Wednesday, April 28, 2010
Ford's $2.1 billion profit may be year's best as costs begin to rise
Ford Motor Co.'s first-quarter profit of $2.1 billion may be as good as it gets this year as the automaker faces rising costs to introduce new models.
Today's earnings report came with a plan to boost second-quarter production and spurred CEO Alan Mulally to forecast a “solid” 2010 profit, a year ahead of his previous prediction. Future quarters may not be as strong, CFO Lewis Booth said today.
“It would be unwise to think of $2 billion as a running rate,” Booth told reporters. “We've got a lot of new product launches, so you'll see some launch expense and we do expect some headwinds from commodities” prices.
The executives cited challenges such as a “fragile” economy after posting a fourth straight quarter of net income, the longest streak since 2005. Booth said the Ford Motor Credit unit was unlikely to “keep up the pace” for the rest of the year.
“The first quarter could turn out to be their best,” said Joe Phillippi, president of AutoTrends Consulting in Short Hills, New Jersey. “The landscape might become more competitive as Toyota fights its way back and GM launches a lot of new products.”
Ford said second-quarter production in North America will be 625,000 vehicles, a 5 percent increase from the plan announced March 2. Output will rise 39 percent compared with a year earlier.
Ford benefited from a recovering auto market and higher prices that added $1 billion to pretax operating earnings. Excluding some gains and costs, earnings were 46 cents a share, topping the 31-cent average of 12 estimates compiled by Bloomberg.
Market share
A 37 percent surge in U.S. sales in the first quarter more than doubled the industrywide increase, helping Ford add domestic market share at the fastest pace in 33 years after becoming the only major U.S. automaker to avoid bankruptcy in 2009.
Profit was buoyed by Ford Credit's $828 million of pretax operating income, after a $36 million year-earlier loss. Ford Credit, which lends to dealers and buyers, will earn about $2 billion on an operating basis in 2010, Ford said. The unit will pay Ford a dividend of $2 billion this year, up from a previous forecast of $1.5 billion, Booth said.
Himanshu Patel, a JPMorgan Chase & Co. analyst in New York, said in a note that the unit's first-quarter gains were driven by rising resale prices and are “unsustainable.” He advises holding Ford shares.
Ford shares slid 6.3 percent, to $13.55, at 4:02 p.m. in New York Stock Exchange composite trading. The stock tumbled as much as 9.1 percent earlier in the day, the most since May 12, after almost tripling in the 12 months through yesterday.
Regional results
In North America, Ford had a pretax operating profit of $1.2 billion, following a $665 million loss in the first three months of 2009. Revenue climbed 41 percent to $14.1 billion.
Ford also posted better results in all regions outside North America.
• Ford South America reported operating profit of $203 million versus $63 million a year ago. Higher costs prevented even higher profits, the company said. First quarter revenue was $2 billion, up from $1.4 billion.
• Ford Europe posted a profit versus a loss last year. The unit enjoyed higher sales, lower costs and higher parts profit. First-quarter operating profits were $107 million, compared with a loss of $585 million a year ago. Revenue jumped to $7.7 billion versus $5.8 billion.
• Ford Asia Pacific Africa also erased a loss last year. The region posted operating profit of $23 million, compared with a loss of $97 million a year ago. Higher sales in China boosted results.
Factory conversions
Some factories will close temporarily in the second half while being converted to build a new version of the Focus compact car, Booth said. Ford's price gains will “deteriorate” with the debut of the Focus and the Fiesta small cars this year because those models are less expensive, he said.
The Fusion sedan, F-150 pickup and Fusion drove first-quarter U.S. sales increases, Booth said.
“The most important thing Ford has done is invest heavily in new product during this down cycle,” said Erich Merkle, president of consultant Autoconomy LLC in Grand Rapids, Mich. “As we're coming out, they've got all this new product coming out in just about every category.”
First-quarter revenue rose 15 percent to $28.1 billion. That compared with the $28 billion average estimate among seven analysts. Net income was 50 cents a share, exceeding the average estimate of 29 cents from two analysts, and compared with a net loss of $1.43 billion, or 60 cents, a year earlier.
2010 outlook
Revising Mulally's previous forecast of being “solidly profitable” in 2011, Ford said today it “now expects to deliver solid profits this year, with positive automotive operating-related cash flow.” Booth said 2010 earnings will exceed the first-quarter total, without giving a figure.
“Given where we were even three or four months ago, this says to you that we're really encouraged by the start we had” to the year, Booth told analysts.
Ford reported $25.3 billion in automotive cash on March 31, up from $24.9 billion at the end of 2009, which the automaker restated from $25.5 billion because of an accounting change.
Cash consumption was $100 million during 2010's first three months, after the company used $3.7 billion a year earlier. Booth said Ford will have positive cash flow for all of 2010.
Borrowing $23 billion in late 2006 gave Ford a cash cushion to withstand losses and develop new models such as the Fiesta. The trade-off was a debt load that Mulally has said puts Ford at a competitive disadvantage with General Motors Co. and Chrysler Group LLC, which had their obligations cut in bankruptcy.
Automotive debt was $34.3 billion, up from $33.6 billion at the end of 2009, which was adjusted from $34.3 billion due to an accounting change, Ford said. That doesn't include a $3 billion payment Ford made on its revolving line of credit on April 6.
Redesigned models such as the Taurus sedan helped boost U.S. market share through March to 17.4 percent from 14.7 percent a year earlier, the biggest jump since 1977, Ford has said. Ford has said it is attracting buyers from Toyota Motor Corp. after global recalls of more than 8 million vehicles.
Mulally, 64, also completed his push to unload Ford's European luxury brands by reaching an agreement in March to sell Volvo to China's Zhejiang Geely Holding Co. That transaction should close in the third quarter, Ford said today.
Today's earnings report came with a plan to boost second-quarter production and spurred CEO Alan Mulally to forecast a “solid” 2010 profit, a year ahead of his previous prediction. Future quarters may not be as strong, CFO Lewis Booth said today.
“It would be unwise to think of $2 billion as a running rate,” Booth told reporters. “We've got a lot of new product launches, so you'll see some launch expense and we do expect some headwinds from commodities” prices.
The executives cited challenges such as a “fragile” economy after posting a fourth straight quarter of net income, the longest streak since 2005. Booth said the Ford Motor Credit unit was unlikely to “keep up the pace” for the rest of the year.
“The first quarter could turn out to be their best,” said Joe Phillippi, president of AutoTrends Consulting in Short Hills, New Jersey. “The landscape might become more competitive as Toyota fights its way back and GM launches a lot of new products.”
Ford said second-quarter production in North America will be 625,000 vehicles, a 5 percent increase from the plan announced March 2. Output will rise 39 percent compared with a year earlier.
Ford benefited from a recovering auto market and higher prices that added $1 billion to pretax operating earnings. Excluding some gains and costs, earnings were 46 cents a share, topping the 31-cent average of 12 estimates compiled by Bloomberg.
Market share
A 37 percent surge in U.S. sales in the first quarter more than doubled the industrywide increase, helping Ford add domestic market share at the fastest pace in 33 years after becoming the only major U.S. automaker to avoid bankruptcy in 2009.
Profit was buoyed by Ford Credit's $828 million of pretax operating income, after a $36 million year-earlier loss. Ford Credit, which lends to dealers and buyers, will earn about $2 billion on an operating basis in 2010, Ford said. The unit will pay Ford a dividend of $2 billion this year, up from a previous forecast of $1.5 billion, Booth said.
Himanshu Patel, a JPMorgan Chase & Co. analyst in New York, said in a note that the unit's first-quarter gains were driven by rising resale prices and are “unsustainable.” He advises holding Ford shares.
Ford shares slid 6.3 percent, to $13.55, at 4:02 p.m. in New York Stock Exchange composite trading. The stock tumbled as much as 9.1 percent earlier in the day, the most since May 12, after almost tripling in the 12 months through yesterday.
Regional results
In North America, Ford had a pretax operating profit of $1.2 billion, following a $665 million loss in the first three months of 2009. Revenue climbed 41 percent to $14.1 billion.
Ford also posted better results in all regions outside North America.
• Ford South America reported operating profit of $203 million versus $63 million a year ago. Higher costs prevented even higher profits, the company said. First quarter revenue was $2 billion, up from $1.4 billion.
• Ford Europe posted a profit versus a loss last year. The unit enjoyed higher sales, lower costs and higher parts profit. First-quarter operating profits were $107 million, compared with a loss of $585 million a year ago. Revenue jumped to $7.7 billion versus $5.8 billion.
• Ford Asia Pacific Africa also erased a loss last year. The region posted operating profit of $23 million, compared with a loss of $97 million a year ago. Higher sales in China boosted results.
Factory conversions
Some factories will close temporarily in the second half while being converted to build a new version of the Focus compact car, Booth said. Ford's price gains will “deteriorate” with the debut of the Focus and the Fiesta small cars this year because those models are less expensive, he said.
The Fusion sedan, F-150 pickup and Fusion drove first-quarter U.S. sales increases, Booth said.
“The most important thing Ford has done is invest heavily in new product during this down cycle,” said Erich Merkle, president of consultant Autoconomy LLC in Grand Rapids, Mich. “As we're coming out, they've got all this new product coming out in just about every category.”
First-quarter revenue rose 15 percent to $28.1 billion. That compared with the $28 billion average estimate among seven analysts. Net income was 50 cents a share, exceeding the average estimate of 29 cents from two analysts, and compared with a net loss of $1.43 billion, or 60 cents, a year earlier.
2010 outlook
Revising Mulally's previous forecast of being “solidly profitable” in 2011, Ford said today it “now expects to deliver solid profits this year, with positive automotive operating-related cash flow.” Booth said 2010 earnings will exceed the first-quarter total, without giving a figure.
“Given where we were even three or four months ago, this says to you that we're really encouraged by the start we had” to the year, Booth told analysts.
Ford reported $25.3 billion in automotive cash on March 31, up from $24.9 billion at the end of 2009, which the automaker restated from $25.5 billion because of an accounting change.
Cash consumption was $100 million during 2010's first three months, after the company used $3.7 billion a year earlier. Booth said Ford will have positive cash flow for all of 2010.
Borrowing $23 billion in late 2006 gave Ford a cash cushion to withstand losses and develop new models such as the Fiesta. The trade-off was a debt load that Mulally has said puts Ford at a competitive disadvantage with General Motors Co. and Chrysler Group LLC, which had their obligations cut in bankruptcy.
Automotive debt was $34.3 billion, up from $33.6 billion at the end of 2009, which was adjusted from $34.3 billion due to an accounting change, Ford said. That doesn't include a $3 billion payment Ford made on its revolving line of credit on April 6.
Redesigned models such as the Taurus sedan helped boost U.S. market share through March to 17.4 percent from 14.7 percent a year earlier, the biggest jump since 1977, Ford has said. Ford has said it is attracting buyers from Toyota Motor Corp. after global recalls of more than 8 million vehicles.
Mulally, 64, also completed his push to unload Ford's European luxury brands by reaching an agreement in March to sell Volvo to China's Zhejiang Geely Holding Co. That transaction should close in the third quarter, Ford said today.
Monday, April 26, 2010
Friday, April 23, 2010
Chrysler and U.S. market to play key role in Alfa relaunch
Fiat S.p.A. CEO Sergio Marchionne made a strong commitment to the money-losing sporty brand, which will be 100 years old in June, during a presentation of Fiat's five-year strategy Wednesday.
Marchionne announced the launch of seven new Alfa models between 2010 and 2014 and said Fiat is determined to transform the brand into a "full-line premium carmaker."
Marchionne also said North America will account for 85,000 unit sales in 2014 out of 500,000 that Alfa aims to sell in that year.
The Chrysler-built vehicles for Alfa will be:
• A compact SUV based on the Compact architecture that underpins the Giulietta hatchback in Europe. Production will begin in 2012
• A large SUV, similar in size to the next Jeep Liberty, which is sold as the Cherokee in Europe. Production will start in 2014.
The crossover models will be built in two of the three U.S. plants that Chrysler Group plans to retool for new Chrysler, Dodge and Jeep models based on Fiat-Chrysler's Compact Wide architecture.
Alfa will also sell a mid-sized sedan and station wagon when in the U.S. starting in late 2012. These two vehicles will have the name Giulia and in Europe will replace the 159 range. They will be built in Italy.
Alfa will also sell in the U.S. a five-door version of its MiTo minicar, which is currently sold in Europe as a three-door. The five-door MiTo will be sold in Europe and North America starting in 2013.
Alfa will launch the Giulietta in North America after the car gets a face-lift in 2014. The Giulietta launches in May in Europe.
Alfa will continue to build the Mito and Giulietta in Italy.
Chrysler to build Alfa spider
Marchionne also said Chrysler will provide the platform for a new Alfa spider model, planned for 2013, but said the production location has not been decided.
Fiat's plan for Alfa to sell 500,000 cars in 2014 is five times more than Alfa sold last year.
Starved of fresh product as Fiat delayed key new models, Alfa sales have declined steeply as its lineup became older. This year's volume expected to be 120,000 units, compared with a peak of 207,000 in 2001. Alfa has lost between 200 million and 400 million euros ($288 million to $566 million) a year in the past 10 years, according to company sources.
Alfa quit the North American market in 1995 after the quality of the brand's cars was condemned in studies and its sales plummeted.
Thursday, April 22, 2010
MSC10: My Special Car 2010
Rimini, dal 26 al 28 marzo 2010. La maggiore esposizione tuning italiana.
1996 Chevy Express van 1500 8cyl ,v8 ,350 eng. 162,000 miles
will stop after running an hour or two.replaced: 2 fuel pumps,fuel filter,fuel relay,plugs, wires,rotor, distributor, coil,spider, 57 pound of pressure from fuel pump.Continue to cut off after an hour or two.Help.
Response:
1)Have you checked your fuel pressure regulator?
2)vapor lock
3)Check Back pressure on catalytic converter
4) check for Engine codes
Freeautomechanic.com tip : Once the engine has died, check to see what is missing... spark or fuel or both, then concentrate on that circuit to determine the problem. "simplify"
Response:
1)Have you checked your fuel pressure regulator?
2)vapor lock
3)Check Back pressure on catalytic converter
4) check for Engine codes
Freeautomechanic.com tip : Once the engine has died, check to see what is missing... spark or fuel or both, then concentrate on that circuit to determine the problem. "simplify"
Wednesday, April 21, 2010
Tuesday, April 20, 2010
GM agrees deal with unions to close Opel plant in Belgium
Compensation package removes key hurdle in Opel/Vauxhall revamp
General Motors Co.'s Opel/Vauxhall unit has agreed a deal with unions to close a plant in Antwerp, Belgium.
GM had announced in January that it would close the 120,000-unit capacity plant as part of a restructuring to reduce European capacity by a fifth to help return Opel to profitability within two years.
Opel unions, which had opposed the closure, on Sunday agreed a compensation package for the 2,560 Antwerp workers, a plant spokeswoman told the German press agency, Deutsche Presse-Agentur.
Workers will vote on Tuesday whether to accept the deal, which offers workers up to 144,000 euros ($193,000) in compensation for losing their jobs.
GM will still look for an outside investor to take over the plant and continue building the Astra three-door hatchback and Astra convertible. If no investor is found by September 30, the factory will close by the end of the year.
Klaus, Franz, Opel's top union leader, told the press agency that an important roadblock hindering labor's acceptance of GM's European restructuring will be removed if Antwerp workers vote to accept the deal.
GM plans to cut 8,300 of Opel/Vauxhall's 48,000 workforce and is seeking up to 2 billion in loan guarantees from five European governments toward its turnaround plan for Opel and its UK sister brand Vauxhall.
The British government has already pledged 300 million. Germany, where Opel and most of its workers are based, is being asked for the largest amount at 1.3 billion euros and has still to make a decision on whether to lend aid.
General Motors Co.'s Opel/Vauxhall unit has agreed a deal with unions to close a plant in Antwerp, Belgium.
GM had announced in January that it would close the 120,000-unit capacity plant as part of a restructuring to reduce European capacity by a fifth to help return Opel to profitability within two years.
Opel unions, which had opposed the closure, on Sunday agreed a compensation package for the 2,560 Antwerp workers, a plant spokeswoman told the German press agency, Deutsche Presse-Agentur.
Workers will vote on Tuesday whether to accept the deal, which offers workers up to 144,000 euros ($193,000) in compensation for losing their jobs.
GM will still look for an outside investor to take over the plant and continue building the Astra three-door hatchback and Astra convertible. If no investor is found by September 30, the factory will close by the end of the year.
Klaus, Franz, Opel's top union leader, told the press agency that an important roadblock hindering labor's acceptance of GM's European restructuring will be removed if Antwerp workers vote to accept the deal.
GM plans to cut 8,300 of Opel/Vauxhall's 48,000 workforce and is seeking up to 2 billion in loan guarantees from five European governments toward its turnaround plan for Opel and its UK sister brand Vauxhall.
The British government has already pledged 300 million. Germany, where Opel and most of its workers are based, is being asked for the largest amount at 1.3 billion euros and has still to make a decision on whether to lend aid.
Sunday, April 18, 2010
Daimler targets sales at double industry growth rate
Daimler AG, the maker of Mercedes-Benz cars and trucks, aims to increase deliveries twice as fast as this year's worldwide auto-market growth rate as the latest models of the E-class and S-class sedans attract buyers.
“Our global sales target for the year is ambitious but realistic,” CEO Dieter Zetsche said today at the annual shareholders meeting in Berlin. The sales gain includes a projected 50 percent jump in sales of the E class, including sedan, station wagon, coupe, and convertible versions.
Carmakers' deliveries will increase 3 percent to 4 percent this year, Daimler said in February. The Stuttgart, Germany- based manufacturer is seeking to close the gap with luxury-car market leader BMW AG while fending off efforts by Volkswagen AG's Audi division to become the world's biggest high-end automaker by 2015. Zetsche didn't specify Daimler's car-sales target for this year.
Daimler is targeting earnings before interest and taxes of at least 2.3 billion euros ($3.1 billion) this year after an Ebit loss of 1.51 billion euros in 2009. The manufacturer stuck to a forecast today that revenue in 2010 will exceed last year's 78.9 billion euros but be “significantly” below the 98.5 billion euros of 2008.
The global economy is “too fragile” to allow Daimler to commit to a timeframe for raising the automaking division's Ebit as a proportion of sales to 9 percent, Zetsche said. Munich-based BMW reaffirmed a target last month of achieving an Ebit margin in carmaking of at least 8 percent by 2012.
Sales at the Mercedes-Benz Cars division, which includes the Smart minicar and Maybach luxury nameplates, rose 11 percent to 271,200 vehicles in the first quarter, the company said on April 6. Including deliveries to dealers, Mercedes-Benz brand sales jumped by almost 27 percent in the period, boosted by a surge of more than two-thirds for the top-of-the-line S-Class, Daimler said today.
Daimler rose as much as 52 cents, or 1.4 percent, to 36.52 euros, the highest intraday price since Jan. 20, and was up 1.2 percent as of 1:59 p.m. in Frankfurt trading. The stock has declined 2.1 percent this year.
The company is also the world's largest truckmaker with Freightliner vehicles in the U.S. and Fuso models in Asia. Daimler said first-quarter truck sales rose 8 percent and orders nearly doubled, even as markets remain “weak.” Bus sales increased 23 percent in the first three months of 2010, and van deliveries jumped 62 percent, Zetsche said.
Reacting to rising international tensions with Iran over the country's nuclear research, Daimler said today that it's abandoning a 30 percent stake in a diesel-engine venture with Iran Khodro Co. Daimler also withdrew an application with the German government to export three-axle trucks to Iran and will halt delivery of such vehicles indefinitely.
“The policies of the current Iranian leadership have compelled us to put our business relationship with that country on a new footing,” Zetsche told about 5,000 shareholders. “Our business activities with Iran will now be limited to meeting our existing contractual obligations and continuing our cooperation with established customers.”
Cooperation With Renault
The manufacturer, seeking to expand its line-up of small cars while holding back costs, announced plans a week ago to cooperate with the Renault-Nissan alliance on developing compact Mercedes-Benz and Smart vehicles. A new line of Smart city cars, including two- and four-seat versions, will share a platform with Renault SA's Twingo. The French partner will supply 3- and 4-cylinder gasoline and diesel engines for Mercedes-Benz cars.
The cooperation represents “a decisive strategic step” that will help Smart enhance its position as a “young” brand, Zetsche said. While the project will help Mercedes-Benz hold back the expense of introducing smaller models, the brand “will not tolerate any compromises to our claim ‘the best or nothing,'” Zetsche added.
Working with Renault and Nissan Motor Co. may not bring the benefits that Daimler is planning, Ingo Speich, a Frankfurt- based fund manager with Union Investment, said at the meeting.
“We have grave doubts that the new partnership will be a success,” Speich said. “The traces of missteps run like a red thread through Daimler's cooperation history.”
After losing ground to Munich-based BMW in reducing vehicle emissions, Daimler aims to almost double annual spending to develop batteries and fuel-saving engines, to 1 billion euros in the next two years from an average 567 million euros in the past three years, Thomas Weber, the company's development chief, said on March 3.
Electric-car projects
The German company plans to develop an electric car for China with BYD Co., the Shenzhen-based automaker backed by billionaire Warren Buffett. It's also building a factory in eastern Germany to produce lithium-ion batteries by 2012 and has taken a stake in Tesla Motors Inc., the Palo Alto, California- based manufacturer of electric sports cars.
“Daimler aims to be, and will be, a pioneer in the field of electric mobility” as the car industry phases out oil-based powering systems, Zetsche said. “When alternative drive systems go into mass production in a few years, we will be ahead of the competition.”
A net loss of 2.64 billion euros last year because of the global car-market contraction prompted Daimler to cancel its dividend for the first time since at least 1999. Daimler posted the loss, its first for a full year since 2001, even after reducing spending by 5.3 billion euros by building fewer vehicles and cutting pay in response to the recession.
Daimler reiterated that it plans to resume dividend payments after returning to profit this year.
“Our global sales target for the year is ambitious but realistic,” CEO Dieter Zetsche said today at the annual shareholders meeting in Berlin. The sales gain includes a projected 50 percent jump in sales of the E class, including sedan, station wagon, coupe, and convertible versions.
Carmakers' deliveries will increase 3 percent to 4 percent this year, Daimler said in February. The Stuttgart, Germany- based manufacturer is seeking to close the gap with luxury-car market leader BMW AG while fending off efforts by Volkswagen AG's Audi division to become the world's biggest high-end automaker by 2015. Zetsche didn't specify Daimler's car-sales target for this year.
Daimler is targeting earnings before interest and taxes of at least 2.3 billion euros ($3.1 billion) this year after an Ebit loss of 1.51 billion euros in 2009. The manufacturer stuck to a forecast today that revenue in 2010 will exceed last year's 78.9 billion euros but be “significantly” below the 98.5 billion euros of 2008.
The global economy is “too fragile” to allow Daimler to commit to a timeframe for raising the automaking division's Ebit as a proportion of sales to 9 percent, Zetsche said. Munich-based BMW reaffirmed a target last month of achieving an Ebit margin in carmaking of at least 8 percent by 2012.
Sales at the Mercedes-Benz Cars division, which includes the Smart minicar and Maybach luxury nameplates, rose 11 percent to 271,200 vehicles in the first quarter, the company said on April 6. Including deliveries to dealers, Mercedes-Benz brand sales jumped by almost 27 percent in the period, boosted by a surge of more than two-thirds for the top-of-the-line S-Class, Daimler said today.
Daimler rose as much as 52 cents, or 1.4 percent, to 36.52 euros, the highest intraday price since Jan. 20, and was up 1.2 percent as of 1:59 p.m. in Frankfurt trading. The stock has declined 2.1 percent this year.
The company is also the world's largest truckmaker with Freightliner vehicles in the U.S. and Fuso models in Asia. Daimler said first-quarter truck sales rose 8 percent and orders nearly doubled, even as markets remain “weak.” Bus sales increased 23 percent in the first three months of 2010, and van deliveries jumped 62 percent, Zetsche said.
Reacting to rising international tensions with Iran over the country's nuclear research, Daimler said today that it's abandoning a 30 percent stake in a diesel-engine venture with Iran Khodro Co. Daimler also withdrew an application with the German government to export three-axle trucks to Iran and will halt delivery of such vehicles indefinitely.
“The policies of the current Iranian leadership have compelled us to put our business relationship with that country on a new footing,” Zetsche told about 5,000 shareholders. “Our business activities with Iran will now be limited to meeting our existing contractual obligations and continuing our cooperation with established customers.”
Cooperation With Renault
The manufacturer, seeking to expand its line-up of small cars while holding back costs, announced plans a week ago to cooperate with the Renault-Nissan alliance on developing compact Mercedes-Benz and Smart vehicles. A new line of Smart city cars, including two- and four-seat versions, will share a platform with Renault SA's Twingo. The French partner will supply 3- and 4-cylinder gasoline and diesel engines for Mercedes-Benz cars.
The cooperation represents “a decisive strategic step” that will help Smart enhance its position as a “young” brand, Zetsche said. While the project will help Mercedes-Benz hold back the expense of introducing smaller models, the brand “will not tolerate any compromises to our claim ‘the best or nothing,'” Zetsche added.
Working with Renault and Nissan Motor Co. may not bring the benefits that Daimler is planning, Ingo Speich, a Frankfurt- based fund manager with Union Investment, said at the meeting.
“We have grave doubts that the new partnership will be a success,” Speich said. “The traces of missteps run like a red thread through Daimler's cooperation history.”
After losing ground to Munich-based BMW in reducing vehicle emissions, Daimler aims to almost double annual spending to develop batteries and fuel-saving engines, to 1 billion euros in the next two years from an average 567 million euros in the past three years, Thomas Weber, the company's development chief, said on March 3.
Electric-car projects
The German company plans to develop an electric car for China with BYD Co., the Shenzhen-based automaker backed by billionaire Warren Buffett. It's also building a factory in eastern Germany to produce lithium-ion batteries by 2012 and has taken a stake in Tesla Motors Inc., the Palo Alto, California- based manufacturer of electric sports cars.
“Daimler aims to be, and will be, a pioneer in the field of electric mobility” as the car industry phases out oil-based powering systems, Zetsche said. “When alternative drive systems go into mass production in a few years, we will be ahead of the competition.”
A net loss of 2.64 billion euros last year because of the global car-market contraction prompted Daimler to cancel its dividend for the first time since at least 1999. Daimler posted the loss, its first for a full year since 2001, even after reducing spending by 5.3 billion euros by building fewer vehicles and cutting pay in response to the recession.
Daimler reiterated that it plans to resume dividend payments after returning to profit this year.
Thursday, April 15, 2010
THE TOYOTA RECALL CRISIS - U.S. auto safety regulators to test Lexus SUV
U.S. regulators will run safety tests on a new Lexus SUV and take action if the Toyota Motor Corp. vehicle does not meet government standards, the top U.S. auto safety official said today.
The National Highway Traffic Safety Administration said it had received a preliminary report from Consumer Reports before the influential magazine issued a public warning on Tuesday calling the 2010 Lexus GX 460 a "safety risk" and warning against buying the vehicle.
"My compliance staff is going to take a look at several of these vehicles including the test vehicle that was used at Consumer Reports," NHTSA chief David Strickland told reporters on the sidelines of the SAE International 2010 World Congress in Detroit.
In the latest blow to Toyota's reputation, the automaker halted sales of its Lexus GX 460 luxury SUV in the United States on Tuesday after Consumer Reports said the electronic stability control system kicked in late on a sharp curve and gave the vehicle a "non-acceptable" rating.
Toyota has extended the sales suspension on the Lexus GX 460 to other global markets and said earlier today it would conduct safety tests on all of its SUVs. Strickland said NHTSA would use its electronic stability control testing framework to see if the Lexus SUV meets those standards.
Mounting criticism
The automaker has faced stiff criticism from U.S. lawmakers and safety advocates for its handling of massive recalls for defective accelerator pedals in January that prompted an unprecedented suspension of sales and production.
Safety regulators also have sought to impose a record $16.4 million fine against Toyota, accusing the automaker of delays in conducting the recall on sticky accelerator pedals. They are also considering other fines.
Strickland said NHTSA expected a response very soon from Toyota about the proposed fine. Toyota has until Monday to challenge that initial fine, the maximum allowed by U.S. law and the largest that the regulator has ever sought.
He said Toyota "took the proactive step" on the Lexus GX 460, a swift response he hopes other automakers will make.
'More responsive'
He said that since he became administrator in January, "Toyota has definitely been more responsive. The career staff has noted that there has been a change about their level of responsiveness."
NHTSA is looking at several rule changes industrywide to improve vehicle safety, including the possibility of making "black boxes" that can capture data on speed, braking and other details mandatory on all new vehicles.
Other potential changes might address start/stop push button controls, braking systems that take priority over the accelerator and creating a pedal that cannot be entrapped by floormats, all thought to be factors in recent crashes.
The National Highway Traffic Safety Administration said it had received a preliminary report from Consumer Reports before the influential magazine issued a public warning on Tuesday calling the 2010 Lexus GX 460 a "safety risk" and warning against buying the vehicle.
"My compliance staff is going to take a look at several of these vehicles including the test vehicle that was used at Consumer Reports," NHTSA chief David Strickland told reporters on the sidelines of the SAE International 2010 World Congress in Detroit.
In the latest blow to Toyota's reputation, the automaker halted sales of its Lexus GX 460 luxury SUV in the United States on Tuesday after Consumer Reports said the electronic stability control system kicked in late on a sharp curve and gave the vehicle a "non-acceptable" rating.
Toyota has extended the sales suspension on the Lexus GX 460 to other global markets and said earlier today it would conduct safety tests on all of its SUVs. Strickland said NHTSA would use its electronic stability control testing framework to see if the Lexus SUV meets those standards.
Mounting criticism
The automaker has faced stiff criticism from U.S. lawmakers and safety advocates for its handling of massive recalls for defective accelerator pedals in January that prompted an unprecedented suspension of sales and production.
Safety regulators also have sought to impose a record $16.4 million fine against Toyota, accusing the automaker of delays in conducting the recall on sticky accelerator pedals. They are also considering other fines.
Strickland said NHTSA expected a response very soon from Toyota about the proposed fine. Toyota has until Monday to challenge that initial fine, the maximum allowed by U.S. law and the largest that the regulator has ever sought.
He said Toyota "took the proactive step" on the Lexus GX 460, a swift response he hopes other automakers will make.
'More responsive'
He said that since he became administrator in January, "Toyota has definitely been more responsive. The career staff has noted that there has been a change about their level of responsiveness."
NHTSA is looking at several rule changes industrywide to improve vehicle safety, including the possibility of making "black boxes" that can capture data on speed, braking and other details mandatory on all new vehicles.
Other potential changes might address start/stop push button controls, braking systems that take priority over the accelerator and creating a pedal that cannot be entrapped by floormats, all thought to be factors in recent crashes.
Wednesday, April 14, 2010
Toyota’s cash-cow Lexus brand may be tarnished on ‘safety risk’
Toyota Motor Corp., struggling to recover from record recalls, may not be able to count on its luxury Lexus brand to bolster earnings after Consumer Reports called the GX 460 sport-utility model a “safety risk.”
The designation, accompanied by a “don’t buy” recommendation from the U.S. magazine, may dampen Lexus sales in the nation, which have risen even as Toyota’s overall deliveries fell amid global recalls of more than 8 million vehicles.
“No one is going to purchase a car that has a ‘don’t buy’ rating,” said Koji Endo, managing director of Tokyo-based Advanced Research Japan. “Worse yet, this will deal a severe blow to the image of the entire Lexus lineup.”
Until now, the Lexus brand was largely unscathed by Toyota’s recalls, which have led to U.S. congressional hearings, a rebuke by Transportation Secretary Ray LaHood, and a proposed $16.4 million fine.
While some Lexus models were called back because of floor mats that might trap gas pedals and cause unintended acceleration, none were involved in later actions to fix sticky accelerators.
Lexus sales in the U.S. jumped 18 percent in the first quarter of this year and accounted for 13 percent of Toyota’s total deliveries in the country. Toyota’s most expensive Lexus models earn at least 10 times the operating profit per vehicle of a Toyota Corolla compact car, according to Advanced Research’s Endo.
Rollover Accidents
Consumer Reports, a non-profit magazine published by New York-based Consumers Union, said Monday that emergency driving tests indicated the 2010 GX 460 model may be prone to rolling over.
The GX’s rear end “slid out until the vehicle was almost sideways before the electronic stability control system was able to regain control” at a Connecticut test track, the magazine said. “In real-world driving, that situation could lead to a rollover accident, which could cause serious injury or death.”
The Lexus division has been the top seller of luxury vehicles in the U.S. on an annual basis for 10 years in a row. The brand tied with General Motors Co.’s Cadillac for the top ranking in a University of Michigan survey of customer satisfaction, the school said in August.
Lexus cars will have the highest average U.S. resale value among 2010 model-year vehicles in five years, according to a study released by Kelley Blue Book in December.
Profitability Pressured
“Buyers who see the Consumer Reports rating may perceive this as a problem across all Lexus models,” said Tadashi Usui, an analyst at Moody’s K.K. in Tokyo. “In that case, because of Lexus’s high margins, we’ll see an impact more on profit than on sales.”
Toyota’s profitability is already being pressured by the cost of incentives the carmaker has introduced to bolster U.S. deliveries. Toyota started offering no-interest loans, discount leases, and free maintenance for some models from March, helping the carmaker raise sales that month by 41 percent from a year earlier. Toyota is extending the offers until May 3.
“These free maintenance offers and such are not adding to Toyota’s bottom line,” said Takashi Aoki, who helps manage about $1 billion at Mizuho Asset Management Co. in Tokyo, including Toyota shares. “And what will happen when the incentive program ends?”
Lawsuits
Toyota is facing at least 177 consumer and shareholder lawsuits seeking class-action status and at least 57 individual suits claiming personal injuries or deaths caused by unintended acceleration incidents. The lawsuits will be combined in a federal court in Santa Ana, Calif., a panel of judges said earlier this month.
The uncertainty surrounding the legal cases will push Toyota to be especially cautious with its dividend payments and profit forecast for the fiscal year started April 1, said Yuuki Sakurai, CEO of Fukoku Capital Management in Tokyo, which manages about $7.5 billion.
“Raising the dividend is out of the question,” Sakurai said. “That would actually upset investors who think it wouldn’t be prudent.”
Toyota will announce its fiscal fourth-quarter and annual earnings results on May 11 in Tokyo.
The designation, accompanied by a “don’t buy” recommendation from the U.S. magazine, may dampen Lexus sales in the nation, which have risen even as Toyota’s overall deliveries fell amid global recalls of more than 8 million vehicles.
“No one is going to purchase a car that has a ‘don’t buy’ rating,” said Koji Endo, managing director of Tokyo-based Advanced Research Japan. “Worse yet, this will deal a severe blow to the image of the entire Lexus lineup.”
Until now, the Lexus brand was largely unscathed by Toyota’s recalls, which have led to U.S. congressional hearings, a rebuke by Transportation Secretary Ray LaHood, and a proposed $16.4 million fine.
While some Lexus models were called back because of floor mats that might trap gas pedals and cause unintended acceleration, none were involved in later actions to fix sticky accelerators.
Lexus sales in the U.S. jumped 18 percent in the first quarter of this year and accounted for 13 percent of Toyota’s total deliveries in the country. Toyota’s most expensive Lexus models earn at least 10 times the operating profit per vehicle of a Toyota Corolla compact car, according to Advanced Research’s Endo.
Rollover Accidents
Consumer Reports, a non-profit magazine published by New York-based Consumers Union, said Monday that emergency driving tests indicated the 2010 GX 460 model may be prone to rolling over.
The GX’s rear end “slid out until the vehicle was almost sideways before the electronic stability control system was able to regain control” at a Connecticut test track, the magazine said. “In real-world driving, that situation could lead to a rollover accident, which could cause serious injury or death.”
The Lexus division has been the top seller of luxury vehicles in the U.S. on an annual basis for 10 years in a row. The brand tied with General Motors Co.’s Cadillac for the top ranking in a University of Michigan survey of customer satisfaction, the school said in August.
Lexus cars will have the highest average U.S. resale value among 2010 model-year vehicles in five years, according to a study released by Kelley Blue Book in December.
Profitability Pressured
“Buyers who see the Consumer Reports rating may perceive this as a problem across all Lexus models,” said Tadashi Usui, an analyst at Moody’s K.K. in Tokyo. “In that case, because of Lexus’s high margins, we’ll see an impact more on profit than on sales.”
Toyota’s profitability is already being pressured by the cost of incentives the carmaker has introduced to bolster U.S. deliveries. Toyota started offering no-interest loans, discount leases, and free maintenance for some models from March, helping the carmaker raise sales that month by 41 percent from a year earlier. Toyota is extending the offers until May 3.
“These free maintenance offers and such are not adding to Toyota’s bottom line,” said Takashi Aoki, who helps manage about $1 billion at Mizuho Asset Management Co. in Tokyo, including Toyota shares. “And what will happen when the incentive program ends?”
Lawsuits
Toyota is facing at least 177 consumer and shareholder lawsuits seeking class-action status and at least 57 individual suits claiming personal injuries or deaths caused by unintended acceleration incidents. The lawsuits will be combined in a federal court in Santa Ana, Calif., a panel of judges said earlier this month.
The uncertainty surrounding the legal cases will push Toyota to be especially cautious with its dividend payments and profit forecast for the fiscal year started April 1, said Yuuki Sakurai, CEO of Fukoku Capital Management in Tokyo, which manages about $7.5 billion.
“Raising the dividend is out of the question,” Sakurai said. “That would actually upset investors who think it wouldn’t be prudent.”
Toyota will announce its fiscal fourth-quarter and annual earnings results on May 11 in Tokyo.
Tuesday, April 13, 2010
1990 celica car runs ok but has a problem
I just got the car it run but water came out by the engine not radiator,just put new radiator. I don't know if is the water pump.
Response:
Best thing to do......Barrow a Cooling System Pressure Tester from your local Parts Outlet. Pressurize the System without Starting the Engine and check where the leak is. HINT, your Radiator Cap tells you what Pressure your System should run. Also, pressurize the Cap as LOW Blow off Pressure raises Coolant Temp. Coupled with a Replacement Radiator and no History of it you may have a cracked Engine Block.
Response:
Best thing to do......Barrow a Cooling System Pressure Tester from your local Parts Outlet. Pressurize the System without Starting the Engine and check where the leak is. HINT, your Radiator Cap tells you what Pressure your System should run. Also, pressurize the Cap as LOW Blow off Pressure raises Coolant Temp. Coupled with a Replacement Radiator and no History of it you may have a cracked Engine Block.
GM to report 'solid' Q1 operating results, Whitacre memo says
General Motors Co. expects to report "solid" operating results for the first quarter, which will show progress toward its goal of returning to profitability in 2010, CEO Ed Whitacre said.
A potential profit this year would end a five-year streak of losses and mark a turnaround for the U.S. automaker, which emerged from a U.S. government-financed bankruptcy in July after slashing debt and labor costs.
Whitacre, who replaced Fritz Henderson as CEO in December, has aimed to move faster to jump-start sales and launch an initial public offering that would allow the U.S. government to reduce its majority stake in GM.
"In January, I said we could earn a profit in 2010, if everything falls into place," Whitacre said in a memo to staff, which was obtained by Reuters.
"Our first quarter financial results will show us an important milestone, and I'm pleased to say that I anticipate solid operating results when we report our first quarter financials in May," he said.
The automaker has said it will report its first-quarter results in mid-May.
Last week, GM reported a $4.3 billion 2009 net loss covering the period from its emergence from bankruptcy in July through the end of the year, in the automaker's first full account of its new balance sheet as a restructured company.
"Our 'fresh start' accounting not only closed the door on 2009, it is a major milestone in our journey to becoming a public company again," Whitacre said in the memo.
Hit by losses of about $88 billion from 2005 through the first quarter of 2009, GM was given $50 billion of government financing to restructure in a bankruptcy steered by the U.S. Treasury, which remains a 61 percent owner of GM.
As part of efforts to push for a faster turnaround, Whitacre has shaken up senior management, including sales and marketing teams, in recent months.
GM reshuffled its sales organization in March, putting North American President Mark Reuss in charge of sales; and GM executives have said Whitacre has been clear he will hold them responsible for delivering on a promised turnaround.
The bankruptcy restructuring helped the “new GM” eliminate debt and build its cash, but the automaker's sales overall remain under pressure as it eliminates four unprofitable brands: Pontiac, Saturn, Hummer and Saab.
The automaker's U.S. sales were up 16 percent in the first quarter from a year earlier, when the industry was hitting its lowest levels since the early 1980s and GM was sliding toward bankruptcy.
But GM's U.S. market share of 18.7 percent in the first quarter was down from 19.6 percent for all of 2009, a year in which it lost 2.5 percentage points of U.S. share.
A potential profit this year would end a five-year streak of losses and mark a turnaround for the U.S. automaker, which emerged from a U.S. government-financed bankruptcy in July after slashing debt and labor costs.
Whitacre, who replaced Fritz Henderson as CEO in December, has aimed to move faster to jump-start sales and launch an initial public offering that would allow the U.S. government to reduce its majority stake in GM.
"In January, I said we could earn a profit in 2010, if everything falls into place," Whitacre said in a memo to staff, which was obtained by Reuters.
"Our first quarter financial results will show us an important milestone, and I'm pleased to say that I anticipate solid operating results when we report our first quarter financials in May," he said.
The automaker has said it will report its first-quarter results in mid-May.
Last week, GM reported a $4.3 billion 2009 net loss covering the period from its emergence from bankruptcy in July through the end of the year, in the automaker's first full account of its new balance sheet as a restructured company.
"Our 'fresh start' accounting not only closed the door on 2009, it is a major milestone in our journey to becoming a public company again," Whitacre said in the memo.
Hit by losses of about $88 billion from 2005 through the first quarter of 2009, GM was given $50 billion of government financing to restructure in a bankruptcy steered by the U.S. Treasury, which remains a 61 percent owner of GM.
As part of efforts to push for a faster turnaround, Whitacre has shaken up senior management, including sales and marketing teams, in recent months.
GM reshuffled its sales organization in March, putting North American President Mark Reuss in charge of sales; and GM executives have said Whitacre has been clear he will hold them responsible for delivering on a promised turnaround.
The bankruptcy restructuring helped the “new GM” eliminate debt and build its cash, but the automaker's sales overall remain under pressure as it eliminates four unprofitable brands: Pontiac, Saturn, Hummer and Saab.
The automaker's U.S. sales were up 16 percent in the first quarter from a year earlier, when the industry was hitting its lowest levels since the early 1980s and GM was sliding toward bankruptcy.
But GM's U.S. market share of 18.7 percent in the first quarter was down from 19.6 percent for all of 2009, a year in which it lost 2.5 percentage points of U.S. share.
Sunday, April 11, 2010
Saturday, April 10, 2010
1999 Chevy Tahoe running rough
Response:
First, check your Engine Codes. Then check your Compression as GM V series engines are known for dropping the last cylinder on the passenger side of the engine due to valve failure and sometimes No 1 cylinder. Also note that the V8 series has a problem with blown head gaskets on the passenger side.
Friday, April 9, 2010
Toyota executive Irv Miller urged automaker to ‘come clean'
WASHINGTON (Bloomberg) -- A Toyota Motor Corp. executive urged the Japanese automaker to “come clean” in January about mechanical failures in accelerator pedals for some vehicles, after other officials suggested a more cautious approach.
Irv Miller, then a vice president for communications at Toyota's U.S. sales unit, told other officials in an e-mail on Jan. 16 that “the time to hide on this one is over.” The world's largest automaker recalled 2.3 million vehicles in the United States for accelerator pedal flaws the following week.
“We are not protecting our customers by keeping this quiet,” Miller wrote in an e-mail to Toyota executives in the U.S. and Japan, obtained Wednesday.
Toyota faces a proposed fine of $16.4 million after the U.S. Department of Transportation said this week the company “knowingly hid a dangerous defect” that caused its vehicles to accelerate unexpectedly. The carmaker waited at least four months before it told U.S. regulators in January that gas pedals in its vehicles may stick, Transportation Secretary Ray LaHood said on April 5.
Miller, who retired from Toyota later in January, declined to comment when reached by phone Wednesday. His retirement was announced Dec. 16.
‘Poor job'
“While Toyota does not comment on internal company communications and cannot comment on Mr. Miller's e-mail, we have publicly acknowledged on several occasions that the company did a poor job of communicating during the period preceding our recent recalls,” Toyota's North American unit said Wednesday in a statement.
Toyota has recalled more than 8.5 million vehicles worldwide for flawed parts including accelerator pedals made by CTS Corp., based in Elkhart, Indiana, and floor mats that could jam and cause cars and trucks to accelerate unintentionally.
Miller and other communications staff discussed how the company should respond to a pending television report on unintended acceleration in Toyota vehicles.
Katsuhiko Koganei, a company communications official based in Torrance, Calif., had said in a message earlier that day that Toyota “should not mention” mechanical failures in gas pedals “because we have not clarified the real cause” and “the remedy for the matter has not been confirmed.”
Mike Michels, a spokesman for Toyota who was also mentioned in the e-mails, declined to elaborate on them. No one at the company advocated hiding or ignoring concerns about accelerator pedals, he said.
Irv Miller, then a vice president for communications at Toyota's U.S. sales unit, told other officials in an e-mail on Jan. 16 that “the time to hide on this one is over.” The world's largest automaker recalled 2.3 million vehicles in the United States for accelerator pedal flaws the following week.
“We are not protecting our customers by keeping this quiet,” Miller wrote in an e-mail to Toyota executives in the U.S. and Japan, obtained Wednesday.
Toyota faces a proposed fine of $16.4 million after the U.S. Department of Transportation said this week the company “knowingly hid a dangerous defect” that caused its vehicles to accelerate unexpectedly. The carmaker waited at least four months before it told U.S. regulators in January that gas pedals in its vehicles may stick, Transportation Secretary Ray LaHood said on April 5.
Miller, who retired from Toyota later in January, declined to comment when reached by phone Wednesday. His retirement was announced Dec. 16.
‘Poor job'
“While Toyota does not comment on internal company communications and cannot comment on Mr. Miller's e-mail, we have publicly acknowledged on several occasions that the company did a poor job of communicating during the period preceding our recent recalls,” Toyota's North American unit said Wednesday in a statement.
Toyota has recalled more than 8.5 million vehicles worldwide for flawed parts including accelerator pedals made by CTS Corp., based in Elkhart, Indiana, and floor mats that could jam and cause cars and trucks to accelerate unintentionally.
Miller and other communications staff discussed how the company should respond to a pending television report on unintended acceleration in Toyota vehicles.
Katsuhiko Koganei, a company communications official based in Torrance, Calif., had said in a message earlier that day that Toyota “should not mention” mechanical failures in gas pedals “because we have not clarified the real cause” and “the remedy for the matter has not been confirmed.”
Mike Michels, a spokesman for Toyota who was also mentioned in the e-mails, declined to elaborate on them. No one at the company advocated hiding or ignoring concerns about accelerator pedals, he said.
Thursday, April 8, 2010
Smart 4-seater for U.S. likely to come from alliance
A four-seat Smart car developed jointly by the Daimler-Renault-Nissan alliance is likely to be sold in the United States, said Daimler CEO Dieter Zetsche.
Zetsche said having a partner for developing a four-seat Smart “was a prerequisite” for expanding the microcar range. “We could not have found a feasible basis alone for the next-generation Smart family,” he said in a call with reporters today.
The next-generation SmartForTwo two-seater, a four-seat Smart and the next-generation Renault Twingo will be jointly developed by the partners. The agreement calls for electric versions of both the Smart and Twingo families as well as sharing and co-development of diesel and gasoline engines.
“Of course, we could do a next-generation Smart alone, but we would lose a lot of money,” said Zetsche, who noted that a final decision on a four-seater for the United States hasn't been made.
Daimler AG would also have had a hard time recouping the required 10 percent return-on-sales it requires for new vehicles by developing a second Smart on its own, he said.
Zetsche said Daimler has no intention of using Nissan dealers in the United States to sell Smart cars. The partnership announced today with Renault SA and Nissan Motor Co. will not affect the Smart distributorship agreement Daimler has with Penske Automotive Group, the sole distributor of Smart cars in the United States.
The SmartForTwo went on sale in the United States in 2008. A total of 24,622 were sold that year, exceeding Daimler's and Penske's expectations.
As gasoline prices fell from record highs and the economy collapsed, Smart sales plunged 41 percent in 2009. This year's demand is down 72 percent from year-earlier levels.
Wednesday, April 7, 2010
Tuesday, April 6, 2010
Toyota may face $16.4 million fine for hiding defect, U.S. says
WASHINGTON (Bloomberg) -- Toyota Motor Corp. “knowingly hid a dangerous defect” that caused its vehicles to accelerate unexpectedly, the U.S. said, for the first time accusing the world's largest automaker of breaking the law.
Transportation Secretary Ray LaHood proposed a record civil penalty of $16.4 million, the most the government can impose. The fine recommended Monday escalates the confrontation between Toyota and LaHood, who initially praised the carmaker for its handling of recalls the company attributed to faulty accelerator pedals.
The fine was announced the week after Toyota reported U.S. sales rose 41 percent in March with the help of no-interest loans and discount leases, signaling the company may be recovering from recalls of about more than 8 million vehicles worldwide for flaws that may cause unintended acceleration..
The Transportation Department's action showed “safety matters and they're going to be tough as nails,” Joan Claybrook, a former head of the National Highway Traffic Safety Administration, said in an interview. “That's very appropriate. They caught Toyota red-handed.”
The Japanese automaker waited at least four months before telling the agency that accelerator pedals might stick, LaHood said in a statement. Companies have five business days to report safety defects, the agency said.
`We now have proof'
“We now have proof that Toyota failed to live up to its legal obligations,” LaHood said in the statement. “Worse yet, they knowingly hid a dangerous defect for months from U.S. officials and did not take action to protect millions of drivers and their families.”
Toyota hadn't received NHTSA's letter on the fine, according to an e-mailed statement Monday from the company's North American sales unit.
“We have already taken a number of important steps to improve our communications with regulators and customers on safety-related matters as part of our strengthened overall commitment to quality assurance,” the company said, without saying whether it will exercise its right to dispute the fine.
LaHood has increasingly faulted Toyota's response since Jan. 28, when he said he had “no criticism” of the company and Toyota “did what they're supposed to do.”
Toyota in January recalled about 2.3 million U.S. cars and trucks for sticky accelerator pedals.
The penalty could “very possibly” be the first of multiple fines, said Claybrook, who is former president of Public Citizen, a Washington-based consumer advocacy group.
NHTSA cited documents obtained from Toyota in saying the company knew about the pedal defect since at least Sept. 29.
“NHTSA wants to make it clear that it was Toyota that was at fault and the agency did its best within the system,” said Alan Baum, an auto industry analyst at Baum & Associates in West Bloomfield, Michigan. He said Toyota probably won't contest the fine, “since they've essentially said they screwed up.”
‘Firepower to attorneys'
At a February congressional hearing, Toyota's U.S. sales chief Jim Lentz told lawmakers “we failed to promptly analyze and respond to information emerging from Europe and in the United States” about the sticky pedals.
Toyota has two weeks to accept or contest the proposed fine, Olivia Alair, a Transportation Department spokeswoman, said in an e-mail. If Toyota contests the penalty and a settlement isn't reached, “it would go to court,” she said.
“One of the biggest reasons to fight the fine would be to defend themselves from the language used by the Department of Transportation,” Ed Kim, an industry analyst for forecaster AutoPacific Inc. in Tustin, California, said in an interview. “That would seem to provide some firepower to attorneys that are suing the company.”
NHTSA's largest civil penalty was $1 million against General Motors in 2004 to settle charges that the company failed to conduct a timely recall involving windshield-wiper failures in about 581,000 vehicles.
‘Free Publicity'
“Both industry and government failed the test of putting the safety of America's drivers first” in the Toyota recalls, Representative Darrell Issa, the top Republican on the House Oversight and Government Reform Committee, one of three panels that has held hearings on Toyota actions, said in a statement Monday.
The proposed NHTSA fine may help consumers suing Toyota over sudden acceleration, said Houston attorney W. Mark Lanier, who has filed class-action and individual lawsuits related to the claims.
“Toyota is spending millions of dollars on public relations right now to sway consumers or a potential jury pool,” Lanier said in a phone interview. The fine “is free publicity that counters Toyota.” The penalty probably couldn't be introduced in court because “it's not like a criminal finding in that there was due process,” he said.
Toyota is facing at least 177 consumer and shareholder lawsuits seeking class-action status and at least 56 suits claiming personal injuries or deaths caused by sudden acceleration incidents, according to data compiled by Bloomberg. Lanier has filed two personal injury cases and is considering filing about 100 others, including a dozen involving deaths, he said.
Transportation Secretary Ray LaHood proposed a record civil penalty of $16.4 million, the most the government can impose. The fine recommended Monday escalates the confrontation between Toyota and LaHood, who initially praised the carmaker for its handling of recalls the company attributed to faulty accelerator pedals.
The fine was announced the week after Toyota reported U.S. sales rose 41 percent in March with the help of no-interest loans and discount leases, signaling the company may be recovering from recalls of about more than 8 million vehicles worldwide for flaws that may cause unintended acceleration..
The Transportation Department's action showed “safety matters and they're going to be tough as nails,” Joan Claybrook, a former head of the National Highway Traffic Safety Administration, said in an interview. “That's very appropriate. They caught Toyota red-handed.”
The Japanese automaker waited at least four months before telling the agency that accelerator pedals might stick, LaHood said in a statement. Companies have five business days to report safety defects, the agency said.
`We now have proof'
“We now have proof that Toyota failed to live up to its legal obligations,” LaHood said in the statement. “Worse yet, they knowingly hid a dangerous defect for months from U.S. officials and did not take action to protect millions of drivers and their families.”
Toyota hadn't received NHTSA's letter on the fine, according to an e-mailed statement Monday from the company's North American sales unit.
“We have already taken a number of important steps to improve our communications with regulators and customers on safety-related matters as part of our strengthened overall commitment to quality assurance,” the company said, without saying whether it will exercise its right to dispute the fine.
LaHood has increasingly faulted Toyota's response since Jan. 28, when he said he had “no criticism” of the company and Toyota “did what they're supposed to do.”
Toyota in January recalled about 2.3 million U.S. cars and trucks for sticky accelerator pedals.
The penalty could “very possibly” be the first of multiple fines, said Claybrook, who is former president of Public Citizen, a Washington-based consumer advocacy group.
NHTSA cited documents obtained from Toyota in saying the company knew about the pedal defect since at least Sept. 29.
“NHTSA wants to make it clear that it was Toyota that was at fault and the agency did its best within the system,” said Alan Baum, an auto industry analyst at Baum & Associates in West Bloomfield, Michigan. He said Toyota probably won't contest the fine, “since they've essentially said they screwed up.”
‘Firepower to attorneys'
At a February congressional hearing, Toyota's U.S. sales chief Jim Lentz told lawmakers “we failed to promptly analyze and respond to information emerging from Europe and in the United States” about the sticky pedals.
Toyota has two weeks to accept or contest the proposed fine, Olivia Alair, a Transportation Department spokeswoman, said in an e-mail. If Toyota contests the penalty and a settlement isn't reached, “it would go to court,” she said.
“One of the biggest reasons to fight the fine would be to defend themselves from the language used by the Department of Transportation,” Ed Kim, an industry analyst for forecaster AutoPacific Inc. in Tustin, California, said in an interview. “That would seem to provide some firepower to attorneys that are suing the company.”
NHTSA's largest civil penalty was $1 million against General Motors in 2004 to settle charges that the company failed to conduct a timely recall involving windshield-wiper failures in about 581,000 vehicles.
‘Free Publicity'
“Both industry and government failed the test of putting the safety of America's drivers first” in the Toyota recalls, Representative Darrell Issa, the top Republican on the House Oversight and Government Reform Committee, one of three panels that has held hearings on Toyota actions, said in a statement Monday.
The proposed NHTSA fine may help consumers suing Toyota over sudden acceleration, said Houston attorney W. Mark Lanier, who has filed class-action and individual lawsuits related to the claims.
“Toyota is spending millions of dollars on public relations right now to sway consumers or a potential jury pool,” Lanier said in a phone interview. The fine “is free publicity that counters Toyota.” The penalty probably couldn't be introduced in court because “it's not like a criminal finding in that there was due process,” he said.
Toyota is facing at least 177 consumer and shareholder lawsuits seeking class-action status and at least 56 suits claiming personal injuries or deaths caused by sudden acceleration incidents, according to data compiled by Bloomberg. Lanier has filed two personal injury cases and is considering filing about 100 others, including a dozen involving deaths, he said.
Sunday, April 4, 2010
Lexus surges in March, passes Mercedes in '10 U.S. luxury race
Lexus -- the leading luxury-auto brand in the United States for the past decade -- used a 42 percent gain in March to inch ahead of rival Mercedes-Benz after the first quarter.
Lexus sold 20,219 vehicles last month and 49,523 for the year's first three months. Mercedes reported sales of 20,023 cars and SUVs for March, a 28 percent increase from a year earlier, and 49,229 for the quarter. The Mercedes tallies exclude Sprinter vans formerly sold by Dodge -- 1,337 of them in the first quarter.
Mercedes, helped by its revamped E-class sedan, had moved ahead of Lexus and BMW through 2010's first two months. The BMW brand posted a 3 percent increase in March to 18,060 and finished the quarter at 46,323.
Industrywide sales rose 24 percent in March, to push the market 16 percent ahead of a depressed 2009 after the first three months.
“The luxury market is doing pretty well,” said Jessica Caldwell, a senior analyst at Edmunds.com, a provider of industry data. “We assumed when times were tough that luxury sales would fall. It has held its share of the market.”
Toyota Motor Corp.'s Lexus benefited from a tripling of sales of its redesigned GX mid-size SUV, as well as increases of 31 percent for the RX SUV and 29 percent for the IS car.
At Mercedes, sales of the E class more than doubled while the C class, its highest-volume model, rose 20 percent.
Not holding back
Mercedes expects more increases from the E class as it adds a convertible version in May and a diesel E-350 in October, said Ernst Lieb, CEO of the brand's U.S. unit.
“We're not holding back,” he said. “We have newer products than some of our competitors. We're going after whatever we can get.”
BMW intends to pass Lexus for the No. 1 rank in the United States by 2012 on the strength of new models, Jim O'Donnell, president of the North American unit, said Wednesday.
In March, BMW spent an average of $4,797 a vehicle on incentives, compared with $3,527 for Mercedes and $1,778 for Lexus, according to Edmunds.com.
“BMW has a lot of good lease deals,” Caldwell said. “They're trying to hold onto the market.” The brand's U.S. share has fallen a tenth of a point to 1.8 percent this year. Sales have risen 8 percent.
Rest of the pack
Among the March results for other luxury brands:
• General Motor Co.'s Cadillac reported a 42 percent increase to 11,639 as sales of the redesigned SRX crossover SUV surged more than sixfold. Cadillac spent a per-vehicle average of $4,307 on incentives, third among luxury brands behind BMW and Ford Motor Co.'s Lincoln, according to Edmunds.com.
• Honda Motor Co.'s Acura brand gained 30 percent to 11,722 cars and SUVs.
• Lincoln sales rose 19 percent to 8,693.
• Nissan Motor Co.'s Infiniti sold 9,942 vehicles, a 37 percent increase from a year earlier and the brand's best month since August 2008.
• Volkswagen AG's Audi sold 8,589 vehicles, up 34 percent.
• Tata Motors Ltd.'s Land Rover increased 21 percent to 2,726 vehicles, while Jaguar dropped 16 percent to 983.
Lexus sold 20,219 vehicles last month and 49,523 for the year's first three months. Mercedes reported sales of 20,023 cars and SUVs for March, a 28 percent increase from a year earlier, and 49,229 for the quarter. The Mercedes tallies exclude Sprinter vans formerly sold by Dodge -- 1,337 of them in the first quarter.
Mercedes, helped by its revamped E-class sedan, had moved ahead of Lexus and BMW through 2010's first two months. The BMW brand posted a 3 percent increase in March to 18,060 and finished the quarter at 46,323.
Industrywide sales rose 24 percent in March, to push the market 16 percent ahead of a depressed 2009 after the first three months.
“The luxury market is doing pretty well,” said Jessica Caldwell, a senior analyst at Edmunds.com, a provider of industry data. “We assumed when times were tough that luxury sales would fall. It has held its share of the market.”
Toyota Motor Corp.'s Lexus benefited from a tripling of sales of its redesigned GX mid-size SUV, as well as increases of 31 percent for the RX SUV and 29 percent for the IS car.
At Mercedes, sales of the E class more than doubled while the C class, its highest-volume model, rose 20 percent.
Not holding back
Mercedes expects more increases from the E class as it adds a convertible version in May and a diesel E-350 in October, said Ernst Lieb, CEO of the brand's U.S. unit.
“We're not holding back,” he said. “We have newer products than some of our competitors. We're going after whatever we can get.”
BMW intends to pass Lexus for the No. 1 rank in the United States by 2012 on the strength of new models, Jim O'Donnell, president of the North American unit, said Wednesday.
In March, BMW spent an average of $4,797 a vehicle on incentives, compared with $3,527 for Mercedes and $1,778 for Lexus, according to Edmunds.com.
“BMW has a lot of good lease deals,” Caldwell said. “They're trying to hold onto the market.” The brand's U.S. share has fallen a tenth of a point to 1.8 percent this year. Sales have risen 8 percent.
Rest of the pack
Among the March results for other luxury brands:
• General Motor Co.'s Cadillac reported a 42 percent increase to 11,639 as sales of the redesigned SRX crossover SUV surged more than sixfold. Cadillac spent a per-vehicle average of $4,307 on incentives, third among luxury brands behind BMW and Ford Motor Co.'s Lincoln, according to Edmunds.com.
• Honda Motor Co.'s Acura brand gained 30 percent to 11,722 cars and SUVs.
• Lincoln sales rose 19 percent to 8,693.
• Nissan Motor Co.'s Infiniti sold 9,942 vehicles, a 37 percent increase from a year earlier and the brand's best month since August 2008.
• Volkswagen AG's Audi sold 8,589 vehicles, up 34 percent.
• Tata Motors Ltd.'s Land Rover increased 21 percent to 2,726 vehicles, while Jaguar dropped 16 percent to 983.
Saturday, April 3, 2010
More vehicles being scrapped than purchased, R.L. Polk says
More Americans ditched older cars than bought new ones during a 15-month period ending last September, according to a report released this week by R.L. Polk & Co.
Polk found that more than 14.8 million cars and light trucks were scrapped in the U.S., compared with new vehicle registrations of just more than 13.6 million.
The tally, taken between July 1, 2008, and Sept. 30, 2009, includes thousands of cars demolished during last year's cash-for-clunkers program.
Scrapping statistics are viewed in the industry as a bellwether for future gains in vehicle sales. The higher the rate of scrapping, the more likely that the demand for new and used vehicles will rise -- especially if the economy is improving.
This is the first time Polk's analysis covered a 15-month period, in large part to accommodate the clunkers program. Cash for clunkers gave consumers up to $4,500 in rebates on a new vehicle if the trade-in and new purchase met certain requirements. The program ran from July 27 through Aug. 25, 2009, and was funded with $3 billion in taxpayer funds.
Polk did not compile figures from comparable 15-month periods, but the research company said light-vehicle scrap rates have increased in the past five years.
Higher scrap rates
As of October 2009, the scrap rate was 6.1 percent of the total U.S. light-vehicle fleet, compared with 4.3 percent in July 2005.
Polk, which tracks the ability of automakers to retain customers, expects current trends for scrappage and vehicle ownership to continue for at least another year. The assessment assumes a general upward trend for vehicle scrappage rates as high volumes of older vehicles continue to retire from the U.S. fleet, according to the report.
The average age for all light vehicles during the 15-month period is 10.2 years, a trend supported by Polk's research that consumers are keeping cars and trucks longer. As of September 2009, the average length of ownership for a new or used vehicle was 49.9 months, up from 45 months at the same point a year earlier.
The economy, limited financing and leasing options, extended warranty offers and improved vehicle quality support the longevity trend, according to Polk. The company said this could provide increased business for various segments of the industry.
“As vehicles age and consumers continue to hold onto them longer, there are significant opportunities for repair services and parts demand for the aftermarket as vehicles are falling out of warranty as they age,” Mark Seng, Polk vice president of sales and client services, said in a statement.
Thursday, April 1, 2010
Ford, Toyota soar as incentives fuel 24% industry gain
General Motors Co. posted a 21 percent increase in March U.S. sales while Toyota Motor Corp. and Ford Motor Co. rose more than 40 percent as higher incentives industrywide helped lure buyers to showrooms.
Ford, which advanced for the sixth straight month, was outsold by Toyota and GM in March after leading the industry in February. Toyota's 41 percent gain was aided by richer incentives aimed at luring buyers after its recall crisis.
"Retail sales were really artificially inflated by huge incentives going on in the marketplace and did not reflect true demand,” said Jessica Caldwell, director of industry analysis at Edmunds.com. “April will be a good indicator of real consumer demand."
Overall U.S. sales rose 24 percent from the depressed levels of March 2009, when automakers were battling the weakest demand in almost three decades. The seasonally adjusted annual sales rate of 11.7 million was the year's highest and the second strongest since August, when the U.S. cash-for-clunkers campaign lifted demand
Chrysler Group fell 8 percent after posting its first monthly gain in more than two years in February. Chrysler, No. 5 in U.S. sales through February, was outsold for the second time this year by Nissan North America, which soared 43 percent.
The Hyundai brand's 15 percent increase was below analysts' forecasts of a gain of more than 30 percent.
American Honda was up 22 percent, in line with predictions. Subaru, the only automaker to post U.S. sales gains in each of the past two years, rose 46 percent.
Last month's SAAR was below the 12 million average forecast of eight analysts compiled by Bloomberg. Still, it was the fifth straight gain from a year earlier. The March 2009 pace was 9.3 million, according to Automotive News data.
Incentive discrepancy
For the first time on record, GM's per-unit incentives were below the industry average, said Susan Docherty, vice president of U.S. marketing. GM spiffs totaled $2,800 per vehicle, down nearly $2,000 from March 2009, she said. The industry averaged $2,910.
GM incentives ranked fourth highest, behind Ford Motor, Chrysler and “an import competitor,” she said.
GM, Ford and other automakers use J.D. Power and Associates data to measure incentives, Docherty said.
But Edmunds.com's incentive measure puts GM first among all automakers with $3,519 spent per vehicle last month. That compares with an industry average of $2,742, the consumer auto site says.
Both Edmunds.com and J.D. Power measure customer cash, interest and lease incentives, along with cash to dealers for specific vehicles. But J.D. Power also includes cash that automakers give dealers for meeting sales volume objectives.
Still, that shouldn't make J.D. Power's per-vehicle numbers lower for GM, said Edmunds.com's Caldwell.
“We've been doing the same thing for years, and it's weird that we're coming to a point where all of the sudden we're showing a huge discrepancy,” she said.
GM retained Chevrolet, Cadillac, Buick and GMC brands as part of its government-backed restructuring, and is selling or closing Saab, Hummer, Saturn and Pontiac, whose sales plummeted 88 percent in March. GM released results for the four remaining lines, which each posted gains of more than 40 percent, almost an hour before the complete tally.
“They haven't increased consideration for the remaining brands,” said Jim Hall, principal of the consulting firm 2953 Analytics Inc. in suburban Detroit. “Killing brands does not increase the consideration for the brands you're continuing. Obviously, they have to do that.”
Industry sales that failed to match analysts' estimates underscored the market's contraction in the recession. Annual U.S. deliveries averaged 16.8 million last decade through 2007. The 2008 total was 13.2 million, and 2009's tally of 10.4 million was the lowest in 27 years.
Automakers were buoyed in March by rising consumer confidence and spring weather after February blizzards in the Northeast. The Conference Board's confidence index rose to 52.5 from 46.4 a month earlier as gloom over job prospects began to lift.
On March 2, Toyota began offering incentives such as subsidized leases after the automaker recalled more than 8 million vehicles globally to fix defects linked to unintended acceleration and to adjust brakes.
Competitors responded with their own discounts while avoiding the spending levels the industry rang up in March 2009 as GM and Chrysler added incentives ahead of their bankruptcy filings. Incentives are down 14 percent from a year earlier, according to Edmunds.com.
Ford, which advanced for the sixth straight month, was outsold by Toyota and GM in March after leading the industry in February. Toyota's 41 percent gain was aided by richer incentives aimed at luring buyers after its recall crisis.
"Retail sales were really artificially inflated by huge incentives going on in the marketplace and did not reflect true demand,” said Jessica Caldwell, director of industry analysis at Edmunds.com. “April will be a good indicator of real consumer demand."
Overall U.S. sales rose 24 percent from the depressed levels of March 2009, when automakers were battling the weakest demand in almost three decades. The seasonally adjusted annual sales rate of 11.7 million was the year's highest and the second strongest since August, when the U.S. cash-for-clunkers campaign lifted demand
Chrysler Group fell 8 percent after posting its first monthly gain in more than two years in February. Chrysler, No. 5 in U.S. sales through February, was outsold for the second time this year by Nissan North America, which soared 43 percent.
The Hyundai brand's 15 percent increase was below analysts' forecasts of a gain of more than 30 percent.
American Honda was up 22 percent, in line with predictions. Subaru, the only automaker to post U.S. sales gains in each of the past two years, rose 46 percent.
Last month's SAAR was below the 12 million average forecast of eight analysts compiled by Bloomberg. Still, it was the fifth straight gain from a year earlier. The March 2009 pace was 9.3 million, according to Automotive News data.
Incentive discrepancy
For the first time on record, GM's per-unit incentives were below the industry average, said Susan Docherty, vice president of U.S. marketing. GM spiffs totaled $2,800 per vehicle, down nearly $2,000 from March 2009, she said. The industry averaged $2,910.
GM incentives ranked fourth highest, behind Ford Motor, Chrysler and “an import competitor,” she said.
GM, Ford and other automakers use J.D. Power and Associates data to measure incentives, Docherty said.
But Edmunds.com's incentive measure puts GM first among all automakers with $3,519 spent per vehicle last month. That compares with an industry average of $2,742, the consumer auto site says.
Both Edmunds.com and J.D. Power measure customer cash, interest and lease incentives, along with cash to dealers for specific vehicles. But J.D. Power also includes cash that automakers give dealers for meeting sales volume objectives.
Still, that shouldn't make J.D. Power's per-vehicle numbers lower for GM, said Edmunds.com's Caldwell.
“We've been doing the same thing for years, and it's weird that we're coming to a point where all of the sudden we're showing a huge discrepancy,” she said.
GM retained Chevrolet, Cadillac, Buick and GMC brands as part of its government-backed restructuring, and is selling or closing Saab, Hummer, Saturn and Pontiac, whose sales plummeted 88 percent in March. GM released results for the four remaining lines, which each posted gains of more than 40 percent, almost an hour before the complete tally.
“They haven't increased consideration for the remaining brands,” said Jim Hall, principal of the consulting firm 2953 Analytics Inc. in suburban Detroit. “Killing brands does not increase the consideration for the brands you're continuing. Obviously, they have to do that.”
Industry sales that failed to match analysts' estimates underscored the market's contraction in the recession. Annual U.S. deliveries averaged 16.8 million last decade through 2007. The 2008 total was 13.2 million, and 2009's tally of 10.4 million was the lowest in 27 years.
Automakers were buoyed in March by rising consumer confidence and spring weather after February blizzards in the Northeast. The Conference Board's confidence index rose to 52.5 from 46.4 a month earlier as gloom over job prospects began to lift.
On March 2, Toyota began offering incentives such as subsidized leases after the automaker recalled more than 8 million vehicles globally to fix defects linked to unintended acceleration and to adjust brakes.
Competitors responded with their own discounts while avoiding the spending levels the industry rang up in March 2009 as GM and Chrysler added incentives ahead of their bankruptcy filings. Incentives are down 14 percent from a year earlier, according to Edmunds.com.
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