All-Wheel Drive Goes From Novelty to Necessity

First Up 09/19/12

September 19, 2012

China Says U.S. Auto Trade Complaint Driven by Election Race
Automotive News reports that China said it has been made a victim of U.S. electoral politics after Washington launched an international trade case alleging that Beijing has been unfairly subsidizing automobile and auto parts exports. U.S. President Barack Obama announced the World Trade Organization case against China over allegedly illegal subsidies for automobiles and auto parts during an election campaign stop in Ohio on Monday. Beijing fired back hours after White House officials made the announcement with a complaint against U.S. duties on many Chinese exports, in the latest example of tit-for-tat trade disputes filed between the world's two largest economies. In its first official comment on the complaint, issued on Tuesday evening, the Chinese Ministry of Commerce was unusually blunt in blaming the case on the race for the White House. "In the midst of an election race, the United States chose to announce this news in Ohio, an automobile production area, showing that the U.S. took this step against China out of considerations of electoral politics," an unidentified Chinese commerce official said on the ministry's website. Click here for more on China’s response to U.S. complaints that China is implementing unfair auto subsidies.

BofA Survey Finds 'Fiscal Cliff' Top Investor Concern
The U.S. "fiscal cliff" has become the top risk identified by investors, replacing the European sovereign debt crisis, which had led the list since last April, according to the Bank of America Merrill Lynch's fund manager survey for this month. "Investors now view the U.S. fiscal cliff as a greater threat than the euro zone, and the upcoming election is putting these fears into sharper focus," said Michael Hartnett, chief investment strategist at BofA Merrill Lynch Global Research. The U.S. "fiscal cliff" – an economically damaging combination of tax increases and spending cuts due to take effect in the new year – became the biggest risk identified by 35 percent of global investors, reports The Wall Street Journal. AIADA Chairman Ray Mungenast shared his thoughts on the impact of the impending fiscal cliff in a recent blog post – click here to see it. The Wall Street Journal’s survey recorded three consecutive months of double-digit positive swings toward European equities. A total of 253 panelists with $681 billion of assets under management participated in the survey from Sept. 7 to Sept. 13. Read more about investor reaction to the U.S.’s impending fiscal cliff here.

Porsche to Trim Car Output, Spending in 2013
Volkwagen AG's Porsche unit will reduce investment spending and cut costs next year to offset lower-than-expected car sales and maintain its high profitability in 2013, reports Automotive News. "We will possibly delay the one or the other project," Porsche brand chief Matthias Mueller said on the sidelines of the production launch of the new Boxster. He added that vehicle sales next year could be between 5-10 percent below the company's internal target, but they should still be on par with the number sold in 2012. The company will also moderately reduce production in 2013, he said. Auto sales in Europe have slowed this year amid the region's ongoing economic slump, and new-vehicle demand is slowing in China, as well. Porsche's global sales have increased 15 percent this year through August to 92,474 vehicles. In 2011, Porsche sold a record 118,867 vehicles worldwide; a 22 percent increase compared with the year before. The brand's biggest markets are the United States and China. In July, the company said it expects to increase profits this year as record vehicle sales help offset high costs for model launches and factory extensions. Read more about Porsche’s production plans here.

VW and Toyota Want Owners to Tout Their Brands
Volkswagen of America and Toyota Motor Sales USA are tapping into social media to encourage owners to share positive experiences about their brands. The two carmakers are pushing the online social media blitz via national television commercials, reports Forbes. The VW brand launched the “Why VW” brand campaign, which includes the social media microsite. The owner stories are also housed on VW’s Facebook page. The brand launched a new national TV commercial to direct viewers to the new “Why VW” social media effort. The ad is called “Smiles.” Click here to watch it. Meantime, Toyota is reaching out in social media to its millions of Camry owners. Toyota actually introduced the “Camry Effect” social media site a year ago as part of the debut of the redone 2012 model. But back then, the site was more of a stand-alone, really just the digital part of the Camry’s multi-media launch. Toyota figured out earlier this year a better way to marry the fan site with its more traditional media. Click here to see the latest TV spot that arrived this month. For more on Toyota and VW’s social media efforts, click here.

All-Wheel Drive Goes From Novelty to Necessity
All four wheels are powering the next step in the evolution of the luxury-car business: the rise of all-wheel drive (AWD). The epitome of a high-performance, luxury sedan for many consumers has long been a car with a big six- or eight-cylinder engine driving the rear wheels. Now, reports The Wall Street Journal, cars that send power to all four wheels are gaining traction, accounting for half or more of luxury-car sales in the colder parts of the U.S. and as much as 15 percent of sales even in snow-free states, up from single-digit shares in the past. Many industry executives say AWD is now a must-have technology for the U.S. market. Whether AWD delivers enough safety and performance benefits for the $2,000 to $3,000 extra charge car makers typically add to the price tag, as well as the mileage penalty that the extra weight of all-wheel-drive hardware still exacts in most cars, is still up for debate. To boost the appeal of all-wheel drive, car makers and their drivetrain-technology suppliers are working to minimize the disadvantages, particularly in fuel economy. For an overview of some of the new technologies being used in today’s AWD drivetrains, click here. For more on the popularity of AWD, click here.

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