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As the indebted Eurozone nation Italy struggles to stay afloat, the country finds many of its wealthier citizens evading taxes and refusing to do their part.
As a result, Italy’s Polizia launched a major operation across Milan in late January, setting roadblocks to halt high-end luxury vehicle drivers. When drivers hand over license and registration, their personal information will be passed on to the national tax agency to determine whether the owner of the car has declared accurate income and if the proper amount of income taxes has been paid.
Targeting tax evaders by profiling luxury vehicles is nothing new. A year ago, Italian authorities applied the same logic to luxury yacht owners in Italy’s harbors.
So far, traffic checkpoints sweeping for tax evaders have been posted in locations including one right across the street from Milan’s famed Corso Como, another at the Cortina d’Ampezzo luxury ski resort, the Italian Riviera’s Portofino, and cities Rome and Florence.
A wealthy entrepreneur of Italy, Andrea refused to give his last name to prevent giving off any further attention to Italy’s tax agency. When asked about his Land-Rover Range Rover, Andrea said, “I’ve been stopped three times in the last few weeks by authorities because I’m driving a luxury SUV. It seems like McCarthy era in America. You’re guilty by suspicion.” Due to excessive harassment from the police, Andrea plans to sell the Range Rover he bought last May. Expecting to receive 40,000 euros at best for a car he bought for more than 100,000 euros, Andrea explains, “Dealers are full of luxury cars. No one wants to buy them now.”
Not only are luxury car owners targeted on the street day to day, but luxury goods tax hikes discouraged premium car ownership as well. An owner of a 316,000 euro Lamborghini Aventador would now have to pay about 8,400 euros in taxes a year for the Italian exotic, an amount that’s almost 500 percent higher than tax charges from the past.
General Manager of Jaguar Italy Marco Santucci said that orders for Jaguar vehicles have “decreased substantially” in the final months of 2011. Demand for the Italian Icons Ferrari, Maserati and Lamborghini have nosedived by 53 percent in January. Maserati CEO Harald Wester expresses his disappointment, “It’s hard to imagine that any other European country having luxury car producers contributing significantly to employment would have introduced a tax.” On the other hand, Ferrari and owner Fiat are less perturbed. Fiat CEO Sergio Marchionne commented that “Italy isn’t a concern for Ferrari as it sells its cars abroad.”
According to ANFIA (Associazione Nazionale Fra Industrie Automobilistiche), the association of Italian automakers, January only netted 66 supercars sold. Italian dealer association Federauto added that new taxes and general national prejudice caused prices for exotic cars to fall by 20 percent. Head of Federatuo Filippo Pavan Bernacchi said, “Extra taxes and fiscal raids are hurting the demand for supercars and killing the second-hand market.”
Despite the displeasure of its citizens, Italy’s raids are working. At the Cortina d’Ampezzo ski resort, 251 luxury vehicles were stopped, including Ferari and Lamborghini supercars. Of the lot, 42 luxury car owners had declared an income of 30,000 euros or less for 2010 and 2009. What’s more 19 luxury vehicles belonged to businesses that posted a loss in the previous year. In Florence, a builder was discovered to have no tax record at all, while his wife received social assistance.
Tax evasion is estimated to cost Italy about 120 billion euros in lost revenues each year and it is unclear whether stopping luxury car owners at checkpoints could really fix Italy’s debt. However, our wealthy readers should note the 20 percent price drop in Italy’s premium car market. Not only is there a bargain to be found, but customers will be lending a hand to Italy’s local business.
Sweden’s debt agency is claiming they have successfully investigated a handful of Saab bank accounts with some success. On Friday, the agency uncovered $796,291 which is enough to cover debts owed to the first four companies waiting for payment.
The debt agency has contacted other banks holding Saab accounts in order to understand exactly where the Swedish automaker stands. The money found only covers a quarter or major debt owed to other companies, with the total amount owed, being much higher. The agency has stated that 23 claims have been posted against Saab, with a total value of nearly $8,000,000. The debt agency is still investigating accounts, but Saab may either be forced to pay off its loans or be pushed toward the court to claim bankruptcy.
[Source: The Wall Street Journal]
Sweden’s regulators started the collection process against Saab Automobile after the struggling automaker failed to meet a Tuesday deadline to pay two suppliers.
”We’ve just begun by looking at what kind of bank accounts they have and what kind of collateral there might be” in the process that started Wednesday, Tommy Barkman, a case worker at the state agency, explained in a telephone interview with Automotive News.
