November 9, 2012
Obama Finding What's Good for GM Not So Good for Taxpayers
The General Motors bailout played an important role in the re-election of President Barack Obama, who stumped on the issue in Midwestern swing states. Now, reports Automotive News, comes the hard part: unloading the government's stake, probably at a big loss. GM received $51 billion from the U.S. Treasury in 2009. Taxpayers have recouped $24 billion and still own 32 percent of the company. The problem is that GM shares are trading at less than half the price the government said it needs to break even. Selling the shares was politically precarious before the election because that would have locked in a loss – $14 billion at yesterday's closing price. Now that the election is over, cutting the stake could be good for GM's image and its stock. The question is how and when. With GM suffering as much as $1.8 billion in losses in Europe this year and Chinese economic growth slowing while the U.S. accelerates gradually, prospects are dim for a doubled stock price. GM's $51 billion was part of the government's $79.7 billion 2009 rescue of GM, Chrysler Group LLC and lender Ally Financial Inc. Click here for coverage of what GM’s bailout could mean for taxpayers.
Electric Vehicle Economics Don't Pencil Out, Study Shows
Sales of electric vehicles won’t take off until automakers lower prices and demonstrate the economic benefits to consumers, according to a J.D. Power and Associates study of electric vehicle ownership. According to The Detroit Free Press, almost two years after automakers started selling battery-powered rechargeable cars in the U.S., the segment is an almost immeasurable portion of auto sales. Nissan has sold fewer than 6,800 Leaf electric cars this year through October, and that’s down 16 percent from the same period last year. Honda has leased just 48 of the electric version of the Fit this year. Mitsubishi has sold fewer than 500 of its MiEV mini-car. Startup electric car company Coda Automotive has refused to disclose how many cars it has sold. Meanwhile, led by Toyota’s family of hybrid vehicles, the industry will sell about 500,000 gas-electric vehicles this year, accounting for about 3.5 percent of U.S. auto sales. People who have purchased an electric car “most often cite environmental friendliness as the most important benefit,” according to the study, which the J.D. Power research firm plans to conduct annually. Click here to read more about the study at J.D. Power’s website. For further coverage from The Detroit Free Press, click here.
Suzuki’s U.S. Departure: No Surprise to its Dealers
When Suzuki Motor Corp. disclosed this week it would pull out of the U.S. auto market, the news came as little surprise to dealers who had struggled with a dramatic plunge in sales over the last five years. A maker of inexpensive compact cars and small sport-utility vehicles, Suzuki first was hurt by its heavy reliance on consumers with poor credit who were among the first to leave the market when credit dried up in late 2008 and later by the strong yen, which made its vehicles more expensive. According to The Wall Street Journal, the Japanese company also faced tougher competition in the low-priced car market from Korean rivals Hyundai Motor Co. and Kia Motors Corp. On Monday, dealers including Don Hicks, who owns a Suzuki dealership in Aurora, Colo., got the news that Suzuki’s U.S. subsidiary, American Suzuki Motor Corp., filed for Chapter 11 bankruptcy protection. “I wasn’t particularly surprised,” Mr. Hicks said. “They had been really slowing things down for a while.” Suzuki’s 220 U.S. dealers now face the task of winding down their stores, which includes selling off remaining vehicle stock. Read more about what Suzuki’s U.S. departure means for dealers here.
Toyota's New Small Car for U.S. Made by Mazda in Mexico
Toyota announced today that it will build a new subcompact car at Mazda's plant in Mexico to go on sale in North America starting in 2015.USA Today reports that the new car will be built on the platform of the Mazda2. While Toyota did not name of the new model, the Mazda2 and its sister, the Ford Fiesta, compete against Toyota's Yaris. The new model also could be used as a replacement for a sedan in Toyota's Scion youth division, where the xD is nearing the end of a typical life cycle. Toyota said the new model will start production at the Mazda plant currently under construction in Mexico in the summer of 2015. The plant plans to make 50,000 of the little cars a year, to be sold through Toyota dealerships. It was only about a year ago that Ford dumped its ownership stake in Mazda, ending their joint development. It's interesting that Mazda has found a new suitor relatively quickly. Through the agreement, Toyota will be able to shore up its North American vehicle lineup while Mazda is able to get better utilization out of its costly new plant. Read more about Toyota and Mazda’s production agreement here.
Crazy Colors Are a Hit on Small Cars
Rankings of the most popular car colors are generally fairly conservative. Whites and grays make up the top of the list. But, for some reason, small cars – and especially very small cars – tend to steer their own course on colors. On tiny cars, loud, odd-ball colors are the rule, reports CNN Money. There are a few reasons that colors like "Lime Squeeze," on display here on the Ford Fiesta, are popular in petite cars, said Nancy Lockhart, color marketing manager for DuPont's automotive coatings divisions. First, small cars tend to be purchased by younger people who haven't yet had the youthful nonconformity crushed out of their souls. (That happens later. Then they buy gray mid-sized family sedans.) Second, bright colors tend to look better in small doses. A color that might seem garish on a large car can be tolerable and even fun on a tiny car like the Fiesta. And third, said Lockhart, these small cars are usually new to the U.S. market, even ones from Detroit brands like Ford and Chevy. So they're carrying with them color schemes that were popular in their original home markets of Europe and Asia. Click here to read more about the popularity of unconventional colors among small cars.
Around the Web
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What $122K in Psychedelic Colors Can Do for a McLaren MP4-12C [Motoramic]
Mercedes-Benz Finally Reveals a SLS AMG Black Series [Autoblog]
Ferrari to Auction F12 Berlinetta for Hurricane Relief [Wheels]