM, which on Tuesday posted its first U.S. sales gain in 21 months, cited an improving business environment and the importance of Opel and its British unit Vauxhall to its global strategy as reasons for the switch.

"GM will soon present its restructuring plan to Germany and other governments and hopes for its favorable consideration," CEO Fritz Henderson said in a statement. "This was deemed to be the most stable and least costly approach for securing Opel/Vauxhall's long-term future."

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Jeep may be only Chrysler brand sold outside N.A.
Automotive News
November 2, 2009 - 4:00 pm ET

MILAN/DETROIT (Reuters) -- Fiat S.p.A.'s plans for Chrysler will scrap the U.S. automaker's plans to peddle its brands outside North America with the exception of Jeep, people with direct knowledge of the plan said.

Fiat CEO Sergio Marchionne is set to brief analysts and reporters on Wednesday on plans that the Italian automaker has been developing for Chrysler after taking management control as part of a restructuring arranged and funded by the Obama administration.

A Chrysler spokeswoman declined to comment on the pending product announcements. "It will be comprehensive," she said of the briefing scheduled to include Marchionne and Chrysler Chairman Bob Kidder.

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Ford posts $997 million Q3 net profit, boosts cash
Jesse Snyder
and Chrissie Thompson
Automotive News
November 2, 2009 - 7:20 am ET
UPDATED: 11/2/09 11:53 a.m. ET

DETROIT -- Ford Motor Co. posted a surprise $997 million net profit in the third quarter and boosted cash reserves while saying it will be "solidly profitable" in 2011.

Ford's pre-tax operating profit of $1.1 billion marked its first quarter in the black on that basis since early 2008. Ford finished the quarter with $23.8 billion in automotive cash, up $2.8 billion from the end of June.

The automaker's shares soared as it attributed the performance to new products, reduced structural costs and higher profits at the Ford Credit finance arm. Ford recorded U.S. sales increases in July and August, aided by the cash-for-clunkers program, and lifted its market share for the quarter.

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GM follows Ford in closing crossover plant
Robert Sherefkin
and David Barkholz
Automotive News
October 29, 2009 - 1:05 pm ET

DETROIT -- The labor violence at an Indian supplier that forced Ford Motor Co.'s Oakville, Ontario, plant to close this week has hit another U.S. automaker.

General Motors Co. will have to close its Delta Township, Mich., crossover plant all of next week because of a parts shortage caused by the strife in India.

Delta Township, near Lansing, builds the Buick Enclave and GMC Acadia and is being retooled for the Chevrolet Traverse crossover. Oakville builds the Ford Edge, Ford Flex, Lincoln MKX and Lincoln MKT crossovers.

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California locks in Tesla sedan plant with tax deal
Automotive News
October 29, 2009 - 12:01 am ET

LOS ANGELES (Reuters) -- California struck a tax incentive agreement with Tesla on Wednesday to ensure that the electric vehicle maker builds its sedan production facility in the state, possibly in the Los Angeles area.

Gov. Arnold Schwarzenegger's office said a state agency will temporarily hold title of $320 million worth of equipment to be purchased by Tesla and will not pay the sales tax on the transaction.

That tax arrangement will allow Tesla to save more than 9 percent of the total cost of equipment purchases.

To read the rest of this article, visit AutoNews

Ford names China's Geely as preferred Volvo bidder
Douglas A. Bolduc
Automotive News
October 28, 2009 - 7:12 am ET

MUNICH -- Chinese automaker Geely Group Holding Co. is Ford Motor Co.'s preferred bidder to purchase Volvo Car Corp.

Ford announced Wednesday that it will start more detailed negotiations with Geely, adding that no final decisions have been made.

"Ford believes Geely has the potential to be a responsible future owner of Volvo and to take the business forward while preserving its core values and the independence of the Swedish brand," Ford Chief Financial Officer Lewis Booth said in a statement.

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Fisker to buy GM plant for $18 million; UAW will 'partner'
Richard Truett
Automotive News
October 27, 2009 - 10:30 am ET

The old General Motors plant in Delaware that until July cranked out sports cars for Pontiac, Saturn and Opel will be sold and retooled to build plug-in hybrids with UAW workers.

Fisker Automotive said today that it will buy the plant, located in Wilmington, Del., from Motors Liquidation Co. -- the old General Motors Corp. -- for $18 million. If Fisker's plans come to fruition, production at the plant could start in late 2012.

Another $175 million will be spent to refurbish and retool the factory over the next three years, Fisker said in a statement. The company has qualified for $528.7 million in federal loans from the Advanced Technology Vehicle Manufacturing program.

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GM plant in Delaware to reopen for hybrid manufacturer, reports say
Automotive News
October 26, 2009 - 12:01 am ET

WASHINGTON (Reuters) -- U.S. Vice President Joe Biden plans on Tuesday to visit a closed General Motors plant in Wilmington, Del., for an announcement, according to the White House.

The visit to the Boxwood plant comes amid media reports that start-up firm Fisker Automotive Inc. is in talks to buy the plant to build plug-in electric hybrid cars.

The Wall Street Journal and the Detroit Free Press both reported on Friday that the talks for the purchase were at advanced stages and that an announcement was likely on Tuesday.

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Chrysler Financial to wind down by end of 2011
Chrissie Thompson
Automotive News
October 23, 2009 - 10:21 am ET

Chrysler Financial, following the directions of the U.S. Treasury Department, will wind down its business by the end of 2011, U.S. pay czar Kenneth Feinberg said.

The lending company, which received $1.5 billion in federal loans, has been downsizing since the government appointed GMAC Financial Services as Chrysler Group's captive finance company when Chrysler filed for bankruptcy.

In light of its future liquidation, the company’s employees are receiving more pay than Chrysler Financial might otherwise justify after receiving federal aid, Feinberg said yesterday in a letter granting his approval to the company's proposed pay structure.

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Honda to post $660 million first-half profit, report says
Automotive News
October 22, 2009 - 12:01 am ET

TOKYO (Reuters) -- Honda Motor Co. will likely post an operating profit of 60 billion yen ($660 million) for the April-September first half, beating its forecast for a loss on cost-cutting and solid sales of fuel-efficient cars, the Nikkei business daily reported on today.

The reported first-half figure implies an operating profit of 34.8 billion yen for the July-September quarter, which would be below the average estimate for a 41.7 billion yen profit in a poll of 5 analysts by Thomson Reuters.

Honda said in a statement the Nikkei's figures were not based on anything announced by the company. Honda is scheduled to announce its first half results on Oct. 27.

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U.S. was 'shocked' by poor management at GM, Rattner says
Automotive News
October 21, 2009 - 10:46 am ET

DETROIT (Reuters) -- The White House auto task force chief who led the rescue of Chrysler and General Motors said he was astounded by the poor quality of management at the automakers.

"Everyone knew Detroit's reputation for insular, slow-moving cultures. Even by that low standard, I was shocked by the stunningly poor management that we found, particularly at GM," said Steve Rattner, the investment banker who headed the Obama administration's auto task force until July.

GM had "perhaps the weakest finance operation any of us had ever seen in a major company," Rattner said in an account of his stint in the administration, published by Fortune magazine today.

To read the rest of this article, visit AutoNews

Honda eyes electric car launch in U.S., CEO says
Automotive News
October 20, 2009 - 2:16 am ET

TOKYO (Reuters) -- Honda Motor Co. CEO Takanobu Ito said he would consider launching electric cars in the United States, Europe and Japan, a sign Japan's No. 2 automaker is changing its strategy for the next generation of fuel-efficient vehicles.

Honda, whose Insight hybrid is trailing far behind the Toyota Prius, has been aiming to leapfrog the competition in the next generation of zero-emission technology by focusing on the development of hydrogen fuel-cell cars.

But faced with slow progress in setting up hydrogen fueling stations, Honda has been forced to take a closer look at plug-in electric cars, which it has until recently dismissed as a short-range option that uses too many expensive batteries.

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GM CFO search complicated by U.S. pay rules, report says
Automotive News
October 18, 2009 - 12:01 am ET

General Motors Co.'s bid to find an outsider to replace its chief financial officer is being complicated by pay restrictions imposed on companies that got big U.S. government bailouts, The Wall Street Journal said on Saturday.

GM executives met recently with U.S. Treasury pay czar Kenneth Feinberg and left with the understanding the automaker would be able to offer a significant amount of stock but no more than a $1 million annual salary, the newspaper said, citing people familiar with the matter.

Sources have told Reuters that GM directors in September backed a plan for CFO Ray Young to leave the company.

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Ex-Ford engineer charged with stealing trade secrets
Amy Wilson
Automotive News
October 16, 2009 - 12:01 am ET UPDATED: 10/15/09 10:27 p.m. ET

DETROIT -- A former Ford Motor Co. engineer has been charged with stealing trade secrets from the automaker after accepting a job in China in 2006.

Xiang Dong Yu, 47, was arrested Wednesday at O'Hare International Airport in Chicago after traveling to the United States from China. A federal indictment charges Yu, a Chinese national living in Beijing, with theft of trade secrets, attempted theft of trade secrets and unauthorized access to a protected computer, Terrence Berg, U.S. attorney for the Eastern District of Michigan, said Thursday in a statement.

Yu was a Ford product engineer from 1997 to 2007. In December 2006, he accepted a job at the China branch of a U.S. company, according to a Justice Department release announcing the charges.

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GM, Magna set to sign Opel deal; talks on jobs continue
Automotive News
October 15, 2009 - 6:16 am ET

FRANKFURT/MADRID (Reuters) -- General Motors Co. was close to signing a deal to sell a 55 percent stake in its European arm Opel to Canada's Magna International Inc. today as talks continued with unions over job cuts.

Sources in Germany, home to around half of Opel's 50,000 staff, said the deal could be signed today or Friday.

The deal, set to close by the end of next month, will cap weeks of negotiations by the companies and Opel labor leaders but still awaits details on financing, including 4.5 billion euros ($6.7 billion) in aid being sought from states with Opel plants.

To read the rest of this article, visit AutoNews

Ford adds 4.5 million vehicles to largest U.S. recall
More than 16 million now affected in decade-long saga
Neil Roland
Automotive News
October 13, 2009 - 4:19 pm ET
UPDATED: 10/13/09 6:10 p.m. ET

WASHINGTON -- Ford Motor Co. plans to add 4.5 million vehicles to the largest-ever U.S. recall because of leaky cruise control switches that have been reported to cause vehicle fires.

The latest action brings to at least 16 million the number of vehicles recalled by Ford for this problem over the last decade. That's about twice the size of the second-largest U.S. recall, which was also involved Ford, according to government figures.

Ford said in an Oct. 9 letter to U.S. regulators that Windstar minivans from 1995 to 2003 will be recalled for repairs following "a small number of reports" of switch fires. The Associated Press put the number of affected Windstars at 1.1 million.

To read the rest of this article, visit AutoNews

Nissan to issue recall for faulty tire monitoring part
Neil Roland
Automotive News
October 12, 2009 - 12:11 pm ET

WASHINGTON -- Nissan Motor Co. plans to recall as many as 143,000 cars to replace a nut in the tire-pressure monitoring system that may corrode and crack in areas with heavy concentrations of road salt, the government said today.

A cracked nut could cause it to fall out of the sensor-transmitter that it secures, the National Highway Traffic Safety Administration said in a report on its Web site.

If that happens, and the driver disregards the monitoring-system lamp that lights up, the vehicle could get a flat tire, and an accident could occur, NHTSA said.

To read the rest of this article, visit AutoNews

China's Tengzhong hopes to close Hummer sale by early 2010
Automotive News
October 12, 2009 - 10:28 am ET

SHANGHAI (Reuters) -- Tengzhong, the Chinese company with an agreement to buy GM's Hummer brand, has started talking with Chinese regulators with the intent of receiving approval in time to close the deal by early 2010.

Seeking Beijing's authorization for the deal, which runs counter to China's energy efficiency drive, is the next hurdle in Sichuan Tengzhong Heavy Industrial Machinery Co. Ltd.'s bid to turn around Hummer. The SUV brand's 64 percent sales decline through September from year-earlier levels was the steepest of any volume brand in the United States.

"Tengzhong could get itself into a black hole by financing the development of a greener Hummer all by itself, and it would be hard to get loans from Chinese banks. If that is the case, I don't think the government will give the green light," said John Zeng, a China automotive forecaster for market research firm IHS Global Insight.

To read the rest of this article, visit AutoNews

GM will wind down Saturn after savior Penske bows out
Bid collapses as retailer fails to find source for vehicles Lindsay Chappell
Automotive News
September 30, 2009 - 4:32 pm ET
UPDATED: 10/01/09 4:00 a.m. ET

DETROIT -- General Motors Co. said it will begin to phase out Saturn -- the car company conceived more than 25 years ago to fend off imports -- after bidder Penske Automotive Inc. failed to secure a source of vehicles to keep the brand afloat.

Penske had been negotiating with France's Renault SA to acquire autos for Saturn once a production agreement with GM had expired. Those talks collapsed, scuttling the Saturn acquisition by the dealership group and its CEO, Roger Penske.

"Mr. Penske is clearly a very clever man," said Paul Melville, a partner at Grant Thornton corporate advisory and restructuring services. "If he has pursued a deal with Renault and if it's too difficult to make that happen, it's dead."

To read the rest of this article, visit AutoNews

Toyota to recall 3.8 million autos as floor mats snag gas pedals
Stuck accelerators may cause unintended acceleration Kathy Jackson
and Chrissie Thompson
Automotive News
September 30, 2009 - 12:01 am ET
UPDATED: 9/30/09 5:35 a.m. ET

LOS ANGELES -- Toyota plans to recall as early as next week 3.8 million U.S. Toyota and Lexus models -- its largest ever -- to fix floor mats that may snag gas pedals and cause vehicles to accelerate at high speeds.

n the meantime, U.S. regulators on Tuesday urged owners of the seven affected nameplates to remove their driver-side floor mats. The National Highway Traffic Safety Administration said it issued the warning because of continued reports of vehicles accelerating rapidly after drivers released the accelerator.

"This is an urgent matter," U.S. Transportation Secretary Ray LaHood said in a statement. "We strongly urge owners of these vehicles to remove mats or other obstacles that could lead to unintended acceleration."

The recall was sparked by an Aug. 28 accident in San Diego during which four people were killed in a Lexus, said Irv Miller, a spokesman for Toyota Motor Sales U.S.A. Inc.

To read the rest of this article, visit AutoNews

Mazda unveils new family of engines
Hans Greimel
Automotive News
September 29, 2009 - 10:35 am ET

YOKOHAMA, Japan -- Mazda Motor Corp., which lacks its own hybrid and electric drivetrains, today unveiled a new generation of fuel-efficient engines that it hopes will keep its models competitive in an age of high-tech green vehicles.

Mazda will introduce the engines, to be known as the Sky series, in 2011 as part of a push to boost the average fuel economy of its fleet 30 percent by 2015 from 2008 levels.

The engines will consume less fuel and deliver higher torque, as a result of Mazda's re-engineering everything from compression ratios and combustion duration to intake volume.

To read the rest of this article, visit AutoNews

NUMMI to shed 4,700 workers by spring -- report
Automotive News
September 28, 2009 - 12:01 am ET

TOKYO (Reuters) -- New United Motor Manufacturing Inc, the joint venture between Toyota Motor Corp. and the former General Motors Corp. in California, will shed its entire work force of about 4,700 by next spring, the Nikkei business daily reported on Saturday.

Toyota said in late August it would end output at the California plant it has shared with GM for 25 years, prompting criticism from labor and politicians facing more job losses in an industry and a state pummeled by recession.

To read the rest of this article, visit AutoNews

Ford to boost ad efforts over next six months
Amy Wilson
Automotive News
September 25, 2009 - 9:10 am ET

DETROIT -- Ford Motor Co., seeking to maintain marketing momentum for its current vehicle lineup, will spend more on advertising and marketing in the next six months compared with current levels, says marketing chief Jim Farley.

In an interview Thursday, Farley declined to say how much more Ford plans to spend. The additional advertising will tout Ford's new vehicles.

The higher spending is not meant to counter recent advertising hikes announced by General Motors Co. and Toyota Motor Corp., he said. For more than a year, Ford has planned the higher level of spending during this period.

"Our competitors are having to do this because they lost share or they've got to regain confidence," Farley said. "We're in a completely different place in the sense that people are interested in Ford, and so our job is to educate them more."

Ford has stood out as the only U.S. automaker to survive outside bankruptcy. Chrysler Group emerged from bankruptcy in June and GM exited in July.

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GM, Chrysler dealer closings to be audited by U.S. Treasury
Neil Roland
Automotive News
September 24, 2009 - 12:01 am ET

WASHINGTON -- The dealership terminations by General Motors Co. and Chrysler Group will be audited by the inspector general for the U.S. Treasury Department's financial bailout, the inspector is expected to say in congressional testimony.

The audit will take place at the same time that dealer-rights negotiations are due to get under way, involving the two automakers, dealer groups, key lawmakers and the Obama administration's auto task force.

A separate audit likely will be conducted of Treasury's ownership and management of GM since the company emerged from bankruptcy.

Neil Barofsky, special inspector general for Treasury's $700 billion Troubled Asset Relief Program, was appointed by President Barack Obama and confirmed by the Senate in December 2008.

To read the rest of this article, visit AutoNews

Bills to reverse GM, Chrysler dealer closings gain steam
Neil Roland
Automotive News
September 23, 2009 - 12:01 am ET

The House's No. 2 Democrat said lawmakers may try to revive stalled legislation to reverse dealer terminations if General Motors Co., Chrysler Group and dealer groups don't sit down soon to begin negotiating a settlement.

Also today, Sen. Charles Grassley asked Senate Judiciary Committee Chairman Patrick Leahy to conduct hearings on legislation he introduced to reverse Chrysler's 789 dealership closures and halt GM's plans to shutter 1,350 stores.

Together, the statements by House Majority Leader Steny Hoyer and Grassley suggest that legislation that has been dormant for months could be resuscitated in response to delays in starting settlement talks.

The discussions were intended by lawmakers as an alternative to the measure, which passed the House but went nowhere in the Senate after the Obama administration said it raised constitutional issues.

Hoyer, D-Md., told reporters that he and other lawmakers were "working very hard on getting to a point where we can sit down to see whether or not there is a possibility of reaching accommodation between the parties."

He added: "And failing that, we will continue to look at the status of the legislation which we passed here through the House."

To read the rest of this article, visit AutoNews

Ford to announce third China car plant, source tells Reuters
Automotive News
September 22, 2009 - 3:46 am ET

SHANGHAI (Reuters) -- Ford Motor Co. and its Chinese partner will announce plans on Friday for their third car manufacturing plant in China, where sales may soon outpace its existing capacity, an industry source said today.

Ford, which competes with General Motors Co. and others globally, produces the Focus, Mondeo and other sedan models in China in a tie-up with Chongqing Changan Automobile Co. and Japan's Mazda Motor Corp.

The new plant, to be based in the southwestern Chinese city of Chongqing, will have a production capacity of at least 150,000 units a year, the source told Reuters, adding to Ford's current car manufacturing capacity in China of 447,000 units.

"There will be a ground-breaking ceremony on Friday and Ford's global chief Alan Mulally will be there," said the source, who asked not to identified as plans for the new manufacturing facility have not been publicly announced.

Financial details and further information regarding the new plant were not available.

Representatives at Ford Motor in China and the company's joint venture declined to comment.

The Detroit automaker also holds 30 percent of Jiangling Motors Corp., which makes light trucks and vans, including Ford's Transit model.

To read the rest of this article, visit AutoNews

Silicon Valley says Detroit must start over to survive
Automotive News
September 19, 2009 - 12:01 am ET

SAN FRANCISCO (Reuters) -- For those who think billions of dollars in federal money has saved the American auto industry, Silicon Valley's venture capitalists have a different view to share.

The U.S. auto industry, they warn, can never become competitive again. It remains too wedded to a dying business model and too out of touch with the sources of innovation, they say.

Instead, they look for a new group of upstart companies to shoot to prominence and profitability, overtaking the automakers once known as the “Big 3" just as Google Inc. came from nowhere a decade ago to eclipse established technology companies.

"I do not believe that the U.S. auto business can be competitive," said Ray Lane, a managing partner at Kleiner, Perkins, Caufield & Byers. "I don't see any of these new car companies based in Detroit."

To read the rest of this article, visit AutoNews

GM buyers will prefer $500 rebate over return policy, dealers say
Dealers like program's product confidence but say consumers won't return cars
Chrissie Thompson
Automotive News
September 18, 2009 - 9:46 am ET

GM dealers say they like the product focus of General Motors Co.'s satisfaction-guarantee program, but most consumers will take the program's $500 rebate offer instead of the 60-day trial period.

Last week, GM unveiled a program that gives consumers 60 days to return a vehicle and get their money back, coupled with advertisements featuring Chairman Ed Whitacre's "may the best car win" challenge. The offer gives consumers $500 cash if they elect not to participate in the trial period.

Some dealers said the satisfaction-guarantee announcement came too recently for them to have had chances to pitch the deal to many customers. But most customers at Tom Durant's six GM stores in Texas and Florida are taking the $500 option, he said.

To read the rest of this article, visit AutoNews

Toyota plans $1 billion U.S. marketing push
Automotive News
September 17, 2009 - 9:31 am ET

DETROIT (Reuters) -- Toyota Motor Corp. is preparing a $1 billion marketing campaign to boost U.S. sales in the fourth quarter, while also planning to expand its line of hybrid models under the Prius name, The Wall Street Journal reported today.

Toyota President Akio Toyoda was among those briefing U.S. dealers at a meeting in Las Vegas where the plans were laid out, the newspaper said.

The $1 billion marketing and advertising plan is 30 percent to 40 percent more than Toyota typically spends in the quarter, the report said, citing a person familiar with the matter.

To read the rest of this article, visit AutoNews

VW considers relaunching Phaeton in the U.S.
Dave Guilford
Automotive News
September 16, 2009 - 12:01 am ET

FRANKFURT -- Volkswagen is studying a diesel powertrain as a selling point to relaunch the Phaeton luxury car in the United States, its top U.S. executive says.

Stefan Jacoby, CEO of Volkswagen Group of America, says VW is eager to reverse its decision to yank the slow-selling car from the U.S. Launched in 2003, the $70,000-plus sedan sold 1,939 units in 2004, its peak year, and was off the market by 2007.

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C-Max puts Ford back into the minivan business
Rick Kranz
Automotive News
September 15, 2009 - 5:00 am ET

Ford Motor Co. is stepping back into a U.S. segment it abandoned back in 2007 -- minivans.

But Ford's plan for success this time involves the small, seven-passenger 2012 C-Max and exterior styling that attempts to hide one noticeable and sometimes unpopular minivan characteristic. "Sliding doors carry a stigma, which is why the minivan has fallen" out of favor with some U.S. buyers, said Derrick Kuzak, Ford's group vice president of global product development. Also, gone is any minivan reference, replaced by "multi-activity vehicle." The unveiling took place today at the Frankfurt motor show.

The U.S. version of the Ford C-Max goes on sale in late 2011. It is one of 10 new vehicles that will be developed for North America on the automaker's re-engineered Ford Focus platform.

Ford's use of names is somewhat confusing, though. The five-and seven-passenger C-Max range for Europe was unveiled today in Frankfurt. While the five-passenger model, called C-Max in Europe, will not be sold in North America, the seven-passenger model, called Grand C-Max in Europe, will be sold in North America as the C-Max.

Ford has not said where the U.S. version will be assembled. Insiders say the U.S. model likely will be assembled at Ford's plant in Wayne, Mich.

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Whitacre fronts GM's 'May the best car win' ads, but is that wise?
10 points to ponder about chairmen featured in campaigns
Rupal Parekh and Kunur Patel
Advertising Age
Automotive News
September 11, 2009 - 12:01 am ET

NEW YORK -- It surely isn't a new idea for General Motors Co. to star Chairman Ed Whitacre in advertising, but is it a good one?

Discussing with reporters GM's "May the Best Car Win" campaign, from McCann Erickson, marketing chief Bob Lutz -- who batted back rumors that Whitacre demanded to be made the "new Lee Iacocca" -- said "what we were looking for was a highly credible spokesperson who would be a new fresh face."

The strongest argument for Whitacre's ad debut is just that: For a company that's been in as much distress over the past year as GM, it could be effective in signaling change. Credibility is another story.

The annals of ad history have shown that marketing campaigns featuring a chairman or a CEO can add tremendous value. Among those frequently cited as the gold standard are Frank Perdue, who made his chicken a household name; James Dyson, the inventor of high-end Dyson vacuums; Wendy's founder Dave Thomas and the zany head of the Virgin empire, Richard Branson. These efforts worked because the execs built these companies, and as such, were not viewed as pitchmen. They're memorable faces and voices that actually embody the brand.

A recent study by Euro RSCG about the "Future of the Corporate Brand" found one-third of consumers polled think having a CEO who is highly visible in the media is an important factor in whether or not they trust the company. Of course, featuring one that doesn't resonate with consumers can also help sink a brand.

Ad Age, a sister publication to Automotive News, canvassed top creatives and agency heads around the country who agreed on one thing: Campaigns featuring company executives can be risky. Here are 10 points to ponder:

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Chrysler poised to return to leasing, sources say
Bradford Wernle
Automotive News
September 11, 2009 - 12:01 am ET

Just three months out of bankruptcy, Chrysler Group is preparing for a likely return to consumer leasing, say auto dealer sources briefed on the plan by the company.

The leases, which will originate with GMAC Financial Services, will be offered only on select vehicles. Probable vehicles include the Dodge Journey crossover, Nitro SUV, Ram pickup and Grand Caravan minivan; Jeep Liberty SUV; and Chrysler Town & Country minivan.

Chrysler is waiting until after Tuesday, when the Automotive Lease Guide issues its latest residual-value numbers, to make final decisions, the sources said. Leasing could be relaunched as early as Sept. 18 if a plan is approved.

Chrysler was forced to stop leasing at midnight July 31, 2008, after its captive finance company, Chrysler Financial, was unable to renew its full line of credit.

The loss of leasing cost Chrysler dearly and was a key milestone in a chain of events that eventually drove the company to file for Chapter 11 bankruptcy April 30.

When Chrysler discontinued leasing, its U.S. market share stood at 11.3 percent. That number declined to 11.0 percent by the end of last year. Chrysler now holds a 9.2 percent share.

Dealers in strong leasing markets such as Detroit said the exit cost them up to half their volume.

Chrysler spokeswoman Kathy Graham declined to confirm that any announcement is imminent.

"We have said in the past that we would like to bring it back, and we're actively investigating it," she said.

As part of Chrysler's bankruptcy filing, President Barack Obama's auto task force ousted Chrysler Financial as the automaker's captive finance company and named GMAC to replace it.

THE OPEL NEGOTIATIONS
GM to sell 55% stake in Opel to Magna and Sberbank
Staff and wire reports
Automotive News
September 10, 2009 - 12:01 am ET
UPDATED: 9/10/09 10:25 a.m. ET

MUNICH -- General Motors said today it plans to sell a 55 percent stake in Opel to Magna International Inc. and its Russian banking partner Sberbank while continuing to work closely with the European unit.

"The hard work over the past two weeks to clarify open issues and resolve details in the German financial package brought GM and its board of directors to recommend Magna/Sberbank,” GM CEO Fritz Henderson said in a statement.

GM will "continue to closely collaborate with Opel and Vauxhall to develop and produce more great cars, such as the new Insignia and the new Astra,” Henderson said.

The Opel sale marks the latest move in the U.S.-ordered restructuring of GM after it spent 39 days under U.S. Bankruptcy Court protection this summer. GM also is shutting down the Pontiac brand, selling its Saab and Saturn units, and terminating about 2,000 U.S. dealerships.

Details of the Magna transaction were not immediately available and sources said there would be strings attached.

"It will be Magna, but under conditions," one source said earlier today.

A separate, German government source in Berlin said: "We won't know whether Magna can meet the conditions set by GM until after the German election," which takes place on September 27.

The trust supervising Opel announced that it would hold a news conference in Berlin today to announce a decision on a majority investor in Opel. GM's chief Opel negotiator John Smith and Fred Irwin, chairman of the Opel trust, will be at the news conference.

The trust was set up in May to keep Opel from being swept into GM's bankruptcy and has the final say on who buys the company. It comprises two representatives each from GM and Germany, as well as an independent chairman who is supposed to act as an arbiter between the two sides.

Closely watched

The decision is being closely watched in Germany, where Opel employs about half of its 50,000 European workers at four plants making everything from three-door Corsa subcompacts to Zafira minivans.

The carmaker has two factories in the U.K. that produce automobiles under the Vauxhall badge as well as major sites in Belgium, Poland and Spain.

A group led by Magna, North America's largest parts supplier, has a promise for the financial backing of the German government to take control of Opel. Belgium-based RHJ International made a rival bid that GM management has said would be easier to implement.

The German government and Opel's labor chiefs have expressed a clear preference for Magna's bid, which they believe will save more jobs in Germany and offer the carmaker a long-term future.

GM signed an initial agreement in May to sell a majority stake in Opel to a Russian-backed consortium led by Magna.

Since then senior GM executives had become increasing worried that Opel under Magna could transfer important technological expertise to the supplier's industrial partner GAZ, Russia's second-largest domestic automaker and a rival to GM's successful Chevrolet brand in Russia.

Opel's Russelsheim operations in Germany also have been the center for developing vehicles that are crucial to GM's vehicle line-up and its effort to deliver better sales of more fuel-efficient cars in the United States.

The Chevrolet Malibu and Buick LaCrosse mid-size sedans and Chevrolet Cruze compact sedan are built on Opel-developed platforms.

$6B to keep Opel

Financial adviser KPMG presented a report to GM's board that said the automaker's management had used "overly optimistic" assumptions when it prepared an earlier estimate of the cost of keeping Opel

KPMG said GM would need up to $6.1 billion in cash to keep Opel, more than the $4.65 billion it had estimated as late as June, according to a copy of the report presented to the board at the meeting in Detroit.

Opel's fate has become a hot-button political issue in Germany ahead of elections looming at the end of the month since some 25,000 jobs in Germany - about half of GM"s European workforce -- depend on the GM unit.

Analysts say GM faced a dilemma with Opel since any of the choices carried risks for an automaker struggling to turn itself around under the majority ownership of the U.S. government.

Selling to Magna, as urged by the German government, was seen by some GM executives as risking key small car technology and an edge in the fast-growing Russian auto market.

The Magna plan involves an equity stake in Opel for Russia's state lender Sberbank.

On the other hand, GM's European operations lost $2.8 billion in 2008 and the long-running debate over Opel's fate in Europe has cost the U.S. automaker goodwill with organized labor and other stakeholders, analysts said.

Reuters contributed to this report

THE AUTO INDUSTRY BAILOUT
U.S. should consider trust for GM, Chrysler stakes, panel says
Automakers' repayment of bailout funds seen as unlikely
Automotive News
September 9, 2009 - 12:15 am ET

WASHINGTON (Reuters) -- The Obama administration should consider a trust for its stake in General Motors Co. and Chrysler Group. to ensure rigorous independent management and facilitate a way out for taxpayers, a government watchdog found.

The Congressional Oversight Panel for the Troubled Asset Relief Program, in a report released Tuesday, also affirmed administration and analyst assumptions the government will not likely recoup its entire investment in the two U.S. automakers. The rescues included bankruptcy financing for both.

The panel credited the autos task force, overseen by the White House and the Treasury Department, for thoroughly analyzing problems at GM and Chrysler and acting quickly to address them this spring and summer. But the group said the administration should more carefully explain its decision-making and provide a clearer picture of its actions.

The government holds a 60 percent stake in GM and an 8 percent investment in Chrysler.

Since January, the Treasury has invested more than $50 billion in GM and $14 billion in Chrysler, which has entered into an alliance with Italy's Fiat S.p.A.

Public offering

The task force has said it plans to sell the government's shares in both companies, which are now private, in initial public offerings as soon as 2010 for GM and later for Chrysler. Chrysler is majority-owned by a trust fund affiliated with the UAW.

The administration, which has appointed several board members at both companies, has promised to stay out of management decision-making.

But the five-member panel, which issues monthly reports on TARP funding issues, found that the best way to insulate the taxpayer investment from potential political interference was to place shares in a trust.

"The government is in a difficult position to be a powerful shareholder in these companies," Elizabeth Warren, a Harvard Law School professor who chairs the panel, said in a telephone interview with reporters.

"The Treasury has an important role to play. The oversight panel recommends Treasury consider a trust so that someone can actively manage (the shares) and an exit strategy," Warren said.

She said Treasury officials had yet to respond to the recommendation.

Obstacles for GM, Chrysler

The report said there are "significant obstacles" to GM and Chrysler ever achieving the "level of profitability" that would permit the return of the entire taxpayer investment.

It is also unclear whether GM and Chrysler will have to borrow from capital markets to facilitate their turnarounds, and analysts have said their performance and market value would have to more than exceed heights not seen for several years.

GM said in a statement that it is confident it will repay the taxpayer because it has reduced debt, has a stronger balance sheet, and touts a competitive product mix.

The panel also said the decision to intervene raised questions about the Treasury's objectives, which have not been adequately explained.

The group recommended the Treasury provide the legal analysis for supporting taxpayer investment as well as embrace more transparency and take "exceptional care" to explain its decision-making.

Along with Warren, other members of the panel are former Securities and Exchange Commission Chairman Paul Atkins; U.S. Rep. Jeb Hensarling of Texas; Richard Neiman, superintendent of banks for the state of New York; and Damon Silvers, associate general counsel of the AFL-CIO.

Warren and Neiman voted in favor of the findings on the auto bailout, while Hensarling dissented. Atkins, who joined the panel too late to fully participate in the review, and Silvers, who recused himself because of his position as a labor leader, did not vote.

THE OPEL NEGOTIATIONS
GM board will again delay decision on Opel's future, report says
Paul McVeigh
Automotive News
September 8, 2009 - 4:07 am ET

MUNICH -- General Motors Co.'s board will again postpone a decision on Opel's future at a two-day meeting starting today despite pressure from Germany to accept an offer for the European unit from Magna International Inc, a newspaper reported today.

GM's board will delay a decision until October at the earliest, the German business daily Handelsblatt said, citing company sources.

The paper said the board favors keeping Opel or, as a second choice, selling a majority stake to Belgian investment group RHJ International, which is offering 300 million euros ($433 million) in cash for a 50.1 percent stake in Opel.

GM signed an initial agreement in May to sell a majority stake in Opel and its British sister brand Vauxhall to a Russian-backed consortium led by Magna.

Since then senior GM executives have become increasing worried that Opel under Magna could transfer important technological expertise to the Canadian supplier's industrial partner GAZ, Russia's second-largest domestic automaker and a rival to GM's successful Chevrolet brand in Russia.

Opel's Russelsheim operations in Germany also have been the center for developing vehicles that are crucial to GM's vehicle line-up and its effort to deliver better sales of more fuel-efficient cars in the United States.

The Chevrolet Malibu and Buick LaCrosse mid-size sedans and Chevrolet Cruze compact sedan are built on Opel-developed platforms.

Other options

Last month, GM's new board asked executives to look at other options besides selling off the German-based subsidiary, which GM has owned for 80 years.

Sources familiar with the negotiations have said that GM is considering raising $4 billion to keep control of Opel.

GM could contribute more than 1 billion euros of its own money to retain Opel, while governments in the U.K., Spain and Poland that are home to major manufacturing operations would finance another 1 billion.

GM could also raise money by selling or mortgaging the automaker's assets in China, one source said. GM is no longer barred from using funding from the U.S. government to support its international operations, but taking this route could trigger a domestic political storm in the United States.

Berlin has said it would provide billions of euros in aid to Opel only if GM selects Magna. If GM rejects Magna, it would have to refinance a 1.5 billion euro bridge loan granted by the German government in May to keep Opel out of bankruptcy and forgo 4.5 billion euros promised by the German federal and the four state governments with Opel plants to help restructure the carmaker under Magna.

German Chancellor Angela Merkel is facing a federal election on Sept. 27, and analysts and officials have said it seems increasingly unlikely that a decision on Opel would come before then.

After the vote, the political stakes would be lower, giving Berlin more flexibility in negotiations, but even then Merkel would be under substantial pressure not to change tack from powerful conservative allies in states where Opel has plants.

Some analysts have speculated that GM's board is holding off on formally approving management's preferred bidder, RHJ, so as not to cause Merkel political embarrassment in the run-up to the election.

Reuters contributed to this report

Volkswagen targets mainstream America
German automaker hopes to broaden appeal while retaining core its base
MSNBC Automotive News
By Dan Carney
msnbc.com contributor
updated 5:05 a.m. MT, Fri., Sept . 4, 2009

David Zalubowski / AP

Volkswagen has ambitious plans to directly challenge Toyota - and a cornerstone of the plan for global expansion is to boost sales in the U.S. by building products with more American flavor.

The plan calls for the company to grow from 6.2 million sales worldwide in 2008 to 10 million cars by 2018, with American sales climbing to 800,000 cars a year.

To accomplish this, VW hopes to expand the appeal of products outside its current base of European car enthusiasts, attracting more of the shoppers who reflexively buy Toyota Camrys and Honda Accords today.

This means making cars that are bigger, but less expensive than today's models, and expanding the model line into additional segments, such as seven-passenger crossover SUVs, where the company does not participate today, said Stephan Jacoby, president of Volkswagen Group of America.

"We believe that the brand has a fantastic foundation to grow into segments where we are not present right now and where we are not competitive right now," he said.

VW said it will be building more of its models in the NAFTA trade zone, with an emphasis on U.S. production, he said. The company plans on assembling the cars in its new Chattanooga, Tenn. plant beginning in 2011. It also plans on building 85 percent of the vehicles in North American.

"We want to have U.S. suppliers, we want to be local here, we want to be good citizens, and we want to understand the market better than we do today," said Jacoby.

This means that the company's suppliers can be located close by the assembly plants, cutting transportation costs, simplifying logistics and insulating Volkswagen from currency fluctuations. "That is the key to offering a VW at a price that is competitive against mainstream American and Asian competitors," Jacoby observed.

The company has already announced plans to build a mid-sized family sedan in the Chattanooga plant and to build a larger compact replacement for today's Jetta model. The unnamed mid-size car will sell alongside the Passat, which will continue to be imported for those buyers who want their German engineering straight up, not diluted with the extra elbow room and Americanized amenities of the new models.

Today's Volkswagens have unorthodox design features on sunroofs and seat recliners — differences which appeal to the sense of individualism in VW's core enthusiasts but which result in lower J.D. Power quality score from newcomers to the brand who are confused by their operation.

VW's adopt to the industry-standard approach to such controls for new mainstream models, said Jacoby. But he adamantly insists that such future models will nonetheless retain their Teutonic feel. "The new cars will be tailor-made for this market, while still being Volkswagens in their essence," he declared.

Some observers are skeptical that it is possible to attract new customers by making Volkswagens more like Toyotas without losing the characteristics that appeal to current customers. "Lowering the costs will certainly make them more attractive, but at what cost to current VW fans?" asked Jon Linkov, managing editor for autos at Consumer Reports. "Making a Jetta more Camry/Accord like will certainly not make the repeat VW buyer happy, I feel, and I don't know if they will be able to cover those losses and bring in more people."

Volkswagen seems determined to rip a page from Honda's playbook, unabashedly describing its plans to simplify its option lists into "Honda-like" trim levels with no factory-installed options, as well as adding new models such as the crossover three-row SUV described with the shorthand label, "Honda Pilot fighter."

The company will also exploit its legendary image among small car buyers to join the minicar segment, with a larger, Americanized version of the next generation edition of the popular Polo minicar currently sold in Europe.

The company also plans to remain in the minivan market, where customers are largely unaware, or unconcerned, that the company sources its "German engineered" minivan from Chrysler LLC. While the minivan market has collapsed to half its previous sales level, minivan customers rate highly in loyalty and they are sufficiently pleased with the Routan for the van to rank second in the latest J.D. Power customer satisfaction survey.

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German economy minister wants GM's decision on Opel next week
Automotive News
September 4, 2009 - 3:01 am ET

BERLIN (Reuters) -- German Economy Minister Karl-Theodor zu Guttenberg said today the government expected the board of General Motors Co. to make a "fundamental decision" on the future of Opel next week.

Speaking on German public TV station ARD, Guttenberg said there were offers for Opel which were ready to be signed and that it was time for its U.S. parent to "give in."

"We're still negotiating toward an investor solution -- that is an industry-based plan which will be valid in the longer term," he said, suggesting Berlin did not expect Opel to stay with GM, a possibility that has recently gained currency.

The German government has been pushing GM to accept a bid for Opel by Canadian auto parts group Magna International Inc., though Belgian-based investor RHJ International SA is also in the running.

In comments published on Thursday, the head of GM Europe, Carl-Peter Forster, told Germany's Die Welt newspaper he believed Magna is most likely to win a bidding battle for Opel, but that the carmaker could also thrive under the ownership of its U.S. parent.

"The greatest probability would be, for me, Magna, since all prerequisites are fulfilled. The contracts have been negotiated to their conclusion, and the financing is there," Forster said.

However, company sources said Forster -- whom Magna has requested to stay on to run Opel should it win the deal -- was not speaking for management, where hardliners gathered around senior executives such as Bob Lutz and Tom Stephens favor either a RHJ's bid or no sale at all.

Opel, which employs about 25,000 in Germany, has been on the political agenda for months in Europe's largest economy, which holds a federal election on Sept. 27.

In an interview published on Friday, Chancellor Angela Merkel said she still expected Opel to be hived off from GM.

"We have no indication that GM is moving away from an investor-based solution," Merkel told the Westdeutsche Allgemeine Zeitung daily.

Opel's senior labor leader, Klaus Franz, on Thursday threatened GM that his work force would not pitch in to reduce about $1.2 billion in costs if Detroit retains control of the European unit.

GM seeks Opel aid from Spain, U.K., Poland, newspaper says
Sales reach 1.3 million vehicles as adjusted rate hits 13.7 million
Staff and wire reports
Automotive News
September 3, 2009 - 12:01 am ET
UPDATED: Sept. 3 09:45 CET

MUNICH -- General Motors Co. expects that the governments of Spain, Britain and Poland will provide it with 1 billion euros ($1.43 billion) in aid for its Opel unit, the Wall Street Journal reported.

The newspaper said GM could also put more than 1 billion euros of its own money into a restructuring of Opel. It quoted an unnamed person familiar with the sale negotiations on Opel.

Separately, Bloomberg reported that GM's board directors should have enough information to make a decision about Opel's future at a meeting scheduled to take place Tuesday, Sept. 8.

The German government has offered to fund the sale of Opel to a group led by Canadian supplier Magna International Inc. Belgium-based investor RHJ International SA has made a rival bid and this week raised its offer for a 50.1 percent stake in Opel by 25 million euros to 300 million euros in cash.

GM is still looking to cut $1.2 billion in costs from Opel, eliminate about 10,000 jobs and receive $4.7 billion in government support, Bloomberg said.

GM's initial review of its European business this year called for closing or selling Opel's operations in Antwerp, Belgium, and Bochum and Eisenach, Germany.

Magna is preferred by Germany because it plans to keep open Opel's four German plants. RHJ plans to idle Eisenach for two years and cut jobs in Bochum.

Lengthy negotiations

At a meeting of the GM board last month, directors led by Chairman Ed Whitacre declined to endorse the long-negotiated deal with Magna and told management to gather more information on a range of other possibilities for Opel, including raising funding to keep the unit.

Any decision on an Opel deal will also have to be approved by the German trust that was set up as part of the bridge financing that was given to the automaker by the German government.

GM and the German government each have two representatives on the trust and there is a fifth, neutral member. The trust owns 65 percent of Opel and GM owns the other 35 percent.

Opel employs 55,000 people in Europe, most of them in Germany, but it also has large production factories in Spain, the U.K., Poland and Belgium.

Expectations have grown in recent days that a final resolution on Opel could be delayed beyond the German elections scheduled for Sept. 27.

Reuters contributed to this report

Ford, Subaru and Hyundai lead first U.S. sales gain in 21 months
Sales reach 1.3 million vehicles as adjusted rate hits 13.7 million
Chrissie Thompson
Automotive News
September 1, 2009 - 12:00 pm ET
UPDATED: 9/1/09 9:48 p.m. ET

Fueled by cash for clunkers, U.S. auto sales ended a 21-month skid in August, registering the first month-to-month increase since October 2007.

But the increase was modest -- a mere 1.0 percent above August 2008.

Industry sales totaled 1.3 million units, topping the 1 million mark for the first time since last August. Demand hit a 13.7-million-unit annual rate, the highest since August 2008.

Ford, Subaru and Hyundai-Kia were the biggest gainers. Chrysler and GM were off by double digits, both worse than their July declines.

"This was a very short-lived, 'booster shot' of a program," Goldman Sachs analyst Patrick Archambault said of cash for clunkers.

Most automakers' results were worse than analysts' expectations because of sharp declines after cash for clunkers ended Aug. 24, he said.

Ford leads Detroit 3

Ford Motor Co.'s light-vehicle sales rose 17.2 percent, their largest increase since July 2005. The gain followed Ford's 2.4 percent increase in July, which was its first year-over-year growth in 19 months.

Subaru's sales spiked 51.5 percent for the brand's best month ever, spokeswoman Heather Ward confirmed. It also was Subaru's largest increase since at least 1998, according to Automotive News data. Subaru's eight-month sales were 11.2 percent above last year's levels, and it is the only automaker ahead of its 2008 pace.

Hyundai-Kia's sales soared 52.1 percent in August, the biggest increase since the companies joined in July 2002.

GM was off 20.1 percent in August, following its 19.4 percent drop in July.

Mike DiGiovanni, GM's executive director of global market and industry analysis, said sales in August 2008 were inflated because of GM's employee-pricing incentives tied to its 100th birthday. The company still saw a 20.3 percent year-over-year decline in August 2008.

"We were starting to hit the stride of the declines, and I think they offset some of that with their programs last year -- not all of it," J.D. Power and Associates analyst Jeff Schuster said.

Chrysler's sales fell 15.4 percent, worse than July's 9.4 percent drop. Chrysler spokeswoman Kathy Graham blamed the sales decline on low inventory, saying the company had five vehicles that ended August with less than a 10-day supply.

The Chrysler Sebring sedan and convertible and Chrysler PT Cruiser both had a six-day supply, the Jeep Compass a four-day supply and both the Jeep Patriot and Dodge Avenger a three-day supply.

At Volkswagen Group of America, sales rose 14.2 percent in August, the biggest rise since May 2006.

Honda's best August ever

Honda's light-vehicle sales increased 9.9 percent, the biggest year-over-year monthly increase since May 2008. The 161,439 units it sold made last month its best August ever, Honda said.

Sales at Toyota Motor Sales U.S.A. rose 6.4 percent gain, its largest increase since June 2007. Toyota was the top-selling brand in the government's clunker program, according to government data. At Ford, F-series sales rose 12.8 percent in August to 45,590, the first increase since October 2006, Ford said.

That provides "an indication that small-business owners are seeing signs of recovery," Ken Czubay, Ford's vice president for U.S. marketing, sales and service, said in a statement.

Ford also noted a 55.9 percent rise in Focus sales and a 49.3 percent boost for the Escape crossover. The Focus ranked No. 4 in vehicles purchased in the cash-for-clunkers program and the front-wheel-drive Escape finished 10th, according to government data. Federal statistics separate vehicles' fwd and four-wheel-drive models.

Sales lull expected

After the August boost from the clunker program, analysts see a lull ahead.

"What's most meaningful is what's going to follow August," Goldman Sachs' Archambault said. He said he's expecting the sales rate in September and October to hover around 10 million units before increasing to an 11- or 12-million-unit rate in November and December.

"You take some pain in September and October, and then you move on," he said. "If it's something more sinister than that, if demand was propped up and made to seem higher than it was, that would obviously be bad news."U.S. auto sales rates were languishing at 27-year lows until July.

The introduction that month of the federal cash-for-clunkers program, which paid consumers up to $4,500 to trade in gas guzzlers for new vehicles with better fuel efficiency, pushed the July sales rate to 11.1 million. That was the first time demand had passed 9.9 million this year.

Richard Truett, Bradford Wernle and Jamie LaReau contributed to this report

GM board discussing Opel's future today, sources say
Automotive News
September 1, 2009 - 10:01 am ET

FRANKFURT (Reuters) -- General Motors Co.'s board of directors will discuss the future of Opel in a telephone meeting today, two sources familiar with the matter told Reuters.

One source said there was a slim chance the meeting would choose a winner between the European manufacturer's rival suitors, Canadian auto parts maker Magna International and Brussels-listed investment firm RHJ International.

It looks increasingly unlikely a decision will be reached ahead of German federal elections on Sept. 27, analysts and officials believe.

"I hope (a deal) will happen before the vote. We are working towards this goal," Chancellor Angela Merkel -- whose government favors Magna's bid -- told Bayerische Runkfunk radio today.

Analysts believe Berlin has admitted defeat in its attempt to install Magna, along with its partner, the Russian state lender Sberbank, as majority owners of Opel against the will of GM's management and its $50 billion benefactor, the U.S. government.

Some analysts speculate that GM's board is holding off on formally approving management's preferred bidder, RHJ, so as not to cause Merkel political embarrassment in the run-up to the election.

GM initially consented to a Magna deal but gradually retreated from that position after emerging in slimmed-down form from 40 days of bankruptcy protection on July 10.

Nearly 25,000 people are employed at one of Opel's four German plants and four times that number in the country are estimated to have jobs that depend on the carmaker.

The German government has provided a 1.5 billion euros bridging loan to keep Opel alive when GM went into bankruptcy, and has offered billions more state aid if Magna gains control of Opel.

Opel is GM's second largest brand after Chevrolet with an annual output of over 1 million vehicles.

Detroit's car woes spread to California
Automotive News
August 31, 2009 - 12:01 am ET

SAN FRANCISCO (Reuters) -- For more than two decades, Frank Ramirez has made a living working an unusual job in Silicon Valley: assembling cars and trucks for Toyota Motor Corp. and General Motor Co.

Ramirez, 49, had planned to continue working for the foreseeable future at the New United Motor Manufacturing Inc, or NUMMI, plant in Fremont, a place that is better known for being home to many technology companies.

But he and about 4,500 other union workers at NUMMI are now facing unemployment following Toyota's decision last week to end production at the plant, a joint venture between Toyota and GM, and the only U.S. auto plant west of Texas.

"We are hoping Toyota will reconsider. Or, someone else will pick up our plant." he said at a rally organized by the UAW in the city on Saturday.

NUMMI, which began as a ground-breaking experiment in industrial cooperation that opened in 1984, came into focus after GM withdrew from the joint-venture in June as part of its bankruptcy reorganization.

Toyota also decided to abandon the plant and shift production of its vehicles to other facilities in the South.

Sergio Santos, the president of UAW local 2244 that represents workers at NUMMI, said the plant is in a messy situation.

"Toyota and General Motors are going through a divorce," Santos said. "(Toyota) doesn't want to pick up General Motors' residue.

"They're dividing the house. Who gets the dog, who gets the doghouse, who gets the bumper in the backyard," he said.

Santos was leading the rally in San Francisco where about 100 UAW members and their families and friends urged Toyota to reconsider its decision to stop building vehicles in California, the biggest car market in North America.

NUMMI is the only Toyota assembly plant in the United States that is represented by the UAW.

James Carroll, 58, another NUMMI worker who attended the rally, said he would lose his home if the plant closes.

"The future of auto workers in California is pretty grim right now," Carroll said.

Open to other possibilities

California, the world's fifth largest economy and home to some of the biggest names in the technology sector, has watched Detroit's auto woes from far until now.

Toyota's decision is forcing the state, which is to deal with the fallout of massive U.S. auto bankruptcies that has bumped up auto-heavy Michigan's unemployment numbers, depressed home values and depleted the state's coffers.

California has been suffering its own economic hangover hemorrhaging jobs, and is trying to fund its budget in a number of ways including holding online and onsite auctions of surplus equipment and unclaimed property.

Officials say up to 35,000 supplier and other jobs in California are indirectly related to the NUMMI's operations. California's unemployment rate was 11.9 percent in July, according to the U.S. Labor Department.

California Gov. Arnold Schwarzenegger has said efforts were underway to transform the site to alternative uses. Toyota has been offered a package of tax breaks and other business enhancements to continue production.

State Assembly Majority Leader Alberto Torrico said he would continue to work to keep the plant open.

"I have not given up hope and I will continue working with state and local officials to pursue Toyota or other auto manufacturers for the plant," he said in a statement.

Santos and lawmakers are hoping to pressure Toyota, which was the biggest beneficiary of the $3 billion U.S. government "cash for clunkers" incentive program designed to jump-start industry sales, to reconsider.

Labor law professor Harley Shaiken of the University of California at Berkeley said Toyota cannot ignore the demands.

"Any consumer company is impacted by how people feel about it," Shaiken said. "There is a lot of things that Toyota may consider. There are pressures that will likely be brought to bear. There are changes in the economy and the auto market that could take place between now and March."

Other parts and automakers may be interested in acquiring the plant, Santos said, naming Subaru, Penske and Tesla.

Tesla, a California-based electric carmaker, has said it is hunting for a site within the state to set up its manufacturing facility.

"We'll build cars for anybody who wants to step in front," said Santos.

Chrysler to accept some old product liabilities
Automotive News
August 28, 2009 - 12:01 am ET
UPDATED: 8/28/09 9:55 p.m. ET

DETROIT (Reuters) -- Chrysler Group LLC said on Thursday it is now confident enough about its business to accept product defect claims that arise on vehicles built before its sale process was completed in June.

Chrysler's predecessor, Chrysler LLC, filed for bankruptcy protection on April 30 and the sale of substantially all of its assets was completed on June 10 to Chrysler Group LLC, which is managed by Italy's Fiat S.p.A.

The automaker said it would take on product liability claims on vehicles built by the old Chrysler that are involved in accidents after the sale was completed.

"While Chrysler Group still faces challenges, we are confident that the future viability of the company will not be threatened if we accept these claims," John Bozzella, senior vice president of external affairs and public policy, said in a statement.

Chrysler said the change made the automaker's approach to its liabilities consistent with the path taken by rival General Motors Co., which underwent a similar bankruptcy and sale process that was completed in July.

GM, which became a majority state-owned automaker through that bankruptcy and sale process, agreed to assume liability for future product defect claims following a negotiation with government officials.

PRESS RELEASE: Chrysler Group To Expand Accepted Product Liability Claims

Auburn Hills, Mich. - In a letter sent today to Members of Congress, Chrysler Group LLC announced that the company will accept product liability claims on vehicles manufactured by Chrysler LLC (now OldCarco LLC) before June 10, 2009, and involved in accidents on or after that date. On June 10, 2009, Chrysler Group purchased substantially all of the assets of Old Carco.

"We know a lot more about the viability of our business today than when we purchased Old Carco's assets in its bankruptcy proceedings several months ago," said John Bozzella, Senior Vice President, External Affairs & Public Policy, Chrysler Group LLC. "While Chrysler Group still faces challenges, we are confident that the future viability of the company will not be threatened if we accept these claims."

OldCarco filed for bankruptcy protection on April 30, 2009. Following many complex and lengthy hearings, the bankruptcy court approved the sale of substantially all of OldCarco's assets to a newly formed company, Chrysler Group LLC. As part of the bankruptcy court-approved purchase, Chrysler Group had agreed to assume liability only for cars sold by Chrysler Group. As a result of today's announcement, Chrysler Group's approach is consistent with that taken by General Motors as part of its bankruptcy process.

"We want our customers to feel comfortable and confident buying, driving and enjoying one of our vehicles," Bozzella said. "Chrysler Group vehicles meet or exceed all applicable federal safety standards and have excellent safety records."

Saab releases details of its new 9-5 flagship

Paul McVeigh
Automotive News
August 27, 2009 - 5:03 am ET

MUNICH -- Saab today released details of its new 9-5 flagship, a car crucial to the brand's success as an independent automaker under new ownership.

Earlier this month, General Motors Co. reached a deal to sell Saab to Koenigsegg Group AB, a consortium of private investors that includes Koenigsegg Automotive AB, a tiny Swedish maker of $1 million supercars.

The new 9-5 will play an important role in a product offensive that Koenigsegg plans to announce once its purchase of the brand from GM is finalized.

"This car is the start of a new era for our brand," said Saab Managing Director Jan-Ake Jonsson in a statement.

Saab says the new 9-5 is the most technically advanced car it has made to date with an array of high-tech features including an aircraft-inspired head-up information display, Bi-Xenon adaptive headlights, adaptive cruise control, parking assistance and all-wheel-drive.

The car will be offered with gasoline, diesel or E85 bioethanol four-cylinder turbocharged engines.

The most fuel-efficient diesel, a 160hp, 2.0-liter unit, has CO2 emissions of 139 g/km.

The new 9-5 shares GM's Epsilon 2 platform with the Opel/Vauxhall Insignia, but the Saab version has a longer wheelbase and its own unique muscular, low-slung exterior styling and unique interior.

The current 9-5 has been on sale for 12 years and its sales have declined as the car has gotten older.

In the first six months, Saab built 9,061 units of the 9-5, down 72.4 percent from the year before, according to J.D Power Automotive Forecasting.

Saab sold 93,000 cars worldwide in 2008.

CASH FOR CLUNKERS
Clunkers program yields 690,114 deals for $2.88 billion

Neil Roland
Automotive News
August 26, 2009 - 10:54 am ET

WASHINGTON -- Dealers submitted a final total of 690,114 cash-for-clunkers deals for $2.88 billion in rebates by last night's 8 p.m. deadline, coming in under the $3 billion budget for the four-week program, the U.S. Transportation Department said today.

The department also plans to add to the staff that already includes 2,000 employees who are processing dealer applications for rebates, the two-page e-mailed statement said.

Ford can't lure volunteers to build more Escapes

Amy Wilson
Automotive News
August 21, 2009 - 6:32 pm ET

DETROIT -- Ford Motor Co.'s efforts to replenish limited inventory of the Ford Escape were hampered after the automaker canceled extra production shifts this week.

The shifts, planned for today and Saturday, were called off because not enough workers at the automaker's suburban Kansas City, Mo., plant volunteered for duty, Ford spokesman Mark Truby said in an interview.

The extra work days were part of a plan announced last week to boost Escape production by 3,500 vehicles during August and September.

Ford is trying to restock dealership inventory depleted by robust cash-for-clunker sales. The company started August with a 21-day supply of the Escape, and many dealers have reported selling out of the crossover.

The canceled shifts probably will slow down the replenishment of dealer stocks, but Ford is adding overtime to try to keep the production increase on track.

"We'll have to see," Truby said. "We're going to do the best that we can to get as much production as we can out there. We'll try to get there."

The Kansas City plant added some overtime to Escape production last week, and several extra Saturday shifts now are scheduled in September and October, Truby said.

Ford had to ask for volunteers to work today and Saturday because the entire week previously had been scheduled as a summer shutdown week.

CASH FOR CLUNKERS
Clunkers' last weekend brings shoppers -- and closed doors

By Richard Truett and Lindsay Chappell
Automotive News
August 24, 2009 - 12:01 am ET

DETROIT -- On the cash-for-clunker program's last weekend, dealerships saw a flurry of last-minute shoppers -- and in some cases, turned them away. Meanwhile, there was no sign that the government would agree to calls for it to extend the deadline for filing clunkers paperwork.

Consumer auto Web site Edmunds.com said its analysts estimate the nationwide annual sales rate for the weekend would reach about 15 million units, compared with an 11.1-million-unit rate for the month of July. The government says it will stop the program at 8 p.m. Eastern time Monday.

For Robert Eret, the program's end means he can finally sleep late.

Ever since the cash-for-clunkers program started, Eret, finance manager at Joe Panian Chevrolet in suburban Detroit, has been reporting to work at 5 a.m. in order to stay ahead of the tidal wave of paperwork that must be filed for each clunker deal.

At 1 p.m. Saturday, the store wrote its last clunker deal. In the following hour, the store answered 10 phone calls from customers interested in trading in their old clunkers.

"It's frustrating as a dealer," Eret said of turning customers away. "We understand their rush. But where have they have been? This has been going on for more than a month. Now you have people in a panic."

Rarely smoothly

The store took in 60 clunkers and had been reimbursed for just seven by Saturday afternoon. Eret says he has been filing 13 to 18 documents per clunker trade as well as filling out online forms.

If everything goes well, he said, that process can take as little as 40 minutes. But it has rarely gone smoothly, and the store doesn't want to be left being owed thousands of dollars because of paperwork troubles. "We want to do last-minute deals," Eret said, "but we have to make sure we can get reimbursed."

At Fresard Pontiac-Buick-GMC, the suburban Detroit store was still writing clunker deals Saturday. Showroom traffic was brisk in the early afternoon. General Manager Mike Dersa said that during the program, showroom traffic increased 80 percent and sales jumped 60 percent.

He said the store will continue doing clunker deals until Monday. "There have been some glitches with the government getting us reimbursed, but it's been a phenomenal program," said Dersa.

Said J.D. Power And Associates analyst Jeff Schuster: "Those that were thinking about it or were on the fence are going to move off the fence, which could mean that we're going have consumers driving away in a lot of purple cars because there are not that many cars left on dealers' lots. There isn't any inventory out there. It's incredible."

Busy, but not crazy

Nearly all the sales staff at Dean Sellers Ford in suburban Detroit were working with customers in the showroom Saturday just as the store was winding down its clunker trades. "It's been busy, but I can't say it has been crazy," said Dean Sellers, the general sales manager. "It's not like everyone waited until the last minute. They knew it was coming to an end."

Sellers said he'd only do another clunker trade if a customer came in with all the required paperwork that would ensure the deal wouldn't be rejected by the government. "Our goal, if we put a clunker deal together now, is to have the paperwork in by noon on Monday," he said.

But, he said, many consumers wanting to trade in a clunker didn't have all the required proof of registration and insurance at hand. The dealership has sometimes waited days to get all the documentation so that it can file a clunker claim. But there's no more time to clear up paperwork problems. Sellers said his store has done about 120 clunker deals and had been paid for only 14 so far.

Computer crash

"The government's computer system crashed yesterday," said Rick Szmigiel, sales manager at Ferndale Honda just north of Detroit. "The paperwork is going through the system, but we are seeing some rejections," he said. The store did 22 clunker deals since July.

The Transportation Department's cars.gov Web site for dealers was down for at least an hour Friday afternoon, preventing dealers from filing rebate claims as the four-week program heads into its final days.

That computer crash was one reason the National Automobile Dealers Association and Japanese automaker Mazda Friday asked the Obama administration to extend the Monday deadline for submission of cash-for-clunkers claims. They cited concerns over the ability of government computers to handle a surge of final sales.

NADA said it would support halting car sales under the $3 billion program as scheduled on Monday, but wants the dealer filing deadline to be extended from Aug. 24 to Monday, Aug. 31.

NADA also recommended dealers concentrate on filing the paperwork on clunker deals already done, rather than continuing to write new deals.

No extension

A spokeswoman for Transportation Secretary Ray LaHood said the deadline would not be extended.

"Secretary LaHood said the program will end Monday at 8 p.m. That remains the case," spokeswoman Jill Zuckman said in an e-mail Friday.

Zuckman said the computer outage "was related to the substantial increase in capacity that the department is bringing online to review transactions and process payments to dealers."

She said the problem has been fixed.

Mazda North American Operations, like NADA, said an Aug. 24 deadline for new car sales under the program was acceptable. The automaker asked for an filing-deadline extension of three or four days.

"In the rush to get everything entered by Monday evening, submissions will be necessarily rushed, and more rejections are the inevitable result," the Mazda letter said.

Low inventories

At Tamaroff Honda in suburban Detroit, there were few customers in the showroom Saturday, though the phones were ringing. The store took in about 100 clunkers before cutting off the program Thursday. "We got rid of many '09s and we are a bit low on inventory," said salesman Treniel Williams.

Asked to compare Saturday's showroom traffic with volume seven days earlier, he said: "Last Saturday we were booming."

Most dealership officials expect a sharp drop in business next week, not only because of the end of the clunkers deals but also because their lots have been picked clean.

The Suburban Group of dealerships stopped writing clunker deals Friday, a salesperson said. Still, at Suburban Toyota outside Detroit, the showroom was busy with about half a dozen shoppers.

Many of the stores in the metro Detroit area that were open for business Saturday cut off clunker deals Thursday or Friday, mostly because finance managers feared they could lose money on deals where the reimbursement claim gets rejected for clerical errors or because of technical glitches.

AutoNation, Group 1 halt

Two of the nation's biggest auto chains -- AutoNation and Group 1 Automotive Inc. -- also pulled the plug early on cash-for-clunkers.

AutoNation said that it would halt all clunker deals at the close of business Friday at its stores.

A staff of 40 to 50 people at AutoNation's main back-office operation in Dallas was to spend the weekend attempting to process about 1,000 contracts that had not been submitted yet, AutoNation spokesman Marc Cannon said.

Cannon said that AutoNation has been reimbursed on a small number of its 11,000 clunker sales. On Thursday, Cannon said AutoNation was owed $45 million for its clunker deals.

AutoNation is No. 1 on the Automotive News ranking of the top 125 dealership groups in the United States, based on 2008 new-vehicle retail sales. Group 1 is No. 4.

Group 1 halted clunker deals Thursday night at all of its East Coast stores, which represent 41 percent of the publicly traded chain's business volume. Those stores alone have some 400 unsubmitted clunker contracts, Group 1 Vice President Pete DeLongchamps said Friday.

Other Group 1 stores halting, too

Group 1's Central and Western stores were to suspend all clunker deals at the close of business Saturday, and then spend Sunday and Monday processing paperwork, he said.

"We are disappointed that they didn't extend the deadline as NADA requested, but we think we can get all of our contracts processed," DeLongchamps said.

The company says it has so far been reimbursed for only 37 of the approximately 4,000 clunker deals it has delivered across the country. DeLongchamps estimated that Group 1 was owed about $15 million in reimbursements.

Bill Wallace, owner of the Wallace Automotive Group in Stuart, Fla., said Friday that his import dealerships were jammed with last-minute customers wanting to take advantage of cash for clunkers.

He has sold about 300 vehicles under the program, has submitted applications for reimbursement for about 200 of those transactions and has been paid for one.

He was worried that he wouldn't be able to get all of the applications for the remaining 100 sales, and for sales he expected to do this weekend, submitted by the deadline.

'Give us more time'

"I'm not sure we can get the 100 done by Monday. They've got to give us more time," says Wallace, who owns 13 Florida dealerships. "The Web site is jammed. It's crazy.

"The only good news we have only 50 to 70 vehicles at all our locations that qualify under the program."

Damon Schoen, operations manager, Hamilton Nissan Hagerstown, in Hagerstown, Md., said he has been keeping up with the paperwork and incentive reimbursement applications.

"We hired extra people and we've been coming in on Sundays making sure that we stay current with these claims," Schoen said. "I would not let them get behind -- no, no, no. There's too much as stake."

His dealership put a halt to cash-for-clunker sales at 3:30 p.m. Friday.

Each transaction the store made on Friday went through four employees to make sure that the all the paperwork was in order, Schoen said. The dealership refused one sale because there was a nine-day lapse in the licensing of the trade-in clunker.

"It looks like they let their (license) tags run out for nine days last December. The rule says you have to have continuous registration for a year and I'm not messing with that," said Schoen.

Said Eret, the Joe Panian Chevrolet finance manager: "It's going to be a real interesting end to the month."

Neil Roland, Arlena Sawyers and Chrissie Thompson contributed to this report.

CASH FOR CLUNKERS CHAOS
Clunker incentives to end Monday as fund runs dry
Rejected applications can be resubmitted after deadline

Neil Roland
Automotive News
August 20, 2009 - 4:15 pm ET
UPDATED: 8/20/09 7:04 p.m. ET

WASHINGTON -- The Obama administration plans to cut off dealer funding for the cash-for-clunkers program on Monday at 8 p.m. EDT, after finding that the $3 billion fund is nearing depletion, Transportation Secretary Ray LaHood said.

"The overriding objective was to be conservative and to provide an adequate window for a soft landing," a senior administration official said in a conference call with reporters today.

Neither official said how much money remains in the program, though a person knowledgeable about its funding said the amount is in the hundreds of millions of dollars.

LaHood expressed confidence that there would be enough to assure payments for all dealer applications submitted through Monday's expiration, even if there is a last-minute consumer rush.

"We expect there will be a flurry of activity over the weekend as the program comes to a close," said Jeremy Anwyl, CEO of the Edmunds.com consumer Web site.

Though the government will not accept rebate applications after 8 p.m. Monday, dealers will still be able to resubmit rejected applications after the deadline, LaHood said.

457,476 applications

The Transportation Department said today that dealers had submitted 457,476 transactions for $1.91 billion in rebates for voucher payments made to customers.

Of this amount, the government has approved $140 million in payments to dealers, the agency said in its first disclosure of rebate figures.

That means that about 7.3 percent of reimbursement claims have been paid to dealers.

"Decisive action must be taken in order to ensure that dealers are fairly reimbursed for sales they have made using program vouchers," said Rep. John Dingell, D-Mich.

Asked how long it would take to pay dealers, the administration official said it depends on the extent to which dealers submit valid applications and how quickly the government can process them.

The government's expected depletion of about $3 billion in just four weeks, from July 27 to Aug. 24, dramatizes the unexpected popularity of the program.

"It has been successful beyond anybody's imagination," President Barack Obama said in a radio interview today.

When the president signed the legislation in June, the measure provided for just $1 billion with the expectation that it would last until Nov. 1.

Obama signed an additional $2 billion in funding early this month. At that time, LaHood predicted the money would last through Labor Day.

"With an average fuel economy increase of almost 10 mpg, the program has achieved its goals of stimulating the economy, enhancing energy security and reducing greenhouse gas emissions," said Dave McCurdy, CEO of the Alliance of Automobile Manufacturers, in a statement.

Advice to dealers

Administration officials today offered advice to dealers for the days ahead.

"The Department of Transportation urges dealers to focus today on getting pending deals completed and submitted," the agency said in a statement. "Dealers should not make further sales without receiving all the necessary paperwork from their customers."

It also advised dealers "to submit complete applications, which will expedite payment."

The official, who declined to be identified, said there had been a number of cases in which dealers hadn't properly documented that customers had 12 months of continuous insurance on the trade-in. Dealers also had often failed to show that they were junking the title of the trade-in to prevent fraud, the official said.

By the end of this week, Transportation expects to triple to 1,100 the number of private and public employees processing dealer claims.

Dealer applications increased at a rate of $75 million a day between Aug. 5 and Aug. 18, federal data show.

That would suggest that about $375 million in additional claims will be filed by the close of the program without an unusual spike in activity, which would bring total dealer applications to about $2.3 billion.

That figure does not include the backlog of transactions that remain unclaimed by dealers.

Small backlog

An informal National Automobile Dealers Association survey found that this backlog is relatively small, Chairman John McEleney said.

The administration official declined to say whether the government would seek additional funding once Congress returns from recess after Labor Day.

He also wouldn't say what the administration would do if there's money left over.

Many dealers have complained that they're not getting paid on claims filed as far back as July 27, when the program kicked off in earnest.

Obama said today that there have not been "extraordinary delays" in the processing of the claims and that the government has to be scrupulous in reviewing them to avoid fraud.

Said Obama: "This is actually a high-class problem to have -- that we're selling too many cars too quickly, and there's some backlog in the application process."

Chrissie Thompson contributed to this report.

CASH FOR CLUNKERS CHAOS
NADA asks U.S. to suspend clunkers
Neil Roland
Automotive News
August 19, 2009 - 5:47 pm ET
UPDATED: 8/19/09 11:50 p.m. ET

WASHINGTON -- National Automobile Dealers Association officials asked the government to suspend the cash-for-clunkers program because a survey by the group found that the $3 billion fund has been exhausted, NADA Chairman John McEleney said.

"We asked them to put a halt to the program -- I think we said 'very soon' -- but a suspension at midnight tonight would make sense," McEleney said in an interview Wednesday. "Our survey opened the eyes of the Transportation Department."

A suspension would allow dealers to submit all pending claims and permit the government to process them so that a precise determination could be made of how much money, if any, is left in the program, he said.

NADA conducted an informal electronic survey of its 18,000 members earlier this week, McEleney said. A limited number responded, and the findings were extrapolated, he said.

Transportation has been conducting its own dealer surveys. Federal and NADA officials are comparing notes, using the two sets of findings to draw conclusions about funding availability, McEleney said.

'That dealer will not be paid'

Later Wednesday, NADA warned members that they may not be reimbursed by the government for any more cash-for-clunkers deals, arguing that some transactions could take place after the program's $3 billion has been depleted.

"It is important to note that NHTSA has confirmed elsewhere that if the program's money runs out before a dealer is reimbursed, that dealer will not be paid," the NADA statement said. "Dealers who accept additional 'clunker' deals face a growing risk that they may not be reimbursed."

Transportation spokeswoman Jill Zuckman declined to comment directly on McEleney's remarks.

Transportation Secretary Ray LaHood said earlier Wednesday that he would announce in the next few days a strategy for winding down the program so dealers aren't left holding the bag for vouchers paid to customers.

The agency will rely on its own twice-a-week surveys of dealers as well as other unidentified surveys, he said.

"We can make a pretty good judgment call," LaHood said at a news conference. "I know dealers are frustrated, but they're going to get paid."

Claim tally

The Transportation Department has said that 411,624 dealer claims for $1.72 billion had been filed as of the morning of Tuesday, Aug. 18.

The difference between that claims figure and the $3 billion total may be accounted for largely by rejections of dealer applications that had not yet been resubmitted, McEleney said.

The dealer backlog of claims that had never been submitted was relatively small, he said.

Among the questions asked in the survey were how many cars were sold under the program, how many claims had not been submitted, and how many claims had been filed but rejected, McEleney said.

Déjà vu

The NADA results echoed its findings in a similar survey conducted the last week of July.

Those findings were that the $1 billion initially budgeted for the program was used up in the first week of its formal operation. The program formally began July 27.

On the basis of that earlier sampling, LaHood told NADA and members of Congress that the program was being suspended.

He was overruled by the White House, which kept the program going until Congress appropriated another $2 billion before recessing earlier this month.

McEleney said Wednesday that if the government were to suspend the program and find that any money was left over, it could extend its operation a while longer.

LaHood and Ford Motor Co. chief economist Ellen Hughes-Cromwick had predicted that the $3 billion would last until Labor Day.

GM boosts output as clunkers drains inventories
Jamie LaReau
Automotive News
August 18, 2009 - 2:11 pm ET
UPDATED: 8/18/09 4:40 p.m. ET

DETROIT -- General Motors Co. will increase North American production by 60,000 vehicles from earlier schedules through the rest of the year as it rebuilds inventories drained by the cash-for-clunkers program.

GM's planned third-quarter output will be 535,000 units, a 35 percent increase over second-quarter totals. Fourth-quarter production will be at least 20 percent more than the third, said Mark LaNeve, vice president of U.S. sales, during a conference call today.

"And it'll probably go up from there," he said. "Our dealers are clamoring for more vehicles in every segment."

GM has about 360,000 units in U.S. inventory, compared with about 1.3 million units at this time of year just "a few years ago," LaNeve said.

The reduction stems from industry sales running at 27-year lows and a shutdown of most North American production during GM's 39-day bankruptcy. The clunkers program, which began in earnest in late July, contributed to the industry's strongest sales performance of the year last month.

"We want to run lean, but we're way too lean right now and we're going to miss sales unless we put some production in," LaNeve said.

More shifts

GM is adding shifts to its CAMI plant in Ingersoll, Ontario, and its factory in Lordstown, Ohio. GM makes the Chevrolet Equinox and the GMC Terrain crossovers at CAMI and the Chevrolet Cobalt compact car in Lordstown.

The move will bring 1,350 employees back to work, GM said in a statement. It will also allow 10,000 workers across GM's North American plant network the opportunity for overtime, LaNeve said.

GM has put its plant in Arlington, Texas, on overtime this month. GM builds the Cadillac Escalade, Chevrolet Tahoe and GMC Yukon trucks there. There will also be additional overtime in Fort Wayne, Ind., where GM assembles Chevrolet Silverado and GMC Sierra pickups.

"We look for pickups to continue to accelerate along with a recovery in the housing industry and overall economy," LaNeve said.

GM will also keep its factory in Orion Township, Mich., running until the end of November rather than shutter it in mid-September as planned. GM makes the Chevrolet Malibu and Pontiac G6 there. The plant will be converted to make an unnamed small car in 2011.

GM also says there is increased demand for the Chevrolet HHR crossover and the Chevrolet Colorado and GMC Canyon small pickups.

Recently launched vehicles are selling well, he said. GM has just a 15-day to 20-day supply of the new Chevrolet Camaro sports coupe and about a 10-day supply of the Equinox. GM is also low on the Cadillac SRX crossover and CTS wagon and Buick LaCrosse sedans.

"We're adding 60,000 units to our production schedule," LaNeve said. "We're probably not done, but this is what we're ready to talk about today."

Chrissie Thompson contributed to this report.

GM, Koenigsegg sign agreement advancing Saab sale
Douglas A. Bolduc
Automotive News
August 18, 2009 - 2:46 am ET
UPDATED: 8/18/09 6:20 a.m. ET

General Motors Co. reached a deal Tuesday to sell its money-losing Swedish subsidiary Saab to Koenigsegg Group AB.

The companies signed a stock purchase agreement that would give the group 100 percent of Saab's shares, GM Europe said in a statement.

Koenigsegg Group is a consortium of private investors that includes Koenigsegg Automotive AB, a tiny Swedish maker of $1 million supercars.

"This contract is an important step in the journey to a potential deal," GM Europe President Carl-Peter Forster said in the statement. "We will continue to work with all parties to define the final details and ensure a fast closure."

The agreement comes after weeks of uncertainty concerning the level of support for the bid from Koenigsegg's backers, after a preliminary deal for the sale was struck in June.

Figuring out the finances

The Swedish government is negotiating with Koenigsegg on a possible guarantee for a loan to Saab from the European Investment Bank.

Forster said that the deal is contingent on this funding being arranged.

Sweden's industry ministry said several steps remained to be taken before a transaction could be concluded.

"The Koenigsegg Group will inject more private capital, negotiate loans with the European Investment Bank and agree with the Swedish National Debt Office on the terms for possible state loan guarantees," Joran Hagglund, industry ministry state secretary, said in a statement.

Swedish daily business newspaper Dagens Industri reported today that Koenigsegg Chairman Augie Fabela said 3 billion Swedish crowns ($413.6 million) of financing were still required in addition to the EIB loan.

Different timetables

Koenigsegg spokeswoman Halldora von Koenigsegg told Reuters today that the firm expected to close the deal within about a month, while GM said it saw the deal closing by the end of the year.

As part of the proposal, GM and Saab will continue to share technology and services for a set time period. GM did not say how long the two companies would work together. GM and Saab will use license and service agreements to manager their future relationship.

In the GM Europe statement, Koenigsegg Group CEO Christian von Koenigsegg said his company plans to "transform Saab into a stand-alone vibrant entrepreneurial company and make it 'sustainable' by making it profitable."

Reuters contributed to this report.

Toyota to end NUMMI output in March, report says
Automotive News
August 16, 2009 - 11:16 pm ET

TOKYO (Reuters) -- Toyota Motor Corp. is looking to end production at its California assembly plant in March following General Motors Co.'s decision to abandon the joint venture, Japan's Asahi Shimbun reported.

Toyota, the world's largest automaker, has said it would decide by the end of this month whether to pull out of the 25-year-old New United Motor Manufacturing Inc., or NUMMI. During its bankruptcy, GM counted its share of the factory as a bad asset and left it with Motors Liquidation Co.

Toyota has started to inform its main suppliers about the plans, the Asahi said.

A Toyota spokesman said the company has reached no official decision yet.

The paper cited a source saying Toyota would transfer production of the Tacoma pickup to its factory in San Antonio, Texas, in June. It will move output of the Corolla sedan to Alliston, Ontario, and to a factory in Japan.

Production of GM's Pontiac Vibe is due to end this month.

California lawmakers and Gov. Arnold Schwarzenegger have appealed to Toyota to save the San Francisco area plant and its 4,500 jobs. The 50-50 venture has the only Toyota workers represented by the UAW.

Analysts have said a closure of the money-losing factory, currently working at less than half its capacity, would help Toyota by raising utilization at its other underused factories.

Honda, Toyota hybrids get top safety ratings
Chrissie Thompson
Automotive News
August 13, 2009 - 2:31 pm ET

The Honda Insight and Toyota Prius hybrids received "top safety pick" labels from an insurance group, bolstering sales prospects for two of the industry's most fuel-efficient vehicles.

Today's designations for the 2010 Insight and Prius along with the Kia Soul mean about a third of the small cars tested by the non-profit Insurance Institute for Highway Safety carry the group's highest rating. Vehicles with that label have posted "good" scores in front, side and rear crash tests. Top safety picks also must have electronic stability control.

"The latest results show that consumers who want good fuel economy can also get a high level of safety," said Russ Rader, an institute spokesman, in an interview. "Because there are so many small cars that test well, there's no reason to settle for a small car with less-than-stellar safety ratings."

Choosing a small car over a large one always means a consumer sacrifices some safety, he said. "The laws of physics still apply."

The insurance group's side test simulates a collision with an SUV or pickup truck moving at 31 mph. The frontal trials mimic 40 mph offset crashes with vehicles of the same weight as the test car. The institute also simulates a stationary vehicle's being rear-ended by a vehicle going 20 mph.

Today's top-safety-pick designations for the Prius, Insight and Soul put the number of top-rated small cars at 10, out of the 27 the group has tested. Other small cars with the rating are the 2009 Subaru Impreza, 2009 Scion xB, four-door 2009 Honda Civic, 2009 Mitsubishi Lancer, 2009 Volkswagen Rabbit, 2010 Toyota Corolla and two-door 2009 Ford Focus.

In April, the insurance group said the Toyota Yaris, Honda Fit and Smart ForTwo minicars performed poorly in frontal crash tests with mid-sized vehicles. Upon impact, the three cars all collapsed into the space around the driver dummy.

Ford boosts Escape, Focus output to meet clunker demand
Amy Wilson
Automotive News
August 13, 2009 - 10:17 am ET

DETROIT -- Ford Motor Co. is boosting third-quarter production of the Escape and Focus to replenish inventories depleted by cash-for-clunkers demand.

Ford is adding another 10,000 units in the third quarter, primarily Escape and Focus, bringing planned North American production for the period up to 495,000 vehicles, up 18 percent from year-earlier levels. Ford also announced today that it plans to produce 570,000 vehicles in the fourth quarter, up 33 percent from a year earlier.

The company will add production shifts and increased overtime on its Escape line in suburban Kansas City and its Focus plant in Wayne, Mich.

In Kansas City, employees will work Aug. 21 and 22 during what had been a planned summer shutdown week. The company expects to build an additional 3,500 Escapes during August and September.

In Wayne, weekday overtime and added Saturday shifts will increase Focus production by more than 6,000 vehicles, the company said. A union official told Automotive News Wednesday that about 6,400 additional Focuses are planned through the end of September.

"Under the Cash for Clunkers program, the Ford Escape and Focus are flying off dealer lots, and we're doing all we can to ensure our dealers are well stocked with the fuel-efficient vehicles that customers really want," Mark Fields, Ford's president of the Americas, said in a statement.

Ford finished July with a 25-day supply of Focus and a 21-day supply of Escape. Some dealers say they're sold out of the vehicles.

Ford also is reprioritizing vehicle shipments to ensure that Focus, Escape and Fusion, another high-demand nameplate, are loaded on car haulers first for speedier delivery to dealerships.

"We want to ensure that dealers have an uninterrupted flow of product because in many cases they are selling them as soon as they arrive on the lot," Ken Czubay, Ford vice president of U.S. marketing, sales and service, said in the statement.

GREEN CARS
Nissan says Leaf EV beats Volt mileage with 367 mpg
Hans Greimel
Automotive News
August 12, 2009 - 9:38 am ET

TOKYO -- Nissan Motor Co., in an online marketing blurb, says it isn't impressed by the Chevrolet Volt's 230-mpg claim. The Japanese automaker says its new Leaf electric vehicle gets 367 mpg, or about 60 percent better fuel efficiency than the Volt.

"Nissan Leaf = 367 mpg, no tailpipe, and no gas required," Nissan wrote on its NissanEVs Twitter page after General Motors Co. announced Tuesday that the Volt would score 230 mpg.

"Oh yeah, and it'll be affordable too," Nissan added, in a dig at the Volt's estimated $40,000 sticker price. Nissan is promising that the five-passenger Leaf, unveiled Aug. 2, will be priced to compete with $25,000-$33,000 mass-market cars in the United States.

Still unclear is how the Japanese automaker derived its lofty mileage rating.

GM CEO Fritz Henderson said Aug. 11 that the EPA is developing a rating methodology for plug-in hybrids such as the Volt. Under those tentative rules, the Volt will be the first mass-produced car with a triple-digit fuel economy rating, he said.

The Volt is a gasoline-electric hybrid that runs up to 40 miles on electric power before the gasoline engine must be started to recharge the battery while it operates. The Leaf, by contrast, is powered solely by a battery that has a range of 100 miles before it needs to be recharged.

Electric vehicle mileage is typically measured in kilowatt-hours per 100 miles. But that metric is unfamiliar to most drivers, so there are ways of deriving a miles per gallon equivalent.

Nissan officials in Japan could not immediately be reached for comment.

But an article posted July 6 on the Society of Automotive Engineers' Web site tackled the problem of calculating fuel economy numbers for electric vehicles.

Its author, Paul Weissler, estimated that the Leaf would get 367 mpg based on the Department of Energy's method of deriving petroleum-equivalent fuel economy for electric vehicles.

In a statement responding to GM's claims for the Volt, the EPA said Tuesday it has not yet tested a Volt and "therefore cannot confirm the fuel economy values claimed by GM."

But the agency said it "does applaud GM's commitment to designing and building the car of the future -- an American-made car that will save families money, significantly reduce our dependence on foreign oil and create good-paying American jobs."

Neil Roland contributed to this report

THE NEW GENERAL MOTORS
General Motors, eBay test selling cars online
Automotive News
August 10, 2009 - 10:16 am ET

DETROIT (Reuters) -- General Motors Co. and eBay Inc. said today that they launched a test program in California that will allow consumers to negotiate with dealers and buy vehicles online.

The car shopping Web site -- gm.ebay.com -- marks a departure from the way new vehicles have been traditionally sold in the United States and is aimed at helping GM gain ground with consumers a month after it emerged from bankruptcy.

More than 225 GM dealers in California are participating in the program, which runs from Aug. 11 through Sept. 8.

The site allows consumers to compare pricing across models and participating dealerships, negotiate prices, and arrange financing and payment. Consumers can agree to pay the advertised price or indicate the price they are willing to pay and can negotiate online with the dealer for the vehicle.

California, which has been dominated by import brands over the past several years, is the most populous U.S. state and the single largest market for new vehicles. Car sales have been hit harder in California than in other states over the past quarter because of the severity of the housing market slump there.

CASH FOR CLUNKERS CHAOS
Obama signs cash for clunkers extension into law
Automotive News
August 7, 2009 - 10:16 am ET
UPDATED: 8/7/09 10:54 a.m. ET

WASHINGTON (Reuters) -- U.S. President Barack Obama has signed into law a bill extending the cash for clunkers auto sales incentive program, the White House said today.

The move came after the U.S. Senate approved the $2 billion extension with a 60-37 vote last night.

The initial $1 billion of funding approved in June for clunker business has generated more than $920 million in rebates and more than 220,000 in auto sales.

Supported by the incentive program, U.S. auto sales overall were down about 12 percent in July from a year earlier, but it was their best performance this year.

The program offers consumers a federally backed rebate of up to $4,500 if they trade in old vehicles for new, more fuel efficient ones.

Supporters of the extension defeated several Republican amendments aimed at derailing the plan in the Senate.

Richard Shelby, the top Republican on the Senate Banking Committee, said the program "has squeezed months of normal activity" into a short period of time.

"When the backlog is met, interest in the program will fade, and the facade of economic benefit will disappear," Shelby said.

But Obama said in a statement after the Senate vote that the economy "will continue to get a much-needed boost" from the program.

Major automakers said in a letter to senators the current $1 billion program has helped their companies, suppliers, scrap yards, steel producers and other small businesses.

"There is no question that cash for clunkers has succeeded," said Dave McCurdy, CEO of the Alliance of Automobile Manufacturers, the chief trade group for General Motors Co, Chrysler LLC, Ford Motor Co, Toyota Motor Corp and other big carmakers.

Domestic and overseas manufacturers have so far split the "clunker" market. More fuel efficient passenger cars have outsold sport utilities, pickups and vans.

The administration, stunned by the swift success of the initiative and stung by a series of administrative glitches in trying to process rebates, had warned that the clunker measure would be suspended if more money was not approved by week's end.

The House of Representatives passed the $2 billion extension on July 31. The Senate took a week to affirm that action.

The outcome reflected the national reach of the auto industry and related businesses, and the persuasiveness of dealers who employ thousands and contribute generously to political campaigns.

Bailey Wood, director of legislative affairs for the National Automobile Dealers Association, said future demand is an open question, but added showroom traffic remains strong and non-clunker sales are up as well.

Barclays Capital analyst Brian Johnson expects the clunker-related lift in the industry's annual sales rate and production in the second-half of the year to continue.

Detroit and overseas automakers that make at least some of their vehicles in the United States have been quiet on production increases.

Economists see the clunker program boosting third-quarter growth, and several firms including Goldman Sachs have recently raised their GDP forecasts.

CASH FOR CLUNKERS CHAOS
Ford dealer needs Focuses, Escapes
Manager: "When we're delivering 20 a day, five doesn't help"
Amy Wilson
Automotive News
August 5, 2009 - 1:38 pm ET

DETROIT -- At Russ Milne Ford in suburban Detroit, the hauler loaded with Ford Focuses that drove up today was like a drinking fountain in the desert for the car-strapped dealership still working on cash-for-clunkers deals.

"They'll probably be gone by the end of the day," said Keith Batko, general manager of the dealership.

Until the car hauler pulled in, there wasn't a Focus to be found on Russ Milne's lots.

The clunker sales surge had wiped the dealership out of the fuel-efficient Focus and Ford Escape and helped trim stock from 500 vehicles going into July to 200 now. The dealership won't get more Escapes until sometime next week, and two are already reserved.

"I have two completely vacant parking lots we could do doughnuts in," said Batko, who praises his hometown congresswoman, U.S. Rep. Candice Miller, for supporting the clunkers stimulus. "This program is the greatest thing since sliced bread."

Batko's staff continues to write up clunkers deals today even though the Senate hasn't voted yet on $2 billion in additional money for the program. Batko said he is confident the extension will be approved, even though possible Republican amendments could force a suspension of the program until Congress reconvenes after Labor Day.

The dealership, which has closed around 130 clunker sales so far, is still waiting for the first payment of the $500,000-plus it is owed by the government.

The bottleneck slowing down the filing of claims has been the only negative aspect of clunkers, Batko said. It got a little better on Tuesday.

"We managed to get five in yesterday," he said. "But when we're delivering 20 a day, five doesn't help."

Dealers' clunker payments start today, feds say
DOT chief: 'We fixed our Web site problems' Neil Roland
Automotive News
August 4, 2009 - 12:28 pm ET

WASHINGTON -- Dealers will start getting reimbursed today for cash-for-clunkers credits paid to consumers, Secretary of Transportation Ray LaHood said today.

"We fixed our Web site problems," LaHood said at a news conference here. "We believe processing will go much smoother."

He said dealers had filed 157,000 applications for $664 million in rebates.

The company contracted to handle the Transportation Department's computer system is Oracle Corp. Clerical processing is being handled by Citigroup Inc.

Citigroup has added staff in Delaware to handle the surge of dealer applications. LaHood said he believed both companies have made changes to improve their response time but gave no details.

Dealers are supposed to get paid within 10 days after filing for a rebate of the $3,500 or $4,500 credits given to customers. Because of bottlenecks in the Transportation Department's computer reporting system, many dealers have had problems filing applications since the program began July 24. Many dealers had begun making deals weeks in advance, adding to the initial backlog problem.

If the Senate follows the House, which last week passed a $2 billion cash-for-clunkers extension, funding should be adequate through Labor Day, LaHood said.

Read the rest of the Article at Automotive News.

Two key U.S. senators see support for clunker extension
Neil Roland
Automotive News
August 4, 2009 - 12:01 am ET
UPDATED: 8/4/09 11:00 a.m. ET

WASHINGTON -- Two pro-environment U.S. senators who had initially criticized the "cash for clunkers" program said they would support a $2 billion extension of the federal incentive, giving the Obama administration a boost.

Sens. Dianne Feinstein, D-Calif., and Susan Collins, R-Maine, said that a federal review of the program last week showed that it was increasing fuel economy more than they had anticipated.

"The original intent of the clunkers program was to encourage people to buy more fuel-efficient vehicles, and the data so far tells us that's exactly what's happening," Feinstein said in a statement Monday night.

The Transportation Department released a preliminary analysis yesterday showing that through Aug. 1, cars sold under the program averaged 25.4 mpg, a 61 percent increase over the 15.8 mpg average of trade-ins.

A spokesman for Senate Majority Leader Harry Reid of Nevada reacted to the senators' endorsement with cautious optimism.

"This is encouraging news, but in the Senate, where any one senator can stall things, we still need to reach agreement with the Republicans so we can get this through the chamber," spokesman Jim Manley said.

President Barack Obama also intends today to step up the administration's lobbying effort.

Obama will meet with the 60 Democratic senators in the White House today to push for the legislation, White House spokesman Robert Gibbs said Monday.

The Obama administration has been pushing the Senate to approve legislation that passed the House last week which would triple funding for the $1 billion program.

No legislation has been introduced yet in the Senate.

At least several Republicans have criticized the program, though no one has openly threatened a filibuster.

Senate Republican leader Mitch McConnell of Kentucky said Monday that the administration miscalculated the popularity of the program, which should give pause to lawmakers considering a health care overhaul.

Feinstein and Collins said in a statement last week: "We will insist that any extension of the program requires that the minimum fuel economy improvement for newly purchases vehicles be at least two miles per gallon higher than it is under the enacted clunkers program."

The administration will support dealer rebates through Friday, when the Senate is expected to recess for a month, Gibbs said.

Honda recalls 440,000 cars for airbag risk
Automotive News
August 3, 2009 - 12:01 am ET

DETROIT (Reuters) -- Honda Motor Co. said on Friday that it is recalling another 440,000 vehicles -- including some of its best-selling Accord and Civic models -- for a potentially lethal airbag defect.

Honda said that the airbag inflators in some of its top-selling sedans can rupture because of too much air pressure causing metal fragments to shoot through the airbag and strike vehicle occupants.

One fatality and a number of injuries have been linked to the defect, Honda spokesman Sage Marie said.

The recall covers certain 2001 and 2002 Accords, 2001 Civics and some 2002 and 2003 model Acura TL sedans. The driver's side airbag is the defective component on the affected vehicles.

Honda said owners of those models can check to see if their vehicle is covered by the recall by checking the automaker's Web site at www.owners.honda.com/recalls.

The Japanese automaker said it was encouraging owners to wait until they received a recall notice to go to a dealership and have the inflator for the steering-wheel airbag replaced.

Honda had originally announced that it would recall some 2001 Accord and Civic sedans for the defect last November.

The notice issued on Friday added another 440,000 vehicles to the recall.

Cash for clunkers still operating; White House searches for funds
Neil Roland
Automotive News
July 31, 2009 - 12:01 am ET
UPDATED: 7/31/2009 9:27 a.m. ET

WASHINGTON -- The federal cash-for-guzzlers program continues to operate this morning despite dealer reports that it was to be suspended at midnight last night because it was approaching its $1 billion limit. "It is not suspended," a White House spokeswoman, who asked not to be named, said in an interview today. "We continue to assess the program and its budget."

National Automobile Dealers Association spokesman Bailey Wood said Thursday that the group had been told by Transportation Department officials of plans to suspend the program after just six days.

Administration officials have been meeting with House Speaker Nancy Pelosi, D-Calif., and sponsors of the cash-for-guzzlers legislation in an attempt to explore possible solutions, Pelosi spokesman Drew Hammill said.

"We're focused on getting results back on the success of the program," Hammill said in an interview.

Transportation Department spokesman Rae Tyson declined comment, and Wood was not immediately available for comment this morning.

NADA is planning to send an advisory to members this morning on how to respond to the anticipated shortfall, Wood said Thursday.

Members of the Michigan congressional delegation also are meeting this morning to discuss how to expand funding for the program.

Transportation officials met with lawmakers Thursday to assure them that dealer claims for federal reimbursement would be met through midnight last night, said U.S. Rep. Fred Upton, R-Mich.

A NADA survey of 2,000 dealers found evidence of a backlog of nearly 200,000 pending claims that, if filed, would probably deplete the program's $1 billion budget, Wood said.

The program, which began processing dealer claims for reimbursement of $3,500 to $4,500 consumer credits on July 24, was supposed to continue through Nov. 1.

"Incredibly popular"

"We are working tonight to assess the situation facing what is obviously an incredibly popular program," a White House official said in an e-mail late Thursday to Automotive News. "Auto dealers and consumers should have confidence that all valid CARS transactions that have taken place to date will be honored."

CARS stands for Car Allowance Rebate System, the official name for the program known popularly as cash for clunkers or cash for guzzlers.

The program was part of a congressional effort to revive slumping U.S. sales and further help domestic automakers, especially General Motors Co. and Chrysler Group, which have emerged from brief bankruptcies.

Sales spiked more than regulators anticipated this week after the government began logging transactions and approving rebates that indicated consumers were opting for vehicles that get significantly better gasoline mileage than the models they were trading in.

Funds sought

The administration opted to keep the program in place while it sought new money. It was not clear late Thursday where the administration would find additional funding in a short period of time.

"We hope there's a will and a way to keep the program going a bit longer," GM said in a statement. "Any doubt that the program would jump-start auto sales is completely erased."

An estimated 16,000 dealers were eligible for the program and each would have to sell more than a dozen vehicles at the maximum rebate to reach the government's funding limit, according to NADA.

U.S. Sens. Dianne Feinstein of California and Susan Collins of Maine said any extension of the incentive must require greater fuel efficiency and higher reductions of auto emissions.

Congress wrestled with both issues when it established the current incentive to give U.S. manufacturers a better chance of qualifying for the program.

U.S. auto manufacturers are scheduled to report their July sales on Monday.

Data released earlier Thursday by the government showed that dealers had submitted 22,782 deals seeking $95.9 million in refunds.

The NADA survey suggests that if the entire backlog of orders were filed with the government, its $1 billion budget would be depleted, Wood said.

Chrissie Thompson and Reuters contributed to this report

Obama defends bailouts, says he expects GM, Chrysler to repay
Automotive News
July 30, 2009 - 12:01 am ET

WASHINGTON (Reuters) -- President Barack Obama said General Motors Co. and Chrysler Group were worth saving but he expects both to repay their government loans.

Obama's comments in Raleigh, N.C., Wednesday, came as his administration released preliminary figures showing dealers sold more than 16,000 vehicles in the first days of the government-sponsored program aimed at spurring auto sales and lifting U.S. automakers financially.

The impact on GM, Chrysler and Ford Motor Co. was not immediately clear, with passenger car sales outpacing those of pickups and SUVs. More specific information was expected to be released next week by the U.S. Transportation Department.

In a speech on the economy, Obama defended the decision for the government to extend GM and Chrysler roughly $64 billion in direct aid and facilitate their bankruptcies this spring.

"If GM and Chrysler were willing to do what was necessary to make themselves competitive and if taxpayers were repaid every dime they put on the line, it was a process worth supporting," Obama said.

"We saved hundreds of thousands of jobs as a result and expect to get our money back."

Bush's role

Nearly $20 billion of the $50 billion extended to GM was pre-bankruptcy bailout funding that dated to the Bush administration. The balance included loans and other aid granted for court restructuring and exit financing. GM sought Chapter 11 protection in June.

Chrysler received more than $3 billion in bankruptcy financing and roughly $6 billion in loans for operations post-Chapter 11. Chrysler, which is operating in an alliance with Italy's Fiat S.p.A., received more than $4 billion in bailout financing before seeking court protection in April.

Government stakes in GM and Chrysler include debt-to-equity conversions of initial bailout balances they owed Treasury.

A payoff for that equity is uncertain, but the administration's autos task force says an initial public offering (IPO) for GM could come as soon as 2010 and could include some combination of new shares and the sale of government-held stock.

The U.S. Senate defeated an amendment on Wednesday that would have limited any additional aid to GM and Chrysler under the Treasury Department's corporate bailout initiative, the Troubled Asset Relief Program (TARP).

The Republican-sponsored proposal also would have required Treasury to issue common stock to taxpayers, representing the government's 60 percent stake in GM and 8 percent holdings in Chrysler.

Will it be recouped?

Outside experts question whether the government will recoup its investment.

A Rasmussen Reports national survey released this week found that most respondents opposed the auto bailouts, with only 26 percent saying it was a good idea for the government to take ownership of GM. Eighty percent want the government to sell its stake in GM and Chrysler as soon as possible.

The ability of GM and Chrysler to repay their loans hinges significantly on whether the sagging U.S. auto market rebounds and whether they capture a healthy share of the business.

The $1 billion government vehicle trade-in program designed to boost sales got off to a fast start this week.

Information about sales of specific models under the cash-for-guzzlers program was anecdotal. But preliminary government figures showed that passenger cars, which are dominated by Japanese and other foreign manufacturers in the U.S. market, outpaced sales of pickups and SUVs -- the strength of domestic manufacturers -- by a nearly 2-1 margin.

The clunker program offers rebates to consumers who trade-in gasguzzlers for more fuel-efficient vehicles.

Honda recalls U.S. Accords, Civics to fix airbags
Automotive News
July 29, 2009 - 8:32 am ET

TOKYO -- Honda Motor Co. said it is recalling more than 300,000 of its 2001 U.S.-built Accord and Civic cars in the United States and Canada to fix airbags made by Takata Corp.

The airbag contains a defective inflator that could produce excessive pressure, causing metal fragments to pass through the fabric and possibly injure the occupants, Honda said.

One driver was reported to have died in an accident in which the airbag deployed, but the cause of death is still under investigation, a Honda spokeswoman said.

Subject to the recall so far are 285,000 Accord and Civic cars in the United States and 21,000 units in Canada. Honda said today its U.S. manufacturing arm was also recalling a combined 1,500 units of the Inspire and Saber models exported to Japan containing the same airbags.

Honda is investigating what other models may need to be recalled. The airbags are also used for vehicles produced in Japan and Canada and exported to various markets, the spokeswoman said.

Takata has not sold the same airbag to another company, a spokesman for the Japanese supplier said.

'Guzzler' incentives won't be subject to taxes, NADA spokesman says
Chrissie Thompson
and Donna Harris
Automotive News
July 27, 2009 - 1:02 pm ET
UPDATED: 7/27/09 5:26 p.m. ET

WASHINGTON -- U.S. incentives paid to dealers under the cash-for-guzzlers program won't be treated as taxable income, a spokesman for the National Automobile Dealers Association said Monday.

"There's no net taxable income for the dealers," said the NADA's Bailey Wood, citing a clarification by the National Highway Traffic Safety Administration.

Confusion over the tax question had prompted Wood earlier in the day to call the issue dealers' No. 1 concern about the program. He said NADA was seeking clarification from NHTSA and the IRS.

"It's amazing how quickly NHTSA has been working on this," Wood said.

NHTSA is administering the Car Allowance Rebate System program, which provides $3,500 and $4,500 U.S. rebates to entice consumers to trade their old vehicles for more fuel-efficient new ones.

At a press conference Monday to kick off the program, U.S. Transportation Secretary Ray LaHood said that so far 17,000 dealers have submitted applications to participate in the CARS initiative.

LaHood said the DOT, which includes NHTSA, has received more than 45,000 phone inquiries and the program's Web site, cars.gov, has received more than 1.5 million hits.

Jaguar Land Rover swings to $1.1 billion loss, paper says
Automotive News
July 27, 2009 - 12:01 am ET

LONDON (Reuters) -- Jaguar Land Rover's U.K. unit reported a loss for 2008 but will receive a guarantee for a bridge loan from the British government, the Financial Times reported on Sunday.

The report said the core British operations of Jaguar Land Rover, which India's Tata Motors Ltd. bought from Ford Motor Co. last year, swung to a net loss of 673.4 million pounds ($1.11 billion) last year from a net profit of 641.5 million pounds in 2007, according to accounts filed to the British financial authorities last week.

News of the loss comes as the carmaker and Tata strive to conclude talks with the British government over short-term financing.

The Financial Times reported that the British government was prepared to offer Jaguar Land Rover a guarantee for a 175 million pound commercial bridge loan, citing a person briefed on the talks.

The report said Tata was pushing for a 12-month term for the loan, while the government wanted six months and board representation.

Tata Motors last month said Jaguar Land Rover posted a loss after tax of 306 million pounds for the 10 months of the fiscal year to March 2009 as the global recession hit sales of luxury cars and SUVs particularly hard.

U.S. spells out rules for 'cash for guzzlers' trade-ins
Chrissie Thompson Automotive News July 24, 2009 - 8:41 am ET UPDATED: 7/23/09 10:42 a.m. ET

Dealers participating in the "cash for guzzlers" program must visit www.cars.gov to find a list of facilities that may qualify for scrapping vehicles and then make sure the company can crush or shred trade-ins, according to preliminary rules on the Web site.

The government posted the rules today for the program, designed to lift U.S. light-vehicle sales from 27-year lows. "Cash for guzzlers" gives consumers vouchers of up to $4,500 for trading in some gas-guzzling vehicles for new ones with better fuel economy.

The list of companies that may qualify for disposing of trade-ins is under the "Disposal and Salvage" link on the Web site, under the bullet point labeled "ELVS List by State." Not all of those disposal firms can crush or shred cars, the federal rules say, so dealers must ask whether they can do so. The facilities can use a mobile crusher, the rules say.

Download the rules in PDF format here

The list may change as disposal companies join or leave the End of Life Vehicle Solutions group used as a source for the Web site, the rules say. So dealers must check the list on the site when they take each trade-in to be scrapped.

In addition, before trade-ins are crushed, dealerships must disable their engines. The procedure for doing so is on page 127 of the rules.

When they receive the trade-ins, disposal facilities must certify they will follow the program's rules for safely disposing mercury switches and other pollutants in the vehicles. The paperwork for doing so is at the "Disposal and Salvage" link at www.cars.gov and on page 130 of the rules.

Instead of sending the vehicle directly to a disposal facility, dealerships may also transfer trade-ins to a salvage auction. The salvage auction must fill out similar paperwork certifying that it will follow the regulations for scrapping the vehicles by taking trade-ins directly to a qualifying scrappage company. Those forms are also available at www.cars.gov and on page 133 of the rules.

Dealers must send completed disposal facility or salvage auction paperwork to disposal@cars.gov within seven days of getting it signed, the rules say.

Companies that crush the trade-ins cannot transfer them to another disposal facility, including a shredder, according to the rules.

List of dealers

Consumers wanting to get the government vouchers can find a list of registered dealers at www.cars.gov, the rules say. Participating dealers must be on a list of franchised dealers, which the government obtained from automakers and will update weekly to reflect new and discontinued franchise agreements.

Those dealers have received letters instructing them on how to register for the program, the rules say, adding that dealers must sign up separately for each brand they sell. The letters included information for registering electronically, and dealers will receive e-mail confirmation after doing so. Their names should appear on the www.cars.gov Web site within two to four days, the government estimates in the rules.

The cash-for-guzzlers legislation, also known as "cash for clunkers," provides vouchers of $3,500 to $4,500 to consumers. Congress allocated $1 billion to fund the program, which expires Nov. 1.

New cars eligible for the federal incentive must have combined highway and city fuel economy of at least 22 mpg, and smaller light trucks must have combined fuel economy of at least 18 mpg. New vehicles must have a suggested retail price of $45,000 or less.

Trade-ins eligible for cash-for-guzzlers must be drivable, less than 25 years old and have combined fuel economy of 18 mpg or less. They must have been continuously insured and registered to their owners for at least one year.

Getting reimbursed

To get reimbursed for the consumer's voucher, dealers must first submit applications electronically, using the username and password they receive via e-mail after registering for the program. Page 128 of the rules shows a sample application page that dealers can reference to prepare the necessary information about trade-ins, new vehicles and purchasers.

The government will use the information about the buyers to confirm they have not already received vouchers for a different purchase.

Each dealer must attach electronic copies of the purchase contract or lease agreement, the manufacturer's certificate of origin, certification paperwork from the salvage auction or disposal company and a "summary of sale/lease and certifications form" signed by the dealer and the buyer (page 122 in the rules). The government also "requests" that the dealership attach a customer survey (page 129 in the rules), the rules say.

If an application shows the dealer has met the cash-for-guzzlers requirements, the government will reimburse the dealership for the voucher amount by electronic transfer to an account the dealer lists upon registering for the program.

If the application is incomplete or shows that the dealer or vehicles did not meet the requirements, the government will electronically notify the dealer of the reason for rejection. Dealerships may correct and resubmit rejected applications at no penalty, the rules say.

Hyundai posts record Q2 profit of $650 million
July 23, 2009 - 6:46 am ET
Automotive News

SEOUL (Reuters) -- Hyundai Motor Co. is likely to struggle to replicate its record quarterly profit as the benefits from a weaker won and government stimulus fade but the popularity of its small, cheap vehicles will help it gain share in a weak global market.

Hyundai posted a net profit of 811.9 billion won ($649.9 million) in the second quarter, soundly beating a 456 billion won forecast by 10 analysts in a Reuters poll.

Its operating profit during the quarter ended on June 30 was 657.3 billion won, well above a forecast for a 496.5 billion won profit. The company's operating profit margin was 8 percent, its highest level in 5 years, it said.

Sales in the April-June period rose to 8.08 trillion won from 6.03 trillion won in the prior quarter but fell from 9.11 trillion won a year before.

South Korea's largest automaker expects overall sales to rise 8 percent this year and its U.S. market share to grow further in the second half, buoyed by an improving brand image and heavy spending on marketing.

That throws down the gauntlet to larger competitors such as Toyota Motors Corp., whose market share has been trending down amid a 35 percent drop in overall U.S. sales in June.

But with the global economy still struggling, the won edging higher and automakers reliant on government stimulus packages to boost demand, analysts questioned whether Hyundai's strong performance could be replicated in the second-half.

"Hyundai's earnings came out quite strong, but that was also helped by government's stimulus plans," said Nara Lim, a market analyst at Hanwha Securities.

"As global economies, including that of the United States, are still weak, investors are wondering if second half numbers will post as strong as seen in the second quarter."

Hyundai shares fell 3 percent today, but they jumped more than a third in the quarter ended on June 30, outpacing the wider market's 15 percent gain.

Stimulus, China help

As with governments elsewhere, South Korea has introduced measures such as tax incentives and easier consumer financing to boost domestic car sales, where Hyundai dominates and achieves higher margins.

Hyundai, the world's No.5 car maker with its Kia Motors Corp. unit, said contributions from overseas affiliates, especially in China and India, helped the strong numbers.

China and India are two bright spots in an otherwise grim auto market. Earlier this month, Hyundai raised it 2009 sales target in China for a second time.

Also today, Maruti Suzuki, India's top carmaker, reported an unexpected 25 percent rise in quarterly net profit as it rode on higher sales, new product launches and a drop in raw material prices. Japan's Suzuki Motor Corp. holds 54.2 percent of Maruti.

To support its ambitions, Hyundai is counting on older standby models along with newer cars such as the i30 wagon and the Genesis coupe.

This week J.D. Power and Associates ranked the Genesis coupe as the most smoothly launched vehicle for this year in North America.

Hyundai also launched successful incentive programs in the U.S., such as the deal allowing buyers who lost their jobs to return just-purchased new cars.

The maker of the Elantra compact sedan doubled its overseas marketing expenses to 3.6 percent of its sales in the first half.

Ford forecast to post another loss; focus will be on cash burn
July 22, 2009 - 12:01 am ET
Automotive News

DETROIT (Reuters) -- Ford Motor Co. is expected to post a fifth straight quarterly loss on Thursday amid the economic downturn that helped force auto parts makers and rivals General Motors and Chrysler into bankruptcy in the past three months.

Still, investors are likely to look past the expected loss and focus on whether Ford slowed its cash burn in the second quarter as it forecast and if it still sees the beginnings of a U.S. economic recovery in the second half of 2009.

And for Ford, with GM and Chrysler now through bankruptcy, the focus also will turn more toward how quickly the automaker will address an automotive debt burden that stood at $25.8 billion at the end of March and reverse years of losses.

Ford's automotive business burned through $3.7 billion in the first quarter and ended March with $21.3 billion in cash.

"I suspect they are going to have very good news for the quarter, and I could see in the short term the stock going up more than it has," Morningstar analyst David Whiston said.

"Long term, I still think they have significant issues that investors need to be aware of. They are still burning cash and they still have a lot of debt on their balance sheet."

Last week, J.P. Morgan said Ford's second quarter results may be better than the analysts' consensus forecast due to improved pricing in North America and Europe, as well as sequential increases in production.

Credit Suisse narrowed its forecasted second-quarter and full-2009 per-share loss forecasts for Ford, while saying the automaker must address longer-term challenges, including debt.

Target is profitability

Ford, which posted losses totaling $30 billion from 2006 through 2008, including a company record of $14.7 billion last year, has said it expects to return to profitability in 2011.

CEO Alan Mulally said Tuesday that the automaker was on track in dealing with its debt.

"We are right following on plan exactly," Mulally told reporters on the sidelines of a Ford event that showcased 2010 model year vehicles, as well as in-development plug-in hybrids and a battery electric compact car.

The automaker is restructuring its manufacturing operations to operate profitably in a smaller U.S. auto market and to meet an expected increase in consumer preferences for cars over larger SUVs and pickup trucks that drove profits a decade ago.

"We have a sufficient amount of liquidity to finance our entire transformation," Mulally said, adding: "As we continue our road to profitability the cash flow will just accelerate the improvement of our balance sheet."

Ford borrowed $23 billion in 2006 secured by most of its remaining assets, including the Blue Oval logo to support a multilayered restructuring and now carries a far heavier debt burden than the post-bankruptcy GM and Chrysler.

Foes face challenges

CFO Lewis Booth told Reuters earlier in July that GM and Chrysler may have "slightly cleaner" balance sheets than Ford, but face a range of continuing problems.

Ford cut its automotive debt by about $10 billion by completing a series of transactions in early April and raised $1.6 billion through a public stock offering in May it used to support funding for a U.S. union retiree healthcare trust.

J.P. Morgan expects Ford to focus on overall debt and suggested it could pursue an equity offering within a year.

Overall, U.S. sales have fallen about 33 percent in the first half of 2009, but Ford has gained market share.

Ford's U.S. sales were either slightly ahead of Toyota for No. 2 in the market behind GM in the first half if Volvo sales were included, or trail Toyota excluding Volvo sales.

Volvo, the last brand Ford has left from its former premier auto group after selling Aston Martin, Jaguar and Land Rover, is up for sale.

Ford shares closed at $6.20 Tuesday on the New York Stock Exchange, rising more than six-fold since the stock hit $1.02 on the exchange in late November when U.S. automakers were seeking government aid.

Volvo C30, Ford Focus fare well in crash tests, insurance group says
July 21, 2009 - 12:15 am ET
Chrissie Thompson
Automotive News

Porsche has debts of 14 billion euros, German paper reports
July 20, 2009 07:33 CET by Automotive News Europe

FRANKFURT (Reuters) -- Porsche Automobil Holding SE has wracked up 14 billion euros ($19.75 billion) in debt in its failed attempt to take full control of Volkswagen, Germany's Bild newspaper reported on Monday, citing an informed source.

Sources told Reuters recently that Porsche's debt was "clearly" higher than 10 billion euros.

As a result of the immense debt, Der Spiegel reported on Saturday that Volkswagen will pay 8 billion euros to Porsche SE to buy its fully-owned sports car business, Porsche AG.

The two companies are set to decide on the issue on July 23.

House approves measure to aid GM, Chrysler dealerships
JULY 17, 2009 - 12:01 AM ET by STAFF AND WIRE REPORTS by Automotive News

WASHINGTON -- The U.S. House of Representatives on Thursday approved a measure that tries to help automobile dealerships hit by the bankruptcies of Chrysler and General Motors.

The House voted 219-208 for a $24.2 billion spending bill for the fiscal year starting Oct. 1. The legislation includes controversial provisions that try to restore the economic rights of those auto dealerships that have been closed or are facing such a prospect as a result of the GM and Chrysler bankruptcies.

The bill's future in the Senate is uncertain, and the Obama administration strongly opposes it because the cuts were deemed necessary as part of the government-financed restructuring of GM and Chrysler.

Chrysler shut down 789 dealerships during its six-week bankruptcy, which ended June 10. Before it filed for court protection on June 1, GM told about 1,300 dealerships that their franchise agreements wouldn't be renewed when they expire in October 2010.

The legislation would return dealerships to their previous status. If automakers want to continue with the cuts, they'd have to go through state courts.

Chrysler, in a statement before today's vote, said its bankruptcy accelerated a dealer reduction that began more than a decade ago.

"If Congress reverses this process, it flies in the face of a U.S. vehicle market that has declined 40 percent since 2007," Vice President Peter Grady said in a statement on the company's blog.

"Indeed, the U.S. dealer network was built to serve a market that once sold 16 million vehicles a year. Those days are gone."

U.S. auto sales averaged 16.4 million annually this decade through last year. This year's sales have been running at an annual rate below 10 million.

Neil Roland and Reuters contributed to this report.

Delphi lenders prepare to make bid, reports say
07-16-2009 by Chrissie Thompsonfrom Automotive News

Delphi Corp.'s lenders have prepared a bid to compete with a private equity firm and help the supplier out of its nearly four-year bankruptcy, news reports say.

The lenders struck a tentative deal early this morning with Delphi and its former parent, General Motors, The New York Times reported, citing "people briefed on the matter."

The lenders said they would try to defeat Platinum Equity's bid through an offer that involves swapping Delphi's debt for ownership in the company, The Wall Street Journal also said today, citing court documents.

The group of planned bidders includes Greywolf Capital Management, Silver Point Capital, Black Diamond Offshore Ltd. and Manchester Securities Corp.

The agreement for the bid came the day before Friday's auction for Delphi's assets and one week before Delphi's hearing to exit bankruptcy.

In Platinum Equity's bid, it would pay $250 million for most of Delphi's operations, and GM would buy Delphi's global steering operations and four U.S. plants. The Platinum-owned operations would get a financing package valued at $3.6 billion, provided by undisclosed sources that include GM.

Delphi, based in suburban Detroit, has been mired in bankruptcy since October 2005. A plan to emerge from protection collapses in April 2008.

The supplier ranks No. 7 on the Automotive News list of the top 100 global suppliers with worldwide sales to automakers of $18.06 billion in 2008.

Reuters contributed to this report. Photo credit: Reuters

End Of Road For 4-Generation Chrysler Dealer
06-13-2009 by Sharon Cohen from AP

HOBART, Ind. - At the end of the 81-year marriage, the Isaksons said goodbye by turning off the lights. The partnership was over. The Chrysler sign went dark.

It was an unceremonious finale to a four-generation bond between one family and one company, but it was not a surprise. Rob Isakson had known for weeks his dealership was on a Chrysler hit list ... the cuts were part of the troubled automaker's survival strategy.

Still, when the moment arrived, he did not go gently into the night.

"It hurts," he says. "How do you put into words 81 years of your family's blood, sweat and tears? How many times did my father miss some family event ... because the business came first? And all of it is for nothing now."

It has been a wrenching few weeks, beginning with Chrysler's notification in mid-May that the family was losing its franchise. The word came in a form letter. "How insensitive is that?" Isakson asks.

Then came futile efforts ... through calls and e-mails ... to find why they were being dropped, even though they say their sales were better than some dealers that survived.

Last week, a judge ruled for Chrysler: The bankrupt company, having sold most of its assets to Fiat SpA, the Italian automaker, could trim about a quarter of its dealer franchises.

Obama Administration Orders $210M Worth of Fuel Efficient Vehicles
06-10-2009 by GreenBiz-Staff

WASHINGTON, D.C. -- Making good on U.S. President Barack Obama's promise to accelerate the greening of the federal fleet, the U.S. General Services Administration has ordered 14,105 fuel efficient vehicles this month and will use $210 million in Recovery Act money to pay for them.

The GSA said yesterday that it ordered the vehicles from General Motors, Chrysler and Ford last week, bringing the total of greener cars ordered since April to 17,205 and the total spending to $287 million.

"GSA is committed to spending Recovery dollars quickly and wisely," Commissioner James A. Williams of GSA's Federal Acquisition Service said in a statement. "Simultaneously, we are focused on acquiring vehicles that will provide long-term environmental benefits and savings by increasing the fuel efficiency of the federal fleet."

On March 30, Obama directed his administration to purchase about 17,600 commercially available, fuel efficient vehicles from American auto companies by June 1, to use funds from the American Recovery and Reinvestment Act -- and to get the job done swiftly to boost the nation's auto industry and replace aging vehicles with greener ones. Just days later the White House said, "The GSA moved faster than any time in its history to launch this aggressive fleet purchase strategy."

On the eve of tax day, the GSA ordered 3,100 fuel efficient hybrid vehicles, worth $77 million. With the $210 million in orders made on June 1, the tally of hybrid and other fuel efficient cars and costs now stands at:
• 2,933 Chrysler vehicles for $53 million
• 7,924 Ford vehicles for $129 million
• 6,348 General Motors vehicles for $105 million

U.S. will invest another $30 billion into GM
05-17-2009 by Neil Roland from Automotive News

WASHINGTON -- The Obama administration plans to inject $30 billion into General Motors on top of the $19.4 billion it has already lent as part of a sweetened offer to bondholders, senior administration officials said today.

At least 35 percent of the bondholders have indicated they will approve the new GM restructuring plan, which calls for them to get a 10 percent equity stake in the new company as well as warrants to buy an additional 15 percent share.

The administration is working through a bondholders committee to try to secure the agreement of the remaining lenders by 5 p.m. ET on Saturday, the officials said on a conference call with reporters.

But even a majority bondholder agreement may not stave off a GM bankruptcy filing next week, an official said. "It will be a judgment call," he said.

GM plans to file for bankruptcy protection on June 1, Bloomberg News reported, citing people familiar with the matter.

A GM bankruptcy may take between 60 and 90 days, the officials said -- somewhat longer than the 28 days it has taken Chrysler thus far as it nears the end of its bankruptcy process in a New York court.

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Big Setback for GM ... Chrysler Sale Awaited

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Chrysler memo says 789 dealers will close by June 9
05-17-2009 from Automotive News

Chrysler LLC will eliminate 789 dealers, or 25 percent of its U.S. network, by June 9, according to a memo sent today to retailers in one sales region.

Dealers are learning of their fate via UPS letters to be delivered this morning, the memo says.

Dealers will get 23 business days for a "court review" of their cases, according to the memo, from a sales manager to district dealers.

"All of this information is subject to change," the memo says. Chrysler officials said they could not comment until documents are filed in U.S. Bankruptcy Court.

"Chrysler will not be required [per bankruptcy law] to buy back the vehicles or tools and parts from rejected dealers," the memo says. "We will match you with an accepted dealers(s) to buy your parts, tools and vehicles."

The memo says Chrysler will send letters to 4 million customers of the rejected dealers after June 9, when the stores are to close.

In the memo, Chrysler says that after the closings, 80 percent of its dealers will carry all three brands under one roof, compared with 62 percent currently. Since early 2008, Chrysler has been consolidating its dealer body under Project Genesis, a plan to put the Dodge, Jeep and Chrysler brands under one roof wherever possible

Chrysler shoppers shrug off Chapter 11
05-11-2009 from Automotive News

Contrary to earlier fears, Chrysler LLC's bankruptcy filing has not caused consumers to scratch its new and used vehicles off their shopping lists, industry analysts say. A survey by Kelley Blue Book's kbb.com of people who say they plan to buy a new vehicle in the next 12 months found that bankruptcy is not a purchase deterrent -- at least not in the near term.

Dems cut deal on cash-for-guzzlers measure
05-05-2009 by Neil Roland from Automotive News

WASHINGTON -- Democratic lawmakers have proposed a cash-for-guzzlers bill that would provide vouchers of up to $4,500 to people who trade in cars and trucks for new, more fuel-efficient vehicles, Rep. John Dingell said.

The program, if approved by Congress and signed by President Barack Obama, would lead to about 1 million new-vehicle purchases, the Michigan Democrat said in a statement.

Customers would get a $3,500 voucher if they trade in a car that gets less than 18 mpg for a new car with mileage of at least 22 mpg. Vouchers of $4,500 would be awarded if the new car gets at least 10 mpg more than the old, the statement said.

It was not immediately clear whether the car would need to be a certain age to qualify for the program.

The statement also did not say how the agreement resolved a key difference between previous proposals: whether eligibility would be limited to vehicles made in North America or would include those made overseas.

The U.S. auto industry hopes such a program here can mirror its success in several countries, particularly Germany. So far this year U.S. vehicle sales have plunged 37.4 percent. But Germany, which passed a similar measure in February, posted gains of 19 percent in April and 40 percent in March.

Chrysler receives court approval for payments to dealers, suppliers
05-04-2009 by David Barkholz from Automotive News

NEW YORK -- Chrysler LLC received bankruptcy court approval for $4.6 billion in debtor-in-possession financing today to pay make payments to dealers and suppliers and to buy time to complete an alliance with Fiat S.p.A.

Bankruptcy Judge Arthur Gonzalez approved the life-giving financing in spite of vigorous objections from a minority group of dissident bondholders. Those bondholders, who hold about $3 billion of Chrysler's $6.9 billion in secured loans, argued that if a Fiat deal falls apart, the Chrysler assets backing those loans would be diminished.

The U.S. Treasury will supply $4.1 billion of the bankruptcy operating funds. New York banks holding about $4 billion in Chrysler secured loans will supply another $400 million. The rest will come from the sale of parts in inventory at Chrysler's replacement components business, Mopar.

Chrysler plans to use $1.49 billion of the funds to pay suppliers for parts delivered before Chrysler filed for Chapter 11 bankruptcy protection last week. The total pre-petition amount owed to suppliers was $1.71 billion.

Another $753 million will go to Chrysler dealers to pay for sales incentives owed them for vehicle sales before the bankruptcy filing.

Obama to announce Chrysler bankruptcy
04-29-2009 from Automotive News

DETROIT -- Barack Obama is planning to announce Thursday morning that Chrysler LLC will file for Chapter 11 bankruptcy protection as it completes an alliance with Fiat S.p.A., Bloomberg News reported, citing people familiar with the matter. However, the administration still is working to resolve outstanding issues, the report said.

Spokespeople for the White House and Chrysler were not immediately available for comment this afternoon.

GM dealerships will be cut by half; Pontiac will be phased out by 2010
04-27-2009 from Automotive News

General Motors, speeding up its restructuring in a bid to survive, said it plans to shut half of its U.S. dealerships by 2014 and phase out its Pontiac brand by next year.

GM's revised viability plan submitted to the U.S. government today also said the automaker will offer stock to debt holders to reduce its crushing debt load.

GM said it will file for bankruptcy unless a sufficient number of debt holders agree to take stock before a government-imposed deadline of June 1.

The automaker will continue to invest in four core brands: Chevrolet, Cadillac, Buick and GMC.

GM to announce Pontiac closure
04-24-2009, by Jamie LaReau from Automotive News

General Motors may announce early next week that its Pontiac brand will be eliminated, said a source familiar with the company's plans. The announcement will be made as part of an updated viability plan to the U.S. auto task force, the source said.

A second source indicated earlier this week that GM was considering phasing out the brand instead of sticking with the current plan to have it continue as a niche marque.

GM, surviving with $15.4 billion in U.S. government loans, had planned to keep Pontiac along with mainstream brands Buick, GMC, Chevrolet and Cadillac. Saturn, Hummer and Saab are up for sale.

Reports that GM is contemplating killing Pontiac surfaced today in Australia, where GM builds the Pontiac G8 sedan.

Ford slows rate of cash burn in posting $1.4 billion net loss
04-24-2009, by Dave Guilford from Automotive News

DETROIT -- Ford Motor Co., the only U.S. automaker operating without federal bailout loans, burned through $3.7 billion in cash during the first quarter in posting its fourth straight quarterly loss.

Ford slowed the burn rate from the fourth quarter of 2008, when cash declined by $5.5 billion. Ford finished the quarter with cash reserves of $21.3 billion, up from $13.4 billion at the end of 2008. The company drew down a $10.1 billion line of credit in the first quarter.

The company reported a net loss of $1.4 billion for the quarter, compared with net income of $70 million a year earlier. The quarterly pretax operating loss, excluding special items, was $2 billion, compared with net income of $686 million during the year-ago period.

Ford, which analysts estimate needs $9 billion to $10 billion in cash on hand to fund operations, is trying to avoid a federal bailout as U.S. auto sales remain at 27-year lows. Detroit rivals Chrysler LLC and General Motors are surviving on $17.4 billion in U.S. loans and are on the brink of bankruptcy.

"Our results in the first quarter reflected the extremely difficult business environment and weak demand for autos around the world," CEO Alan Mulally said in a statement.

Ford's revenue plunged as first-quarter-U.S. vehicle sales fell 44.4 percent amid a recession that's now the longest since the Great Depression. Ford said revenue fell from $39.2 billion to $24.8 billion.

Bankruptcy fears rattle dealers
04-20-2009, from Automotive News

Retailers get ready for GM and Chrysler bankruptcy filings

The growing likelihood that General Motors and Chrysler LLC will land in Bankruptcy Court has sent a wave of fear through U.S. auto dealers. Many GM and Chrysler dealers are protecting themselves by cutting inventory and factory orders. GM and Chrysler desperately need orders, but dealers are holding back because the automakers are in such bad shape. Dealers also are speeding up reimbursement.

The credit crisis and other financial problems are accelerating General Motors and Chrysler LLC dealership closings. Before the credit crisis, GM and Chrysler were encouraging dealers to consolidate as the automakers sought fewer but stronger dealerships. The crisis is speeding this process but also is hurting sales when the automakers desperately need revenue.

GM recalls 1.5 million vehicles for oil leak
04-14-2009 by Richard Truett, Automotive News from Automotive News

General Motors is recalling nearly 1.5 million Buick, Chevrolet, Oldsmobile and Pontiac mid-sized cars equipped with a 3.8-liter engine because an oil leak could start an engine fire.

Under hard braking, engine oil could leak past a heat shield and drip on the exhaust manifold. The National Highway Traffic Safety Administration says that could start a small fire that could spread to a plastic spark plug wire guide and beyond.

The vehicles affected by the recall are the 1997-2003 Buick Regal; 1998-2003 Chevrolet Lumina, Monte Carlo and Impala; 1998-99 Oldsmobile Intrigue; and 1997-2003 Pontiac Grand Prix.

GM dealers will remove the plastic spark plug retention guide and install two spark plug wire retainers free of charge, NHTSA says. A total of 1,497,516 vehicles are involved in the recall.

Analyst: GM bankruptcy risk increases
04-13-2009 by David Shepardson from Detroit News

Washington -- The odds of General Motors Corp.'s filing for bankruptcy protection have increased, JPMorgan Chase said in a research report Monday ...
GM has been planning for weeks for a possible bankruptcy filing if it can't meet a June 1 deadline to win tough concessions from its bondholders and the United Auto Workers union demanded by the Obama administration's auto task force. Read More

Bankruptcy buzz: Bad for business
04-06-2009

Automakers, and even President Obama, offer incentives to counter buyers' fears.

Dodge-Jeep dealer Jim Giddings in Woodbridge, Va., knows firsthand how the cloud of bankruptcy over Chrysler LLC is hurting sales. Some customers have been offering him half the price of vehicles. When he refuses, Giddings says, "Customers say, 'You'll be selling soon for whatever you can get because you guys will be going under, going bankrupt.'"

GM speeds up dealer cuts
04-06-2009

General Motors will lean much harder on its strongest brands -- Cadillac and Chevrolet -- as it accelerates the reduction of dealerships. New CEO Fritz Henderson says the federal Auto Task Force's rejection of GM's viability plan requires GM to make "deeper and faster" cuts. GM has 60 days to submit a new, more drastic restructuring plan or face bankruptcy.

GMAC to resume car loans to subprime borrowers
04-01-2009

NEW YORK (Reuters) -- GMAC Financial Services said it will lower vehicle financing costs and resume making loans to subprime borrowers, part of a series of moves that could stimulate sales at General Motors.

The finance company said today the moves are expected to make at least $5 billion of credit available to customers over the next 60 days. GMAC also eased a variety of fees and payments imposed on dealers, giving them more breathing room to lower both costs and inventory of unsold vehicles.

The moves come as GM races to craft a restructuring plan acceptable to the Obama administration as a condition for obtaining more taxpayer funds. On Tuesday, GM CEO Fritz Henderson said the automaker could go bankrupt by June 1 if it cannot devise such a plan.

GMAC said it will resume accepting finance applications from car and truck buyers who have credit scores below 620, a line dividing prime borrowers from less creditworthy subprime borrowers. The median U.S. credit score is 723, according to Fair Isaac Corp's myFICO unit.

Obama: U.S. will guarantee GM, Chrysler warranties
03-30-2009 by Neil Roland and Richard Truett from Automotive News

In a bid to boost flagging auto sales, the federal government will pay for any warranty repairs on a General Motors or Chrysler vehicle if either company can't because of financial problems or a bankruptcy filing, President Barack Obama said today.

"Let me say this as plainly as I can. If you buy a car from Chrysler or General Motors, you will be able to get your car serviced and repaired just like always," Obama said in a speech today. "Your warranty will be safe. In fact, it will be safer than it has ever been. Because starting today, the United States will stand behind your warranty."

GM and Chrysler are at a high risk of bankruptcy as they face some of the lowest U.S. sales rates in 27 years, analysts have said. The government today took several actions to help shore up the two automakers, including the removal of GM CEO Rick Wagoner.

"Given where the industry is, these highly unprecedented actions are consistent with the unprecedented times we're in," Standard & Poor's analyst Robert Schulz told Reuters today.

Both companies have said that bankruptcy would snuff out sales because consumers wouldn't buy a car from a company that might not be around to honor the warranty and provide service and spare parts.

Any funds for the warranty program will come from the $700 billion Troubled Asset Relief Program (TARP) provided by Congress, according to White House fact sheet on warrantees that was distributed last night.

U.S. raises fuel-economy standard to 27.3 mpg
03-27-2009 by Hans Greimel from Automotive News

Fuel-economy standards for all light vehicles will rise 8 percent, to an average of 27.3 mpg for the 2011 model year, under new U.S. rules issued today.

The regulations will use a new system that sets standards for individual models based on their size.

Cars will be required to travel an average of 30.2 miles on each gallon of fuel, up from 27.5 mpg, and light truck standards will increase by 1 mpg to 24.1 mpg, the National Highway Traffic Safety Administration said today. The combined fleet average will go up by 2 mpg.

"These standards are important steps in the nation's quest to achieve energy independence and bring more fuel-efficient vehicles to American families,'' Transporation Secretary Ray LaHood said in a statement.

Toyota ups ante in green car race
03-25-2009 by Hans Greimel from Automotive News

TOKYO -- The green car race between Toyota and Honda is heating up.
Toyota Motor Corp. plans a new small hybrid car to take on the Insight, the inexpensive Honda hybrid that just reached the United States.

The small gasoline-electric car being planned will be an low-priced spinoff of the Toyota Yaris, said Akihiko Otsuka, chief engineer of the redesigned, third-generation Toyota Prius.

"We are developing a low-priced hybrid vehicle like Honda's Insight," Otsuka said. "We are going to compete by expanding our hybrid-vehicle lineup to smaller hybrids, in the class of the Vitz [sold in Japan] and Yaris." He did not say when the small hybrid would debut, but it could arrive as early as 2011, according to Japan's Nikkei business newspaper.

Toyota's plan is the clearest sign yet that it is worried about the inroads that its domestic arch rival is making into small, low-priced hybrid vehicles. The Honda Insight, which starts at around $20,000, is selling briskly in Japan and will be followed by a hybrid version of the Fit compact.

Buick, Jaguar overtake Lexus to rank at top of reliability survey
03-19-2009 by Chrissie Thompson from Automotive News

Buick and Jaguar shared first place for brands with the most-dependable vehicles in a study released today, ending Lexus's 14-year reign.

Buick climbed from sixth place last year in market research firm J.D. Power and Associates' Vehicle Dependability Study, and Jaguar soared from 10th. They were followed by Lexus, Toyota and Mercury in the survey of owners of 3-year-old vehicles.

Buick's No. 1 ranking reflects General Motors' efforts to shake a reputation of poor dependability, said David Sargent, J.D. Power's vice president of automotive research.

"Part of GM's historical challenge has been that the customer's perception of GM's vehicles has been not in line with reliability. GM, as well as Ford, has made a lot of strides recently," he said. "Maybe 10 or 15 years ago their vehicles weren't as reliable as some of the imports, but I think today they've virtually caught up."

Jaguar, sold by Ford to India's Tata Motors last year, has fought similar stereotypes, Sargent said. In the U.S., the brand has had a reputation "of being somewhat unreliable."

Original owners of Buick and Jaguar models reported an average of 122 problems per 100 vehicles, four fewer than Lexus. In compiling the rankings, J.D. Power used surveys taken in October of more than 46,000 owners of 2006 model-year vehicles.

Imports join incentive wars to curb growing inventories
03-16-2009 from Automotive News

With only a few holdouts, the import brands are leaning heavily on incentives to avoid ballooning inventories of unsold vehicles.

Luxury brands such as Mercedes-Benz, Infiniti and Lexus have increased incentives sharply to control inventories despite collapsing sales.

Chrysler says $5 billion in low-interest loans will be enough
03-15-2009 by Jeff Bennet from Dow Jones

DETROIT -- Chrysler LLC won't need additional federal funding to run its operations if it succeeds in securing $5 billion in low-interest loans by the end of the month.

The $5 billion will help Chrysler work through the crucial July shutdown period when U.S. auto makers traditionally idle their plants for up to two weeks to retool their factories, a company spokeswoman said.

Chrysler, which has already received $4 billion in low-interest loans, told the U.S. Department of Treasury in February that it needed only another $5 billion in order to avoid bankruptcy. The auto maker is slated to submit a plan on March 31 that details its cost-cutting actions and how it intends to repay the loans.

Chrysler and General Motors Corp., which also needs more low-interest loan money, are both in cost-concession negotiations with the United Auto Workers. The UAW ratified an agreement with Ford Motor Co. - which hasn't accessed the loans - is expected to save the auto maker $500 million annually.

UAW members approve Ford contract changes
03-09-2009 by Amy Wilson from Automotive News

DETROIT -- UAW members at Ford Motor Co. have ratified contract concessions and changes to retiree health care funding. Nearly 60 percent of the votes favored the measure.

The UAW announced the approval this afternoon. The deal allows Ford to use stock to fund up to half its obligations to a retiree health care trust.

"Once again, UAW members have stepped up to make the difficult decisions necessary to deal with the reality of the current economy, the deteriorating auto industry as a whole and specifically the negative impact the economic climate is having on Ford Motor Co.," UAW President Ron Gettelfinger said in a statement.

The UAW said 59 percent of production workers and 58 percent of skilled-trades workers approved the agreement.

To rebuild the U.S. auto industry, Gettelfinger again called for "shared sacrifice" from other stakeholders, such as company executives, directors, shareholders, bondholders, dealers and suppliers.

Saturn has interested buyers, GM says.
03-06-2009 by Jamie Lareau from Automotive News

Saturn is attracting interest from a "few" parties that might want to acquire the brand, a General Motors spokesman said Thursday.

GM has hired Steve Girsky, formerly senior auto analyst for Morgan Stanley, to help advise on any possible Saturn deals.

Saturn spokesman Steve Janisse said, "There is interest from investors in doing a spinoff, and there are other entities interested in just buying it." He said he does not know whether the interested parties are other automakers.

GM, Ford, Toyota plunge more than 39% in Feb.
03-03-2009 by Chrissie Thompson from Automotive News

Analyst: 'We are in an automotive depression'
Ford, Toyota and General Motors sales plunged more than 39 percent last month in what early reports indicated was the weakest February sales performance in at least 34 years.

GM, which is staying afloat with U.S. loans, dropped 53.1 percent. Ford Motor Co. slid 49.5 percent, while the three biggest Japanese automakers -- Toyota, Honda and Nissan -- were all down more than 37 percent.

"We are in an automotive depression amid 'The Great Recession,' " Standard and Poor's analyst Efraim Levy said in a report. "Shell shocked consumers fearful for their jobs, the value of their homes and stock market assets are wary of making the sizable discretionary purchases of new vehicles."

The results for the five biggest automakers were worse than most analysts' forecasts and reinforced projections that last month's sales tally would be the lowest for any February since at least 1976, the most distant year of available data.

U.S. sales haven't risen since October 2007, in stride with a 15-month recession.

Dealers barely in black
03-02-2009 from Automotive News

U.S. auto dealer profits slid to a nearly two-decade low in 2008 and could fall even more this year. According to the National Automobile Dealers Association, the average dealership made a net pretax profit last year of just 1.0 percent of sales, down from 1.5 percent in 2007.

GM posts wider loss, burns through $5.2 billion in cash
02-27-2009 by Jesse Snyder from Automotive News Europe

General Motors, battered by a global economic collapse and buoyed by U.S. rescue loans, posted its sixth straight quarterly loss and burned through $5.2 billion in cash as revenue shrank 34.2 percent.

The net loss of $9.6 billion in the fourth quarter compares with a loss of $1.5 billion a year earlier. The operating loss was $5.9 billion. Revenue fell to $30.8 billion from $46.8 billion.

The loss sealed CEO Rick Wagoner's fourth straight year without a profit and reflect the distress that GM showed last week when it asked the U.S. Treasury for as much as $16.6 billion in additional U.S. aid. GM, which has received $13.4 billion so far, said the request reflected a market that was deteriorating more rapidly than anticipated.

"2008 was an extremely difficult year for the U.S. and global auto markets," Wagoner said in a statement. "We expected these challenging conditions will continue through 2009, and so we are accelerating our restructuring actions."

GM ended the quarter with $14 billion in cash. In GM's last quarterly report in early November, GM said it was close to exhausting its cash supply. The automaker then petitioned Congress for help, was rejected by the Senate and bailed out by lame-duck President George W. Bush.

This year, GM has officially yielded the global sales title to Toyota Motor Corp., which itself is about to post its first annual operating loss in 70 years. GM recorded a 49 percent sales decline in January U.S. sales, as demand sank to its lowest mark since 1981.

GM's fate now rests with a task force appointed by President Barack Obama, who told Congress this week that the Detroit 3's ills were largely self-inflicted as he pledged to help create an industry that "can compete and win."

Wagoner was scheduled to meet later today with the task force, headed by U.S. Treasury Secretary Timothy Geithner and White House economic adviser Larry Summers.

GM, like smaller rival Chrysler LLC, faces pressure to wrap up concession talks with the UAW on how to cut funding promised to a health-care trust fund. Chrysler has received $4 billion in U.S. loans and seeks $5 billion more.

Obama vows to not 'walk away' from auto industry
02-25-2009 by Harry Stoffer from Automotive News Europe

WASHINGTON -- President Barack Obama tonight vowed to hold U.S. automakers accountable for "bad practices" but promised to help create a "retooled, re-imagined auto industry."

In remarks prepared for delivery to a joint session of Congress, Obama gave a sobering assessment of the nation's ills -- mainly economic -- but said, "We will rebuild, we will recover, and the United States of America will emerge stronger than before."

About midway through the speech, the president had this prepared comment:"As for our auto industry, everyone recognizes that years of bad decision-making and a global recession have pushed our automakers to the brink. We should not, and will not, protect them from their own bad practices.

"But we are committed to the goal of a re-tooled, re-imagined auto industry that can compete and win. Millions of jobs depend on it. Scores of communities depend on it. And I believe the nation that invented the automobile cannot walk away from it."

Chrysler unlikely to stand alone
02-23-2009 by Bradford Wernle from Automotive News Europe

DETROIT - Chrysler LLC says it can survive without a proposed product-sharing alliance with Fiat S.p.A. if it gets an additional $5 billion federal loan. But analysts say Chrysler's stand-alone plan relies on extremely optimistic assumptions.

In its Tuesday, Feb.17, submission to the U.S. Treasury Department, Chrysler laid out two survival plans - one with an alliance with Fiat and one without. In the stand-alone scenario, Chrysler assumes it can maintain U.S. market share, get debt reduction deals with creditors and win price cuts from suppliers.

Hyundai sweetens incentive to car buyers that covers job loss
02-19-2009 by Kathy Jackson from Automotive News

LOS ANGELES -- Hyundai Motor America is making its successful Hyundai Assurance sales incentive even more attractive.

Hyundai Assurance, which was launched in January, allows consumers to return their new Hyundai vehicles within a year of purchase if they lose their jobs.

Now, with Hyundai Assurance Plus, Hyundai also will pay the vehicle loan or lease for 90 days during the year while the owner looks for work. If the owner keeps the car, the payments do not need to be repaid.

Hyundai Assurance Plus will be offered from Feb. 23 to April 30.

"We continue to look for ways to help consumers in this challenging economic environment," says Joel Ewanick, Hyundai's marketing vice president.

Hyundai is scheduled to broadcast TV spots about Assurance Plus during the Academy Awards show on Sunday. Hyundai replaced General Motors as the Academy Award's automotive sponsor this year.

Seven 30-second Hyundai spots are scheduled, plus one 60-second corporate spot highlighting the history of the company and its commitment to the U.S. market.

The incentive is credited in large part for boosting the Hyundai brand's U.S. January sales 14.3 percent above the figure for January 2008, to 24,512 units. Industry sales fell 37.1 percent in January.

GM aims to show $1 billion in annual labor savings
02-17-2009 by David Barkholz from Automotive News

General Motors is expected to identify more than $1 billion in savings from additional plant closings and factory work-rule changes when it files a viability plan with the U.S. Treasury on Tuesday, said a source familiar with ongoing stakeholder negotiations. The carmaker and the UAW are expected to bargain deep into tonight.

Meanwhile, U.S. Rep. Thaddeus McCotter, R-Mich., said today that Congress expects a commitment from GM bondholders to let the automaker pay off a sizeable portion of its $30 billion debt with company stock in lieu of cash.

"People had better put their best foot forward because these plans will be the basis for funds going forward," McCotter said.

GM and Chrysler LLC are required to file restructuring plans Tuesday detailing how they plan to cut costs and eventually repay $17.4 billion in federal loans that they are using to survive the worst industry downturn in decades.

GM's board was scheduled to convene via a telephone conference call today to review a draft plan of the automaker's viability plan before its submission to Treasury.

Obama drops 'car czar' idea
02-16-2009 by Timothy A. Clary from Automotive News

CHICAGO (Reuters) -- President Barack Obama has decided to form a government task force to oversee the restructuring of the struggling U.S. auto industry instead of naming a "car czar" with sweeping powers, a senior administration official said on Sunday.

Obama, who last week won congressional approval of a massive economic stimulus program, is appointing Treasury Secretary Timothy Geithner as his "designee" for overseeing auto bailout loans and as co-head of the new high-level panel along with White House economic adviser Lawrence Summers, the official said.

But Obama, who is spending the Presidents Day holiday weekend in Chicago, has dropped the idea of having a single "car czar" empowered to handle the politically sensitive task of revamping of the auto industry.

"There is no 'car czar'," the official said, speaking on condition of anonymity.

There was no immediate word on when Obama plans to unveil his strategy, but General Motors and Chrysler LLC are required to submit new turnaround plans by Tuesday showing how they can be made viable after receiving $13.4 billion in emergency aid at the end of Bush administration.

Congress scales back tax break for car buyers
02-12-2009 by Harry Stoffer from Automotive News

WASHINGTON -- A proposed tax break for new-vehicle buyers is dramatically scaled back in the final version of the economic stimulus bill.

Auto dealers and their allies had sought to make interest on auto loans and the sales and excise taxes on new-vehicle purchases deductible from federal taxes. Proponents say those measures are needed to boost showroom traffic and sales.

But the final stimulus bill -- a compromise between House and Senate negotiators -- makes only sales and excise taxes deductible. The loan interest provision was dropped, a spokeswoman for Sen. Barbara Mikulski confirmed today.

Sources said the trim in the tax break for new-vehicle purchases reduced its cost from about $11 billion to about $2 billion. Congressional negotiators sought to limit the cost of the stimulus bill to pacify lawmakers worried about spending.

Mikulski, D-Md., sponsored the original provision on vehicle purchases at the request of dealers. The spokeswoman said Mikulski considers the deduction for sales and excise taxes an important victory.

GM to cut 14% of global salaried workforce ... will trim executive pay by 10%
02-10-2009 from Automotive News

General Motors, facing a Feb. 17 deadline to show the government it's a viable company, said today that it will cut 14 percent of its salaried jobs globally by the end of the year and slash the salaries of many who remain.

Salaried employment will be reduced to 63,000, from 73,000, the company said in a statement. In the United States, about 3,400 of GM's 29,500 salaried employees will lose their jobs, and most will be eliminated by May 1.

The cut in base pay for executives will be 10 percent. "Many other" salaried workers will have their pay reduced by 2 percent to 7 percent, GM said.

"These difficult actions are necessitated by a severe drop in vehicle sales worldwide and by the need to restructure GM for long-term viability," GM said in the statement.

Nissan to slash jobs, production after forecasting $2bn annual loss
02-09-2009 from Automotive News Europe

TOKYO (Reuters) -- Nissan Motor will cut production by 20 percent and reduce its global headcount by 20,000 by the end of March, the carmaker said Monday.

Nissan CEO Carlos Ghosn said the company has no plans to close any factories.

Nissan posted a big quarterly loss on Monday and warned it would lose money this year.

For the year to March 31, Nissan now expects an operating loss of 180 billion yen ($2 billion) instead of the 270 billion yen profit it projected three months ago.

Nissan, 44 percent owned by Renault, expects its net loss at 265 billion yen instead of its earlier projection of a 160 billion yen profit.

Saddled with excess capacity and with sales plummeting in developed markets, Nissan has cut 2,000 non-permanent manufacturing jobs in Japan.

10 Cars That Get More Than 40 MPG

02-08-2009
by Jacob Gordon of TreeHugger

Perhaps you've noticed the phenomenon of the incredible shrinking car. Yo-yoing gas prices and a stumbling economy have had a visible downsizing effect on the types of vehicles Americans are choosing to buy these days. Small cars are simply cheaper to run than bigger ones, and no one believes that this price reprieve at the pumps will last very long. Now that there is a demand for small cars, however, we need to find the cars to fill it. For that, we need to turn to our more fuel-efficient neighbors across the ponds for help.

Chrysler again urges dealers to order more cars
Press: "You can either help us or burn us all down"

02-03-09
by Bradford Wernle

DETROIT -- Chrysler LLC executives, making their second sales plea to dealers in two weeks, urged them today to order 15,000 more cars by Monday to keep the company viable.

"You have two choices," said Chrysler co-President Jim Press. "You can either help us or burn us all down."

The executives said 70 percent of the dealer body had heeded the company's request to order 78,000 vehicles they had been allocated for February. Press made the first plea Jan. 24 at the National Automobile Dealers Association convention in New Orleans.

"We've got to get the cash flow coming in so we can get to March 31 as a viable company," Press said in a conference call to dealers this afternoon. "By doing that right now, we can begin to harvest the long-term benefits of the investments we're making."

"By successfully keeping the doors open in January and February, we'll get the loan," said Press, referring to $4 billion Chrysler has received from the U.S. Department of Treasury. Chrysler must submit a plan to the government by Feb. 17 to show it's a viable company. The government will decide by March 31 whether to keep the loan in force.

The automaker is seeking an additional $3 billion in U.S. aid.

Chrysler spokesman Rick Deneau declined comment on the call.

Ford, GM drop more than 40% as industry nears 27-year low

02-03-09
by Chrissie Thompson
Ford Motor Co. and General Motors said sales plunged more than 40 percent in January, putting the industry on pace for its worst month since August 1982.

Ford's 41.6 percent fall and GM's 49 percent drop were steeper than analysts' forecasts. Honda, Nissan and Toyota posted declines ranging from 27.9 percent to 31.7 percent, cementing the industry's fourth straight monthly slide of more than 30 percent.

Ford sales analyst George Pipas projected industry wide sales for the month would fall below 10 million on an annual selling rate basis. That would be below analysts' average projection of a 10.3 million rate and the lowest in almost 27 years.

"The biggest reasons for the decline in the sales rate was the fleet market," Pipas said. "We estimate the industry fleet sales were down 65 or more percent from a year ago."

Ford said its sales to individual customers fell 27 percent, while its fleet sales plunged 65 percent. The fleet figure includes a 90 percent drop in sales to rental companies.

VW down, Subaru up
The Volkswagen brand was down 11.7 percent, while Daimler AG said sales of its Mercedes-Benz and Smart vehicles slipped 35.5 percent. Subaru, the only automaker to post an increase in U.S. sales last year, was up 8 percent.

Ford is trying to continue operations without federal aid, despite burning through $5.5 billion in cash last quarter. Last week the automaker said it finished the year with cash reserves of $13.4 billion and will tap $10.1 billion in credit lines. Ford needs at least $10 billion in cash to operate, analysts say.

GM and Chrysler LLC, which reports sales later today, are preparing viability plans for the U.S. Treasury Department to preserve the $13.4 billion in federal loans they have already received.

Analysts had expected the biggest Japanese automakers to report less severe declines than the Detroit 3 as the industry looks to recover from its worst U.S. sales year since 1992. Last year's light-vehicle sales dropped to 13.2 million, as soaring fuel prices in the first part of the year and a global credit crunch later in the year deepened a national recession. In 2007, 16.1 million light vehicles were sold in the United States.

Most analysts say sales levels will be suppressed through the first half of 2009 at least.

Falling production
Last week, Pipas said January production levels in North America that were two-thirds lower than last year's might trigger an industry wide 60 percent decline in fleet sales compared with January 2008. The retail rate for January would be in line with recent months, Pipas and GM both predicted -- about 8.3 million units.

January fleet sales fell partly because of U.S. automakers' extended plant shutdowns after the year-end holidays, analysts say. In addition, some corporations took advantage of GM's December fleet incentives. December fleet deals helped GM unload about 300,000 more vehicles than Deutsche Bank's Rod Lache expected, the analyst said in a note to investors.

The industry started 2009 with a 94-day supply of vehicles, more than 50 percent above the level recommended by analysts.

Chrysler offers new round of buyouts to UAW

02-02-09 by Robert Sherefkin and David Barkholz
DETROIT -- Chrysler LLC has launched a new companywide round of hourly worker buyouts and retirement incentives to cope with the industry downturn and meet federal labor-saving requirements for the automaker's rescue package.

Chrysler notified UAW locals of the plan today, said a union source who asked not to be identified. Automotive News obtained a copy of the notice.