Saab was to pay Kongsberg Automotive, a Norwegian manufacturer of car-seat parts. The Swedish automaker was also supposed to pay Infotive AB, a Gothenburg, Sweden-based consulting firm, a combined sum of $633,000 to avoid proceedings. The majority of that amount is owed to Kongsberg, Hans Ryberg, a division chief at the enforcement agency, said on Tuesday. Another $792,200 is owed to more suppliers in a weeks time. Over one-hundred debt claims have been filed against Saab with the collection agency.
Production came to a stand still in late March when the automaker could not afford to continue production, and the Trollhattan factory in Sweden has not been operational since early June. Usually the collection agency takes one to three months to complete the collection process, but this can be avoided in Saab pays off the debts owed.
[Source: Automotive News]
Swedish Automobile, owner of financially-stricken Saab, is being pressured by European suppliers to declare bankruptcy, hoping the threat will pressure the automaker to pay back debts.
Saab production came to a halt in April, with suppliers refusing to deliver components because they were not being properly paid. Spanish auto panels maker Matrici S. Coop prepared a bankruptcy request, after being owed $2.8 million by Saab.
Lars Holmqvist, head of the European Association of Automotive Suppliers said, ”Some companies are waiting and having no answer. Now, some have heard that other companies have been paid partially. Then they are getting very upset. They realize there is no other way but to try to demand bankruptcy because obviously then Saab pays.” Lars also explained that he had been contacted by some German companies that were owed more than 5 million euros each. They too are also interested in pursuing the process to demand Saab bankruptcy.
Saab spokesman Eric Geers explained, “We know the situation we are in. We are working very hard to resolve this and to get a more stable financing in place.”
Earlier this year Saab’s employee union threatened to push the automaker to the bring of bankruptcy over unpaid wages to workers.
[Source: Automotive News]
The Chrysler Group has repaid it outstanding debt worth $7.6 billion in loans to the U.S and Canadian governments. This ends nearly two years of public ownership of the third largest U.S automaker.
Chrysler made a payment of $5.9 billion to the U.S Treasury and $1.7 billion to Export Development Canada- finally ending loans that bailed Chrysler out of near bankruptcy in June 2009. It is impressive that the automaker managed to repay all debts six years ahead of schedule.
“Less than two years ago, we made a commitment to repay the U.S. and Canadian taxpayers in full and today we made good on that promise,” CEO Sergio Marchionne said in a statement. “The loans gave us a rare second chance to demonstrate what the people of this company can deliver and we owe a debt of gratitude to those whose intervention allowed Chrysler to re-establish itself as a strong and viable carmaker.”
The repayment became possible for Chrysler through its 16 new or refreshed models this year. The company reported a first quarter net profit for the first time since exiting bankruptcy under the control of Italy’s Fiat S.p.A
The automaker initially borrowed $5.1 billion from the U.S and $1.6 billion from Canada in June 2009 however the company racked up $1.8 billion in interest.
[Source: Automotive News]
Saab parent company Spyker held talks with parts suppliers Thursday, in a bid to restart production that has been halted over a dispute regarding unpaid bills.
The scandal has been a blight on Saab’s efforts to re-structure after a tumultuous year of teetering on the brink of bankruptcy. “We’re expecting that we could resume normal production early next week,” Saab spokeswoman Gunilla Gustavs told Automotive News. “A lot of work is going into strengthening the financial position of the company.”
The head of Sweden’s parts suppliers organization could not put an exact figure on the debt but said it was in the “millions” of Swedish kronor. In the mean time, Saab’s plant remained deserted as workers expressed hope that they could return to their jobs starting next week.
[Source: Automotive News]
Ford Motor Company has announced huge strides in its efforts to become economically viable. And whether through magic or some sort of wacky accounting that involves proper management of finances, it has done this without federal government aid (aka your tax dollars).
Today Ford announced that is has reduced its $25.9 billion debt by more than a third with a payment of $9.9 billion. The payment was made in 2.4 billion in cash as well as 468 million shares of Ford Common stock.
Reducing the company’s debt so significantly puts FoMoCo in a much-improved financial situation moving forward. This one-time payment will reduce Ford’s annual interest payments by $500 million.
“By substantially reducing our debt, Ford is taking another step toward creating an exciting, viable enterprise,” said Ford President and CEO Alan Mulally. “As with our recent agreements with the UAW, Ford continues to lead the industry in taking the decisive actions necessary to weather the current downturn and deliver long-term profitable growth.”
Official release after the jump: