July 19, 2010

VW Invests Billions in U.S. Comeback Bid
Germany's Volkswagen AG is mounting a new attempt to push back Japan's entrenched carmakers and take a bigger slice of the American market, according to The Detroit News. Volkswagen sounds confident it can break out of its niche status in the U.S., where it has just 2 percent of the market - 3 percent counting Audi and VW's other premium brands. Click here for a chart showing VW's share of the U.S. market compared to its other global markets. The company is investing $5 billion in North America, building a $1 billion assembly plant in Tennessee, and more importantly, redesigning its compact and midsize cars to meet the demands of mainstream U.S. car buyers. By producing more cars in North America, as its Japanese rivals do, VW can price them more competitively, too. Click here for a price comparison. The 2011 Jetta, which goes on sale later this year, is bigger than the outgoing model. But with a base price of around $16,000, it starts at around $2,000 less. Click here for a photo gallery of the new Jetta. VW is also planning a new, as-yet-unnamed midsize car that will be roomier than the Passat sedan and wagon it's replacing but cost thousands less. Click here for more on VW's plans to take a bigger share of the U.S. auto market.

Tesla to Build Electric Toyota Rav4
Tesla Motors will produce electric Rav4 crossover SUVs for Toyota Motor Co. beginning in 2012, the two companies announced Friday. A fleet of electric Rav4 prototypes will be delivered later this year, the two automakers said. According to CNN Money, the first prototype has already been built, and is undergoing evaluation. Click here for video coverage of Toyota's decision to partner with Tesla. Toyota used an earlier version of the Rav4 as an electric vehicle in the 1990s during a time that California required automakers to sell vehicles with engines that produced zero emissions. That electric Rav4 competed against General Motors' EV1 electric car. Toyota, which is already the industry leader in gas-electric hybrid cars, is also looking for other partners to develop future alternative fuel technologies. In fact, collaboration with other companies is expected to be a key part of Toyota's alternative fuel strategy, company executives have said. Last year, Toyota revealed a concept version of a tiny electric "city car" with a 40-mile range. That car was under development, Toyota said at the time, and intended primarily for short-term rental use within cities. Toyota plans to introduce a plug-in version of the Toyota Prius hybrid car in 2011, but that vehicle would still use a gasoline engine as its primary power source. Click here for more on Toyota and Tesla's venture.

Dealer Closings Criticized by Audit
The Obama administration's auto task force rushed General Motors and Chrysler to cull hundreds of dealers last year and overlooked how many jobs might be lost at dealerships, a new audit said Sunday. According to the Detroit Free Press, the report by the independent inspector general for the Troubled Asset Relief Program (TARP) is the most critical government assessment of the auto task force to date. Click here for the audit's report. The task force "made a series of decisions that may have substantially contributed to the accelerated shuttering of thousands of small businesses and thereby potentially adding tens of thousands of workers to the already lengthy unemployment rolls," the audit said. An exact number of dealer closures has not yet been released, but original plans targeted 2,241. According to Automotive News, a group of activist dealers rejected in the Chrysler and General Motors bankruptcies is contemplating going back to Congress to seek justice after the federal audit questioned the criteria used to terminate dealers, as well as the automakers' claims the moves were necessary to help restore profits. Click here to read more on their plans. Click here for more from the Detroit Free Press on the audit's conclusions on the effects of last year's dealership closures.

Car Loan Approval Rates are Improving
It's getting easier to get a car loan. According to MSNBC, the loan approval rate for customers with the highest credit scores was 90 percent in June after sliding to 70 percent in late 2008 during the recession. For the majority of consumers with middle-tier credit, in the range of 620 to 750, loan approvals jumped 12 percentage points in the past year to above 82 percent, says CNW Marketing Research. And now, even those with poor credit scores are getting a break. Historically, the approval rate for subprime borrowers - those with scores below 620 - ran about 60 percent. Last year, the rate fell to 5 percent. Now, it's running at 9 percent. Subprime borrowers still need to make a sizable down payment and will pay interest of 10 percent or more, but car buyers with poor credit make up a big chunk of the market. The auto industry accounts for around 3 to 5 percent of the nation's gross domestic product and about 16 percent of all durable goods shipments. Better access to credit is an important step to selling more cars and helping an industry that has seen 250,000 jobs disappear in the past three years. Nearly 830,000 auto-related jobs still exist in the U.S. Click here for the full report on car loan approval rates.

Review: Borrowing from the 7 Pays Dividends for the 5
Lawrence Ulrich at the New York Times, reviewing the revamped BMW 5 Series, writes that there's certainly nothing flashy or superficial about the redesigned midsize sedan. Click here for a photo. The 5 Series' perennial task is to bridge the gap - in size, price, sportiness, and luxury - between the sprightly 3 Series and the big-and-rich 7 Series. Sharing a stellar chassis with the latest 7 Series, the new 5 leans in that luxurious direction, literally: the mildly stretched 5 Series is just 6.9 inches shorter than the 750i but 14 inches longer than the 3 sedan. Not surprisingly, the 5 drives more like a scaled-down 7 than a scaled-up 3. Traditionalists can certainly cheer the redrawn styling, with its combed-back cabin and 3.2-inch-longer wheelbase. Ulrich writes that the cabin evokes both luxury and pure functionality without seeming to lift a pinkie to exert itself. Highlights include a no-nonsense black-panel instrument display; a knockout 10.2-inch, high-resolution screen for the optional navigation system; and an especially comfortable back seat, with a touch more knee room than before. Starting at $50,475, the popular 535i model gets the company's new 3-liter single-turbo in-line 6, with 300 horsepower and 300 pound-feet of torque. That 535i is good for a factory-estimated scoot from 0 to 60 miles per hour in 5.7 seconds. Click here for a photo gallery of the new 5 Series. To read Ulrich's entire review, click here.

Around the Web
Video Review: 2010 Audi R8 5.2 [Cars.com]
Rendered: 2012 Mercedes-Benz B-Class [MotorAuthority]
What's the Most Reliable Car Built Since 1980? [Jalopnik]
Rubber 'Ring: Michelin's 10,000 Horsepower Challenge [Motor Trend]