Chrysler wants to move veteran workers off its rolls to eventually bring on hires who will earn half the $28-an-hour wage of current veteran workers and half their benefits. The carmaker employs about 38,000 workers represented by the UAW.

Chrysler also must bring its labor costs in line with Japanese transplant automakers by Feb. 17. That's when the company is required to justify a federal rescue loan of $4 billion. General Motors has the same timeline to justify a federal loan commitment of $13.4 billion. Chrysler spokeswoman Shawn Morgan declined to comment.

The buyout incentives are similar to those offered last year but with a couple of new wrinkles, the union source said. Retirement-eligible workers who leave will receive a $50,000 incentive plus a voucher of $25,000 for a new Chrysler vehicle, according to the notice. Last year the incentive was $70,000.

Workers who take a buyout and leave with no retiree health care benefits get $75,000 and a $25,000 car voucher, the union source said. The incentive was $100,000 last year.

Another group now is eligible for full retirement benefits: workers age 55 or older with 10 years of service, according to the notice.

January auto sales expected to drop 30%

01-30-09
By Brent Snavely - Detroit Free Press
There was hope — just a little over two weeks ago - that automotive sales in January would rebound slightly from the lowest levels the industry has seen since 1982.

But as the U.S. economy continues sputtering, that optimism has mostly dissipated. Automakers and consulting firms are predicting that sales will be just as bad as they were in December due to record-low consumer confidence, the continued lack of available credit and bad winter storms.

When manufacturers report January sales on Tuesday, Edmunds.com predicts that new vehicle sales in the United States will decline 30.1% for the month.

Edmunds expects that Chrysler LLC's sales will decline the most, or about 48%, followed by 38% for General Motors Corp. and 29.8% for Ford Motor Co.

Green Car Rules Give Auto Industry a New Challenge

01-29-09
from Google News & The Associated Press By Ken Thomas and Dan Strumpf
WASHINGTON (AP) — President Barack Obama wants automakers to make greener cars at a time when General Motors and Chrysler are hanging by the thread of a massive government loan and auto sales have plummeted to their lowest levels in more than two decades.

Obama's plans could bring smaller cars, more hybrids and advanced fuel saving technologies to showrooms, but car shoppers will probably pay more upfront because the new rules are expected to cost the hamstrung industry billions of dollars.

"The consumer needs to understand that they will see significant increases in the cost of vehicles," said Rebecca Lindland, an auto analyst for the consulting firm IHS Global Insight. Her firm estimated the upgrades could add $2,000 to $10,000 to the price of a vehicle.

Ford Credit to cut 20% of U.S. work force as sales fall

01-28-09
from AUTOMOTIVE NEWS by Amy Wilson
DETROIT -- Ford Motor Credit will cut 20 percent of its U.S. work force as auto sales plunge and the company provides financing for fewer brands.

About 1,200 jobs will be eliminated by the end of July, Ford Credit spokeswoman Margaret Mellott told Automotive New this evening.The move follows a 21.8 percent decline in Ford Motor Co.'s U.S. sales last year, spurred in part by the sale of the Jaguar and Land Rover brands to India's Tata Motors. "This will help keep our costs in line with the level of receivables we have," Mellott said.

More details will be shared Thursday when the automaker and its finance unit release fourth-quarter and full-year earnings reports.

The Ford Credit job cuts will begin in mid-February, Mellott said. The 1,200-position reduction will be achieved primarily through involuntary layoffs and include some planned attrition and retirement. Ford Credit's headquarters in suburban Detroit, regional business centers and field staff will be affected.

In addition to dropping Jaguar and Land Rover, Ford Credit is moving away from writing loans for Mazda. Ford reduced its stake in the Japanese automaker in November to raise cash.

Newscast Video 01-26-09
from AUTOMOTIVE NEWS
-Obama's clean-air move
-NADA make meetings
Watch

CHRYSLER AND FIAT JOIN FORCES
The plan: 7 Fiat vehicles for U.S.

01-25-09
from AUTOMOTIVE NEWS
Chrysler LLC and Fiat S.p.A. will bring seven new vehicles to North America under their alliance -- four with Chrysler brands and three as Fiats or Alfa Romeos. The vehicles will be built at Chrysler plants in North America and sold through select Chrysler, Dodge and Jeep dealerships, according to sources who have seen the product-sharing agreement.

Industry wants more from Obama

01-25-09
from AUTOMOTIVE NEWS
The government has pledged $50 billion to help automakers and auto lenders, but other industry segments say they need immediate aid, too. And President Barack Obama's $825 billion economic stimulus plan hardly mentions cars and trucks. Suppliers and dealers seek additions to the stimulus bill that specifically would help them. But others, including some industry leaders, argue.

GM's sales fall, ending claim as world's largest automaker

01-21-09
from AUTOMOTIVE NEWS by Chrissie Thompson
General Motors said worldwide sales fell 10.8 percent in 2008, ending its 77-year claim as the world's largest automaker.

GM sold 8.36 million vehicles last year, putting it about 616,000 units behind the 8.97 million reported by Toyota Motor Corp. Tuesday.

The 2008 results cap an advance by Toyota that has seen the Japanese automaker overcome a 3 million deficit since the start of the decade, fueled in large part by gains in the United States. In 2008, both automakers posted sales declines.

At the time of the announcement, just before 9 a.m. Wednesday, GM defined itself on its Web site as "the annual global industry sales leader for 77 years."

GM President Fritz Henderson had said the previous evening that retaining the title wasn't "terribly important," to him. He told the Automotive News World Congress last night that it's more critical that GM, which hasn't posted a profit since 2004, is strong financially.

National Motor Vehicle Title Information System Available to Public

01-20-09
from ASA NEWS by Luca Ciferri
WASHINGTON, D.C. The National Motor Vehicle Title Information System will be implemented by Jan. 30, 2009, providing a national database of vehicles compiled from state, salvage and insurer reporting. It will require insurance companies and salvage yards to report vehicles that are severely damaged or totaled, and consumers will have access to such information as odometer readings and theft records. Data is predicted to be more comprehensive, up-to-date and less expensive than some private sector reports.

The implementation stems from the 2008 court case, Public Citizen Inc., Consumers for Auto Reliability and Safety, and Consumer Action v. Michael Mukasey, Attorney General of the United States. Public Citizen filed the suit to fight for a used car database that was established by Congress in 1992 in the Anti-Car Theft Act. However, the U.S. Department of Justice (DOJ) had never made the system available to the public.

The Automotive Service Association supported legislation in the 110th Congress similar to the new National Motor Vehicle Title Information System. The Automotive Service Association is the largest not-for-profit trade association of its kind dedicated to and governed by independent automotive service and repair professionals. ASA serves an international membership base that includes numerous affiliate, state and chapter groups from both the mechanical and collision repair segments of the automotive service industry. ASA's headquarters is in Bedford, Texas.

Fiat, Chrysler in partnership talks

01-19-09
from AUTOMOTIVE NEWS by Luca Ciferri
TURIN -- Fiat Group is in negotiations with Chrysler LLC to form a strategic partnership that could include a Fiat equity stake in the ailing U.S. carmaker. The pact would help Chrysler speed up and strengthen its ongoing restructuring plan.

According to people familiar with the matter in Europe and Detroit, Fiat could give Chrysler access to its mini-, small-, lower-medium and upper-medium platforms, engines and transmissions. This would allow Chrysler to quickly build a complete new range of front-wheel-drive, low-emission vehicles. It is not clear if Fiat would receive money or equity for giving Chrysler access to its technology.

A Chrysler spokeswoman today said she couldn't provide immediate comment. A spokesman for majority owner Cerberus Capital Management LP could not be immediately reached for comment. Thomas Froelich, a spokesman for Daimler AG in Stuttgart, declined to comment. Daimler owns 19.9 percent of Chrysler.

Fiat confirms plan to acuire 35% stake in Chrysler

01-20-09
from AUTOMOTIVE NEWS by Luca Ciferri
TURIN, Italy -- Fiat S.p.A. and Chrysler LLC confirmed today that the Italian company intends to acquire an initial 35 percent stake in the U.S. carmaker.

In a joint statement, Fiat, Chrysler and Chrysler's majority shareholder Cerberus Capital Management L.P, said they have signed "a non-binding term sheet to establish a global strategic alliance."

The pact "would provide Chrysler with access to competitive, fuel-efficient vehicle platforms, powertrains, and components to be produced at Chrysler manufacturing sites," the companies said.

Under the terms of the deal, first reported on Monday by Automotive News Europe, Fiat would make available its distribution network in key growth markets. "Substantial cost savings opportunities" would be available to the alliance, the companies said.

The transaction already has the blessing of the UAW. UAW President Ron Gettelfinger said in the press release: "This is great news for the UAW Chrysler team and we look forward to supporting and working with them to ensure Chrysler's long term viability."

Fiat, Chrysler in partnership talks

01-19-09
from AUTOMOTIVE NEWS by Luca Ciferri
TURIN -- Fiat Group is in negotiations with Chrysler LLC to form a strategic partnership that could include a Fiat equity stake in the ailing U.S. carmaker. The pact would help Chrysler speed up and strengthen its ongoing restructuring plan.

According to people familiar with the matter in Europe and Detroit, Fiat could give Chrysler access to its mini-, small-, lower-medium and upper-medium platforms, engines and transmissions. This would allow Chrysler to quickly build a complete new range of front-wheel-drive, low-emission vehicles. It is not clear if Fiat would receive money or equity for giving Chrysler access to its technology.

A Chrysler spokeswoman today said she couldn't provide immediate comment. A spokesman for majority owner Cerberus Capital Management LP could not be immediately reached for comment. Thomas Froelich, a spokesman for Daimler AG in Stuttgart, declined to comment. Daimler owns 19.9 percent of Chrysler.

Electric cars: Cheap gas kills the thrill

01-19-09
from AUTOMOTIVE NEWS
Fuel economy and the electrified vehicle dominate the show. But with current fuel pricing -- a barrel of oil skidded to $35 last week -- alternative-energy cars are going to have to wait to catch the American mainstream.

17 million U.S. sales? It could happen again

01-19-09
from AUTOMOTIVE NEWS
As auto industry executives plan for a dismal 2009, they face a lot of uncertainty on investing for the future. The key question: What will a "normal" year look like? For nine years starting in 1999, the normal U.S. market was around 16.9 million units. But the post-credit-crisis world may be much different, and smaller. Or maybe not.

Chrysler Financial gets $1.5 billion federal loan

01-16-09
from AUTOMOTIVE NEWS by: Bradford Wernle and Harry Stoffer
WASHINGTON -- The U.S. Treasury Department said today it will lend $1.5 billion to a new arm of Chrysler Financial Services LLC so that it can increase lending to vehicle buyers. The five-year loan carries a flexible interest rate. The money will come from the $700 billion Congress approved last October for rescue of the nation's financial institutions.

The money also has been used for emergency loans to General Motors and Chrysler LLC and to shore up GMAC Financial Services. The Treasury called today's aid for Chrysler Financial "part of a broader program to assist the domestic automotive industry in becoming financially viable." There are also limits on Chrysler Financial executive pay and taxpayers collateral.

Detroit Auto Show: The best Detroit auto show ever: here's why

01-12-09
from AUTOMOTIVE NEWS by: Edward Lapham
There is general agreement that this year's Detroit auto show has a lot less wattage than previous years. That was to be expected.

There are fewer stands because some automakers aren't here. Some displays are a lot leaner. They're not exactly pipe-and-curtain but nowhere near as elaborate as they have been in other years.

And there are wide open spaces in the middle of the floor where there used to be stands ... even though a couple of Chinese automakers, a college and a supplier were able to move their displays from the basement to the main floor. There also seem to be a lot fewer journalists. I'm not complaining.

There are plenty of new products and concepts that will be important for the future of the industry and the nation. And focusing on the products is a good thing. So, here are the top five reasons why the 2009 North American International Auto Show is the best one yet:

5. With more space and fewer people, it's easier to see the vehicles.
4. You can get from place to place faster.
3. Even with half a foot of snow on the ground it makes the Detroit show seem like Los Angeles.
2. I haven't had anyone run over my foot with one of those stupid press kit bags with wheels.
And the No. 1 reason this year's show is better .... No-one has complained yet that Cobo Center needs to be expanded.

UAW: GM, Chrysler may not need additional federal funds

01-07-09
from AUTOMOTIVE NEWS
DETROIT -- UAW President Ron Gettelfinger said today that General Motors and Chrysler LLC may not need additional federal loans beyond the $17.4 billion approved by the White House. "If we can get by without more money, that's what we want to do," Gettelfinger told Automotive News in an interview at Solidarity House here.

He said how well the money holds out will depend on sales volume this year. Gettelfinger said he hopes sales will not dip more than 1 million units below 2008's depressed 13.2 million.

The $13.4 billion earmarked for GM may be sufficient, said a source close to the company.When asked directly whether GM plans to ask for money beyond the $13.4 billion, the source answered, "no."

"We've got enough" money from the loan, the source said, "in terms of what our downside scenario is" for U.S. sales this year.

Ford sales fall 32% ... VW, Daimler also drop

01-05-09
from AUTOMOTIVE NEWS
Ford Motor Co. posted a 32 percent decline in December sales as the U.S. auto industry capped its worst year since the early 1990s.

Ford's drop was its 23rd in the past 24 months. The Volkswagen brand was down 14.4 percent, and Daimler AG plunged 23.5 percent. Subaru of America, the only other automaker to report by midday, slipped 7.7 percent.

Ford's results bolster analysts' forecasts for an industrywide fall of more than one-third. That would be the fourth straight monthly tumble of more than 25 percent, amid the longest U.S. recession since the early 1980s and a national debate over whether the federal government should rescue Chrysler LLC and General Motors.

"No one wants to buy anything," Jesse Toprak, Edmunds.com's executive director of industry analysis, said in an interview before today's figures were released.

GM's stake in revived GMAC will shrink

01-05-09
from AUTOMOTIVE NEWS
The government bailout of GMAC Financial Services gives General Motors a lender that's back in business with dealers and consumers. But GMAC is even less of a captive finance company for GM than ever before. Nonetheless, the bailout has provided fresh capital to GMAC, and the lender expanded credit to GM car shoppers last week.

Detroit show: Glitz on a shoestring 01-05-09
from AUTOMOTIVE NEWS
Welcome to the first Detroit auto show in the bailout era. Automakers will roll out new cars, and top executives will take questions from the press -- as they do every year at the North American International Auto Show. But in the process, we'll get our first glimpse of how the industry will tackle a challenging year.

Newscast Video 12-30-08
from AUTOMOTIVE NEWS
Year in Review - Top 10 Hot Features of 2008
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2009 sales: How low will they go? 12-29-08
from AUTOMOTIVE NEWS
Detroit 3 expect a deep freeze in U.S. market
Will 2009 offer any relief from this most dreary of car-selling seasons? The Detroit 3 aren't optimistic. Ford Motor, the most bullish of the three, predicts U.S. light-vehicle sales of 12.2 million units in 2009. That would be 900,000 fewer than the 13.1 million expected in 2008 by auto analyst Erich Merkle.

Newscast Video 12-29-08
from AUTOMOTIVE NEWS
Year in Review - Top 10 Auto Stories of 2008
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GMAC gets Fed's OK to become bank holding company 12-24-08
from AUTOMOTIVE NEWS
WASHINGTON (Reuters) - GMAC LCC won Federal Reserve approval on Wednesday to become a bank holding company, giving it access to government lending programs, after owners General Motors and Cerberus agreed to cut their stakes.

GM agreed to reduce its 49 percent stake in GMAC to no more than 10 percent, while Cerberus, which owns 51 percent, will distribute equity interests to investors to get its control to no more than 14.9 percent of voting shares. A GMAC spokeswoman called it a "key turning point in our 89-year history."

'Car czar' absent from auto rescue plan 12-22-08
from AUTOMOTIVE NEWS
The White House on Friday opted against appointing a "car czar" to oversee the $17.4 billion bailout of U.S. automakers, handing oversight responsibility to Treasury Secretary Henry Paulson instead. Paulson's office oversees the source of the rescue money -- the $700 billion Troubled Asset Relief (TARP) program.

Toyota forecasts first operating loss as sales slump 12-22-08
from AUTOMOTIVE NEWS
NAGOYA, Japan (Reuters) -- Toyota Motor Corp. forecast a first-ever annual operating loss, blaming a relentless sales slide and a crippling rise in the yen while declaring an emergency unprecedented in its 70-year history.

The world's biggest automaker had been expected to issue its second profit warning in less than seven weeks after domestic rival Honda Motor Co. also cut its outlook again last week, but today's downward revision was bigger than analysts predicted.

"We are facing an unprecedented emergency," President Katsuaki Watanabe told a year-end news conference today. "This is a crisis unlike the crises of the past."

Toyota May Post First Loss in 70 Years 12-19-08
from AUTOMOTIVE NEWS
Toyota is set to issue a revision for its parent and consolidated forecasts at a year-end news conference on Monday, the Chunichi Shimbun and Kyodo news agency reported.

Toyota last posted an operating loss in its first year of operation in 1937-38

GM, Chrysler Win U.S. Aid to Prevent Collapse 12-19-08
from AUTOMOTIVE NEWS
Harry Stoffer
WASHINGTON -- President Bush today announced emergency federal loans to prevent the collapse of General Motors and Chrysler LLC. The announcement of the unprecedented action came in a White House press conference.

White House intervention became necessary after Congress last week rejected legislation to provide $14 billion in loans – with the promise of more aid to come next year.

Administration officials repeatedly said this week that, under normal circumstances, they would want companies to reorganize under federal bankruptcy law but that these are not normal times.

GM and Chrysler have warned they could run out of cash within weeks as U.S. auto sales drop levels not seen since the early 1980s. Ford Motor Co. said it does not face a similar crisis but wants access to a federal line of credit in case market conditions worsen or one of its rivals fails.

Toyota halts U.S. Prius Project 12-15-08
from AUTOMOTIVE NEWS
Lindsay Chappell
NASHVILLE -- Toyota Motor Corp., with its sales plunging in the United States, is freezing its plan to build the Toyota Prius in a new plant near Tupelo, Miss. For how long? The automaker doesn't know.  The Prius sold 8,660 units in November, down from 16,737 in November 2007. Total Toyota sales in the United States fell 32 percent in November.

Economy Decimates Dealerships 12-15-08
from AUTOMOTIVE NEWS
About 2,000 U.S. new-vehicle dealerships -- nearly one of every 10 -- will close in 2008 and 2009, the National Automobile Dealers Association projects. And that's the best-case scenario, under which no automaker files for bankruptcy or dies next year. A bankruptcy would accelerate dealership shutdowns.

Bush says auto bailout not ready 12-15-08
from AUTOMOTIVE NEWS
KABUL (Reuters) -- U.S. President George W. Bush said on Monday an announcement on a auto industry rescue was not imminent, leaving the industry's fate clouded in uncertainty for a little longer. "We're not quite ready to announce that yet," Bush told reporters on Air Force One during a flight from Baghdad on an unannounced visit to Afghanistan. He had been asked when he might make an anticipated announcement about tapping a $700 billion financial industry bailout fund to aid General Motors, Ford Motor and Chrysler. Asked whether he was leaning toward using financial bailout funds, Bush said: "I signaled that that's a possibility." Bush said a decision would not take long. White House spokeswoman Dana Perino said earlier that she had no timetable for a decision.

Auto Suppliers Share in the Anxiety 12-11-08
from NEW YORK TIMES
DETROIT — With Congress failing to agree on a bailout for Detroit, the odds that General Motors and Chrysler will be insolvent by year's end are growing rapidly.

Sagging Economy Gives Auto Repair Shops a Boost
from The Dallas Morning News
Car repair companies across the country are reaping the benefits of a scaled-down economy as people patch up aging vehicles instead of splurging on newer ones.

Hybrids Enter Auto Repair Classes
from The Miami Herald
Learning the basics about hybrids – and how to deal with them safely – is slowly becoming standard text in vocational programs around South Florida. Auto technician programs are teaching students about the distinct differences in the trendy vehicles that run on both gasoline and electricity. Knowing those differences, instructors say, is essential.

The Gap: Feather, Fill and Block
from AutoInc. Magazine
In collision repair, the term that has become known as "The Gap" refers to the part of the repair process that exists from the time the repair ends and where the refinish process begins. The repair area is finished up to150 grit and void of any surface imperfections. Once this stage is reached, the panel is handed off to the painter, who will work the area more to get the panel to accept the paint.

Automakers Sign on to NASTF Service Information Standards
from ABRN
The National Automotive Service Task Force (NASTF) has established NASTF Service Information Standards and requested that each auto manufacturers renew its commitment to NASTF to make service and training information and tools accessible to all repairers on an equal basis by signing an agreement with NASTF. Much of the standards embody the practices that have been in place for six years, but one new element is a binding arbitration backstop in the NASTF Dispute Resolution Process.

Loading Up on TVs and iPods
from The New York Times
Back when bulky car phones were for the elite and directions came from a passenger holding a map, stores like Car Tunes, a six-outlet chain in the Detroit area, mostly sold upgraded car stereo systems and bigger speakers. In comparison, the array of electronics that retailers sell for vehicles today seems endless — from navigation systems and iPod interfaces to high-definition satellite television and many more comforts of home.

Hard Times Cut Demand for Big Chrome Custom Car Wheels
from USA Today
The bling-bling is going out of the fancy custom wheels business. After a decade in which shiny chrome rims ruled the streets — the bigger and more outrageous the better — consumers appear to be passing up automotive cosmetics in order to buy gas and groceries.

Badly Burned Fort Worth, Texas Mechanic Counts His Blessings
from The Fort Worth Star-Telegram
Fire engulfed him from his knees to his chin, but Clifton Atkins, an auto mechanic at Affordable Muffler and Auto Repair in Fort Worth, Texas, doesn't remember any flames, just the torturous sensation of intense and spreading heat. Four months after the accident, Atkins says he's thankful.

At Specialty Garage, Making Hybrids Even Greener
from The New York Times
The fig tree and the philodendron are the first things that meet the eye in the repair bay of Luscious Garage in San Francisco. Then the two Toyota Priuses come into focus — one with a slightly dented rear door, the other on a lift with two tires off and rusty brake rotors exposed. Then comes the eerie sense that something is missing: grime. The only hybrid specialty garage run by a woman has opened in the Bay Area, which has more Priuses — 70,000 as of 2006 — than most states.